Republican Missouri Governor Eric Greitens will allow a Republican-sponsored bill banning local minimum wage increases to take effect without his signature.

According to the St. Louis Post-Dispatch, Gov. Greitens announced that starting August 28, the $10 hourly minimum wage ordinance approved by the City of St. Louis in 2015 will be rolled back to $7.70 an hour, which is Missouri’s statewide minimum wage. Under Missouri law, a governor can either sign a bill into law, veto it, or allow it to take effect automatically after the expiration of a constitutional deadline.

The $10/hour wage finally took effect in May of 2017, following a lengthy court battle initiated by owners of large corporations who argued that the increased labor costs would hurt their profits. The Post-Dispatch reported in May that the minimum wage increase would not affect businesses that made less than $500,000 in annual revenue, or be applied to businesses that applied fewer than 15 workers.

“The extra $1,800 a year the average St. Louis worker will earn will help tens of thousands of struggling families — and help the economy as workers spend their paychecks at local businesses,” said Paul Sonn, general counsel for the National Employment Law Project, in a public statement issued when the higher wage went into effect.

While lobbying groups representing big businesses, like the Missouri Chamber of Commerce and Industry, opposed St. Louis’ minimum wage increase by saying it would kill jobs, empirical research proves the opposite. A June 2017 study by University of California-Berkeley (UC-Berkeley) researchers Michael Reich, Sylvia Allegretto, and Anna Godoey found that despite doom-and-gloom warnings from corporate lobbyists, Seattle’s $15/hour minimum wage, approved in 2014, had no effect on employment in the industries most affected by a minimum wage increase. In fact, Seattle’s unemployment rate reached a nine-year low in May of 2017.

In the chart below, economists on the UC-Berkeley research team found that in data sets for both real-time and synthetic models, employment rates continued to increase despite the higher minimum wage:

Seattle’s $15/hour minimum wage and how it affected employment. Chart by Michael Reich, Sylvia Allegretto, and Anna Godoey.

As of this writing, Missouri is the first state to officially roll back a city’s wage increase. The Post-Dispatch reports that St. Louis Mayor Lyda Krewson is exploring the possibility of introducing a ballot referendum to raise the city’s minimum wage back to $10 an hour.

 

Matthew P. Robbins is an economics reporter for Grit Post covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats. 

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