Missouri News

Missouri business owners still trying to gauge impact of minimum wage law

Delanie Okenfuss plays with Booker Johnson on Tuesday in the nursery at the YMCA of Hannibal in Hannibal, Mo. A new minimum wage in Missouri kicked in at the beginning of this month. A number of Hannibal YMCA employees, in particular high school and college students, are affected by the wage increase. | H-W Photo/Jake Shane
By Herald-Whig
Posted: Jan. 9, 2019 9:20 am Updated: Jan. 9, 2019 9:33 am

HANNIBAL, Mo. -- Many employers in Northeast Missouri are grappling with how to keep their operations afloat while complying with new minimum wage requirements.

The new minimum wage -- approved when voters passed Proposition B in the Nov. 6 election -- will be phased in over five years.

The first phase took effect Jan. 1. It involved raising the state's minimum wage by 75 cents per hour to $8.60 -- up from the previous $7.85.

The law requires the minimum to keep rising by 85 cents in each of the next four years. That means the wage will jump to $9.45 in 2020, $10.30 in 2021, $11.15 in 2022 and $12 in 2023.

The new law will especially affect businesses that hire a lot of entry-level employees or seasonal workers, such as the YMCA of Hannibal.

"We have a very young workforce with many high school and college students. So the minimum wage increase will have a significant impact on most YMCAs," said Eric Abts, executive director of the YMCA of Hannibal.

This year alone, when the minimum wage rose from $7.85 to $8.60 per hour, the YMCA's budget was affected almost $20,000, Abts said.

The cumulative financial hit on the not-for-profit organization will get more profound over the next four years as the minimum wage gradually rises to $12.

Abts said the YMCA is already making plans to do some belt-tightening this year and next in response, but he's certain that bigger steps will have to be taken in the years after that.

"I don't even have my head wrapped around that $12 mark yet," he said.

"Long-term we're just going to have to make smart business decisions to accommodate for higher wages," he said. "We promise that we will continue to provide excellent service and great facilities and programs, but we're just going to have to be as smart as we can on every penny that we spend."

Abts believes some fee increases may be needed eventually.

"We never like to increase prices. We always use that as a last resort," he said. "But it is a possibility that membership fees and program fees may go up slightly based on the minimum wage increase."

McKenzie Disselhorst, executive director of the Hannibal Area Chamber of Commerce, has heard mixed reactions from local business owners about the new minimum wage law.

"Some say it won't have a very big impact" immediately, she said, because many local businesses were already paying their workers more than the required minimum.

"But as we move forward and it continues to go up incrementally, it's going to be more and more challenging" for businesses to handle the extra costs, she said.

The situation will become especially nettlesome for employers once the minimum hits the $12 mark, she said.

"Some of them are concerned about it," Disselhorst said. "A few have mentioned that they're going to have to increase their prices or their rates because of the minimum wage increase."

Whenever costs rise and revenue remains the same, Disselhorst said, employers have little choice but to increase their prices "or cut other things."

She said one problem facing many Hannibal-area businesses is a shortage of available entry-level workers, so employers often have to pay more than the minimum wage to attract enough qualified workers.

The new minimum wage does not apply to government employers. However, many governmental entities, such as the Hannibal Parks and Recreation Department, nonetheless offer competitive wages in order to attract enough qualified workers.

"So we're going to go along with the minimum wage like everybody else," said Andy Dorian, department director.

Dorian said the department hires quite a few high school and college students during the summer months, so the department must pay competitive wages or those hard-to-find seasonal workers will go elsewhere.

"It's a challenge already to find lifeguards," Dorian said. "And if you don't keep up with what everybody else is giving employees, there's no way on Earth that we would be able to find anybody to work for us."

Dorian said he's not sure how the department will keep its budget on an even keel once the minimum wage tops out at $12 an hour.

"It's going to make a major impact at the Aquatic Center and at our skate park," he said.

"At the pool it will be a serious issue" because the Aquatic Center is "already losing money" each year, he said.

"We're already talking about some things that we can do" to cut expenses, Dorian said. "But we really can't reduce the number of employees, because we've got a minimum amount of lifeguards that we need. And minimizing the hours at the pool is probably something we wouldn't want to do either."

Dorian said the department might consider some price increases in coming years to offset the rising wages.

"We haven't had a price increase at any of our facilities in many, many years, so that may be coming," he said. "How much it is, we don't know. But it's something we will work on as a Park Board over the next couple of years."

Jarrod Phillips, who operates Primo's Pizza in Canton when he's not busy serving as the city's mayor, said the minimum wage increase is a concern for many small-business owners who will be facing rising costs for wages.

"In most cases either the owner has to eat the cost they have to raise prices in proportion," Phillips said.

"We should be good here for the next six or eight months. Then we'll evaluate it and see how that impacts our bottom line."

Phillips said he may end up paying more than the minimum wage "because there's a shortage of help right now" in the Canton area.

"I'm not opposed to anybody making more money, but I certainly have to see how it impacts my bottom line. As a business owner, I'm not good to anybody when I'm out of business. I have to make sure that my bills are paid."

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