WAGE WARS: MISSOURI PROPOSAL HIGHEST IN NATION

Approval of a proposed Missouri minimum wage bill could hurt the people the measure is meant to help, according to opponents.

"It would cost jobs in the state, create a surge in welfare rolls, and hurt young and low-skilled workers," said Mark Rhoads of Save Our State's JOBS, a group established recently to counter the effort to pass the measure.

The proposal which will appear on the November ballot will initially raise the state's minimum wage to $6.25 an hour -- highest in the nation.

If adopted by voters, the Missouri measure will take precedence over the federal increase which has already been approved by Congress, said Rhoads.

The federal bill, which calls for a 90-cent a hour increase over 13 months, is awaiting the president's signature.

Missouri's healthy business climate will be placed at risk under the state proposal say Rhoads and other officials.

The upside of the proposal is the prospects of bigger paychecks for more than 300,000 Missourians, including more than 1,000 in Cape Girardeau County. The downside is that such a measure could force many small businesses to close, reducing overall employment.

One researcher, Dr. David Neumark of Michigan State University reports that increases in minimum wages raise the probability that more-skilled teenagers may leave school and displace lower-skilled workers from their jobs.

This is natural, said Rhoads. "If a company has to pay more, it will turn to the more skilled worker."

For some small business, the additional labor cost could be a determining factor in closing, or moving to another state..

The proposed initial increase of $2 an hour in January will cost an employer with just 10 full-time employees more than $40,000 a year.

John Doyle, director of pubic affairs with Washington, D.C.,-based Employment Policies Institute explains the worst scenario.

"Many small business can't raise that kind of money raising prices," said Doyle

The average profit for a small business with 10 employees is less than $40,000 a year, said Doyle.

A number of state and local officials and business peoples have expressed concern about the proposal, which is being pushed by the Missouri Association for Community Organization for Reform Now, or ACORN.

"It would be a detriment to business," said John Mehner, president of the Cape Girardeau Chamber of Commerce. "Our chamber board took a position against it early on."

Few workers make minimum wage in Cape Girardeau County, where the unemployment rate hovers between 3.5 and 4 percent.

One restaurant owner said he was paying his kitchen help $6.80 an hour. Help wanted signs, especially at fast-food facilities, advertise for help with wages ranging from $5 to $6.

One fast-food business -- Sonic Drive-In -- does start some employees at minimum wage, but raises come quickly.

"The new federal increase is in two cycles, of 50 and 40 cents, said Richard Davidson, general manager of Sonic in Cape Girardeau. "That's not too bad."

Davidson indicated that if the Missouri increase passes, some costs will have to be passed on to the customer.

"It will be a trickle down effect," he said. "My vendors will also have to adjust their rates."