Inflation's effect on minimum wage is significant

The state announced Friday the first inflation adjustment under the Missouri minimum wage law approved by voters last year, calculating a 2.2 percent increase to $6.65 an hour beginning Jan. 1.

The increase is sure to re-ignite the effort, pushed by the Missouri Chamber of Commerce and Industry, to repeal the indexing provision of the law. Regardless of whether that is successful in the short term, the real pinch from the indexing will hit in 2009 and 2010.

On Jan. 1, 2009, the second automatic increase will take effect. If it mirrors this year's rate, the wage would go to $6.80 an hour. On July 24, 2009, a federal minimum wage increase takes effect that would raise the rate to $7.25 an hour. And another state-mandated inflation increase, applicable to the $7.25 rate, would take effect Jan. 1, 2010.

All this indexing raised a question in my mind: Is the minimum wage, adjusted for inflation, higher or lower than historic rates? The answer is both.

It all depends on how you view it. If you look at minimum wage from when I first took a job -- I wore a fake straw hat, bused tables and washed dishes in 1977 at a Farrell's Ice Cream Parlor in Louisville, Ky. -- then it has not.

The minimum wage at that time was $2.30 an hour. My first wage is worth $8.40 an hour in today's dollars.

I found a history of the minimum wage on the U.S. Department of Labor's Web site at www.dol.gov/esa/minwage/chart.htm. I found an inflation calculator at the Web site of the Bureau of Labor Statistics at data.bls.gov/cgi-bin/cpicalc.pl.

And I didn't stop with myself. I found, for example, that the first minimum wage -- 25 cents an hour in 1938 -- is worth $3.69 an hour today. The largest inflation-adjusted minimum wage was enacted in 1968. The $1.60 minimum mandated at that time is worth $9.56 in today's dollars.

From 1950 to 2002, the inflation-adjusted minimum wage was more than $6 an hour. From 1956 to 1983, the inflation-adjusted minimum was $7 or more.

So yes, our current minimum wage is, after adjusting for inflation, lower than it has been for a portion of the time of the minimum wage's existence. But it is above where it has been for most of its 69-year history.

• Employment down: The state also released monthly local employment statistics last week, and regional figures show a decline in the total number of jobs to the lowest level of the year.

The Department of Economic Development's Missouri Economic Research and Information Center reported that 64,317 people had jobs in the census-defined statistical area that includes Cape Girardeau, Scott and Bollinger counties in Missouri and Alexander County, Ill. In January, the number of working people was 66,148.

The unemployment rate for the region was 5.1 percent, up from a year-to-date low of 4.1 percent in April, when 66,212 people were working and 2,814 people were unemployed. The number of people unemployed in the region stood at 3,464 in August.

Looking closer to home, unemployment in Cape Girardeau hit 5.4 percent in August, with 18,170 people working and 1,036 unemployed. Remember, unemployment figures only include people looking for work; those who are retired and not working as well as stay-at-home mothers (or fathers) or unemployed and not looking for whatever reason do not get counted.

The statewide unemployment rate in August was 5.2 percent; the national unemployment rate was 4.6 percent.

• Deal falls through: A deal that would have transferred about three acres of open land near Center Junction to a St. Louis developer fell through, David Donley of Commercial Real Estate Specialists of Cape Girardeau told me Sunday.

The property, adjacent to the Ashley Furniture Home Store on East Jackson Boulevard, was under contract but the prospective buyers couldn't find tenants, Donley said. The prospective purchase contract expired Friday, he said.

"We got tired of waiting on them," Donley said.

Property totaling about 4.5 acres was divided into three lots, and the "back lot" furthest from Jackson Boulevard is sold, to what Donley described as "a local guy and a guy from Chicago who were going to build a hotel but that is now on hold."

The other two lots -- a "middle" lot of 1.45 acres and a "front" lot of 1.3 acres were the two under contract and they will now be aggressively marketed, Donley said.

"We are back at it full time to find new users," he said.

The property is near the new Comfort Suites hotel, which is now under construction.

• ARI Jackson Manufacturing moving to expand: An expansion at the metal fabrication plant operated by American Railcar Inc. under the name ARI Jackson Manufacturing appears to be a go.

The company filed for a Jackson building permit to put in the concrete foundation for an expansion that will add 20 to 22 jobs. Plant manager Brian Blankenship said the company is still waiting for state approval of a block grant application by the city of Jackson for infrastructure support for the expansion before making a final commitment to the project.

"You can say we have the intent to pursue an expansion project on Highway PP," he said.

The grant approval is expected "any day," Blankenship said.

The Jackson Board of Aldermen approved an application for a $420,000 block grant in April. ARI-Jackson Manufacturing produces more than 5,000 different items at the 120,000 square foot facility that first opened in 1985.

• New business owner: Brandi Hamm, a long-time employee of the Broadway Prescription Shop at 710 Broadway, bought the 75-year-old business from Harry George in July. She's not a pharmacist, but she holds a bachelor's degree in integrated marketing communication from Southeast Missouri State University and her final project to obtain her MBA is in the hands of faculty.

A graduate of Kelly High School, Hamm, 27, worked at the shop for eight years. "I have some ideas" for a few changes, she said. "We want to bring medicine therapy management to the front in our store, taking patient's medical records, examining them and offering therapeutic changes, in conjunction with the doctors, to maximize care."

Hamm's biggest concern for her small drugstore, she said, is continuing to find qualified pharmacists and dealing with cuts in reimbursement rates from insurance companies and government agencies.

• Real estate deals: Crouch, Farley & Heuring is relocating its accounting firm from Scott City to Cape Girardeau, to new offices at Highway 74 and South Silver Springs Road. And the Atchinson Mini Storage property at 2820 E. Jackson Boulevard was sold to R. Hetzel Properties LLC owned by Rick Hetzel.

Tom Kelsey of Lorimont Place Ltd. sent me notices of the deals last week. The accounting firm's quarters are 1,500 square feet; the firm has offices in DeSoto and Farmington, Mo.

The Jackson property includes two commercial buildings, one which housed a beauty shop and warehouse building as well as 56 units of storage. The sellers, Walter and Florence Atchinson, who operated both the salon and storage businesses, are retiring.

Rudi Keller is the business editor for the Southeast Missourian. Contact him at 335-6611, extension 126