Government & Politics

No consensus emerging in KC minimum wage fight

About 40 supporters, including fast-food workers and local faith leaders, gathered earlier this summer at City Hall to push for a higher minimum wage.
About 40 supporters, including fast-food workers and local faith leaders, gathered earlier this summer at City Hall to push for a higher minimum wage. rsugg@kcstar.com

Six weeks ago, the Kansas City Council put off a decision on a minimum wage increase in hopes of finding middle ground between $15-per-hour advocates and business groups adamantly opposed to that idea.

Now, as the council’s self-imposed July 16 deadline for a vote looms, a solution remains elusive.

“The two sides just talk past each other,” Mayor Sly James told his council colleagues, describing weekly roundtable discussions between supporters and foes of an increase above the current $7.65-per-hour rate. “Although I think it’s been beneficial to have the two sides talking, it hasn’t produced any agreement of anything.”

Council members still pledge that by July 16, they will try to adopt some type of minimum wage increase in response to a certified petition initiative. That grass-roots initiative called for a public vote to boost the rate to $10 per hour by Sept. 1 and to $15 per hour by 2020.

“We’re the ones in the middle,” James said, with no clear answer in sight.

Restaurant, hotel and other business groups went ballistic over the initiative petition in May, so James and the council bought time until July 16 to gather more information and to try to find a compromise.

Advocates for low-wage workers say they are looking to the city to set the standard for a higher minimum wage in Missouri.

“Kansas City is a progressive leader in the Midwest,” said Lindsey Walker with the Service Employees International Union in Kansas City. “We should step up and continue to be a leader.”

Business interests see peril in a higher minimum wage rule.

“The marketplace” — not the city — “should dictate minimum wage,” countered Bud Nicol, executive director of the Hotel and Lodging Association of Greater Kansas City.

James and some council members said last week they still hope to find a “sweet spot” for an increase, although many doubted it would be $15 or $13 per hour, even phased in gradually by 2020.

Any decision is fraught with uncertainty. Despite weeks of study and discussion, no one has come up with reliable data on what impact an increased minimum wage would have in Kansas City job gains or losses, or businesses choosing to move.

Business groups vow a lawsuit if any increase occurs, arguing the state prohibits cities from adopting their own minimum wage. Conversely, the petitioners say they will still push for a public vote in the November election if they don’t get their $15-per-hour outcome.

“It’s going to be real tricky and there’s going to be a backlash regardless,” James conceded.

The Kansas City Council also finds itself alone in the state in wrestling with this issue.

St. Louis appeared poised to act earlier this summer.

In early June, St. Louis Mayor Francis Slay expressed preliminary support for an increase to $15 by 2020. But by the end of June, Alderman Joe Vaccaro had canceled any further hearings, saying it was wrong to rush such a controversial measure, according to the St. Louis Business Journal.

The rush is due in part to state legislation, yet to be signed into law, that some think would let cities adopt a minimum wage above the $7.65 state level if they act before Aug. 28.

James said Kansas City might have been able to punt like St. Louis if it weren’t for the petition initiative to trigger a Kansas City election. So he feels obligated to get an increase in response to that populist crusade. And he said he personally believes $7.65 per hour is too low.

Monday meetings

Since June 1, the city has held roundtable discussions every Monday afternoon in the basement of the Kansas City Health Department building. On one side of the table sit representatives of the restaurant, hotel, and grocery associations. On the other are representatives of worker and civil rights groups, including Stand Up KC, Jobs with Justice, the Southern Christian Leadership Conference and the Service Employees International Union.

The two sides have sparred over such things as whether franchisees should be considered small businesses even if they are backed by large corporations such as McDonald’s. Under one proposal, the mandated minimum wage would rise more slowly for small businesses.

But at the core, the factions are philosophically miles apart.

Worker advocates want a minimum wage that would allow low-skilled but diligent workers to make enough to support themselves and their families. They cite examples of two-parent couples working full time and still unable to support three kids, facing eviction and homelessness.

“These workers aren’t asking to be rich. Fifteen dollars an hour by 2020 does not make it so you are rich. It means you get closer to the living wage,” said Gina Chiala, a representative of Stand Up KC, which has organized numerous rallies on behalf of low-wage workers.

But the hotel association’s Nicol retorted that it’s not the role of business to ensure a living wage.

“Minimum wage can’t solve all society’s ills,” Nicol said. He noted that McDonald’s, Wal-Mart and other large corporations are already boosting some wages as the economy improves, so that shows the market is responding.

Nicol said that if Kansas City alone mandates a new minimum wage, it will drive away jobs and businesses. He said he knows of one hotel developer who has halted plans for a hotel near the airport.

“He said, ‘I’m not going to invest $20 million and create 35 new jobs if I can’t afford to stay open.’ So that’s on hold until this gets resolved,” Nicol said, declining to identify the developer.

Vic Allred, a Kansas City restaurateur and chairman of the Missouri Restaurant Association, questions why some of Stand Up KCs workers still struggle after years in fast food jobs. He said they should seek out better training and chances for advancement.

“In our industry,” he said, “it’s very easy for upward mobility if you’re willing to work hard.”

Differing data

The two sides have very different interpretations of analyses on who earns the minimum wage. Allred said the average minimum wage earner nationally lives in a household making over $40,000 and is a student or not the primary breadwinner.

But Stand Up KC cites federal Bureau of Labor statistics showing that 267,000 Missourians, about 10 percent of the workforce, were paid less than $8.50 per hour in 2014. In Missouri, seven out of 10 minimum wage workers were 20 or older, and six of 10 were heads of households. Low-wage service jobs were the fastest-growing job sectors, disproportionately held by women and African-Americans.

While a $15 minimum wage goal has grabbed headlines because of new laws in places such as Seattle and San Francisco, those cities are phasing in the raises. In Seattle, for example, it doesn’t kick in until 2018 for large businesses and 2021 for small businesses.

Observers have noted that as Kansas City contemplates $15 per hour, it has a very different cost of living than the West Coast.

At the June 29 roundtable, moderator Scott Helm of the University of Missouri-Kansas City Bloch School of Management shared a CNN analysis showing that $15 per hour in Seattle equates to $11.83 per hour in Kansas City. The same $15 per hour wage in San Francisco would equate to just $8.97 per hour in Kansas City.

A $15-per-hour wage in Kansas City would also represent a 96 percent increase from $7.65. In Seattle the bump would be less dramatic, from the current rate of $11 per hour and in San Francisco from the current rate of $12.25 per hour.

Councilman Scott Wagner said he is still trying to identify a reasonable wage that will give relief to struggling workers without negative consequences for low-profit-margin businesses.

“It comes down to trying to absorb those sorts of labor increases in a way that would allow them to survive,” he said.

Both Wagner and James suggested the real debate may focus on something in the $9 to $11 per hour range.

But Councilman Jermaine Reed, who introduced an ordinance based on the petition initiative, still hopes the council will act on a gradual increase to $15.

If the council doesn’t act sufficiently, the petitioners will insist that their $15 per hour proposal go to Kansas City voters, said Vernon Howard, a spokesman for the petitioners.

“We are poised to go to the ballot in November if what is presented is not something that we feel is just and will add progress for poor working people,” Howard said.

Councilman Ed Ford predicted the council will act, but he suggested it will result in litigation and that a court may well conclude that Missouri cities do not have the power to set their own minimum wages. Or the legislature may further undercut any city action next session.

That leaves the chance of a statewide initiative, which business says would be a better approach, for uniformity across the state. It could also be easier to defeat in the more conservatively oriented state population.

No matter what, Ford said, Kansas City can be a “catalyst,” for more legal clarity and more statewide action.

“Whatever we do,” he said, “there will be ramifications.”

To reach Lynn Horsley, call 816-226-2058 or send email to lhorsley@kcstar.com.

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