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Dark money casts a shadow over Missouri’s minimum wage debate

Dishonest businessman secretly giving money to his partner in the dark - bribery scam and venality concepts
Dishonest businessman secretly giving money to his partner in the dark - bribery scam and venality concepts Big Stock Photo

Why are special interests in Washington, D.C. spending millions of dollars on a minimum wage initiative in Missouri?

It’s a good question to ask “Raise Up Missouri,” a supposedly grassroots campaign to raise the state’s minimum wage that’s received nearly 90 percent of its funding from out of state groups. This national interest in Missouri state politics would be less offensive if the policy the campaign was pushing wasn’t so harmful.

Start with some history. The minimum wage debate in Missouri stretches back several years to Kansas City and a 2015 legislative duel between the City Council and the state legislature. The national labor union-backed Fight for $15 had targeted Kansas City to expand its campaign efforts from the coasts to the Midwest. The legislature wisely objected to local efforts to create new mandates, preferring one statewide standard.

A prolonged legal battle that eventually reached the state Supreme Court led to the legislature’s passage in May 2017 of a law that established one statewide wage standard. Labor groups had already moved on to Plan B: In December 2016, the labor group Missouri Jobs for Justice submitted 12 different potential ballot proposals to the secretary of state. This was no carefully considered economic decision; rather, the organizers submitted proposals for minimum wage increases to $11, $12, $13, $14 and even $15 — presumably, to see which one polled best. (They settled on $12 — a 53 percent increase over the current wage level.)

The campaign’s true goal, which has subsequently been stated clearly by state party operatives, was to have the wage issue on the ballot in conjunction with a hotly-contested U.S. Senate race. Enter “Raise Up Missouri”: Of the $6,516,362 “Raise Up Missouri” received in named contributions, $5,761,354 has come from outside the state, with most coming from D.C.- and New York-based groups. The largest contributor to the committee is a D.C.-based 501(c)(4) organization called the Sixteen Thirty Fund. According to reports from the Missouri Ethics Commission, the fund has given more than $4.6 million to “Raise Up Missouri,” including a $3 million check in August.

It is difficult to pin down how the fund finances its operations. The Washington Free Beacon reported last year that multiple labor unions gave more than $860,000 to the fund from 2015 to 2016. (Labor unions are required by federal law to disclose who they give contributions to.) According to data from the Department of Labor, this figure rose to $2,235,000 in 2017. We won’t know the extent of labor’s 2018 support for the fund until after the election.

What’s the economic cost of this minimum wage scheme? A study released by the Missouri-based Show-Me Institute found that the minimum wage mandate would cost 11,000 employees their jobs, disproportionately affecting “the young, the less educated and female workers.” Furthermore, the policy would not accomplish its stated goal of reducing poverty; only one in five affected workers are in families with incomes below the poverty line, and just 10 percent are single parents. The average family income of an affected employee is more than $62,000 per year.

Organizers have tried to downplay the consequences of $12 minimum wage by pointing to business owners who support the policy. The list, collected by a group calling itself Business for a Fair Minimum Wage, is misleading; many of the signers employ few, if any, employees who would be affected by the policy change. Signers include lawyers, self-employed consultants, fashion designers, tax preparation services, a green lifestyle magazine and even a cat clinic. This group has previously offered business surrogates in support of a $15 minimum wage in California. But earlier this year, one of its lead spokespeople from Wetzel’s Pretzels recanted his support for $15, arguing that the policy is now “bad for employees.”

If the $12 ballot measure is indeed bad for employees, and few in-state interests are willing to finance it, it raises an important question: Why would anyone vote for it this fall?

Michael Saltsman is the managing director of the Employment Policies Institute, a 501(c)(3) nonprofit research organization dedicated to studying public policy issues surrounding employment growth.