, training and boarding business into a converted garage.
(Photo- Heather Overstreet, owner of Top Dog Training in Boonville, explains the impact of a higher minimum wage on her small business. Her business includes a 10,000 square foot outdoor area to exercise dogs.- Rudi Keller/Missouri Independent)It was a milestone for a business she started at age 16 by training dogs for friends of her mother. She innovated on the furnishings, refurbishing a bathtub left behind by the previous owner to use for dog washing. She built indoor kennels with room for 12 dogs and fenced 10,000 square feet outdoors to exercise dogs in daycare and overnight boarding.
But future expansion is on hold, Overstreet said, until she understands the impact of voter-approved
Proposition A, which increases the state minimum wage, on her payroll and customers.
“It not only throws off my math, but it just is an entirely new challenge,” Overstreet said.
Under the provisions of Proposition A, Missouri’s minimum wage rose to $13.75 an hour on Jan. 1, up from $12.30 an hour. It will increase again to $15 an hour on Jan. 1, 2026, with future adjustments tied to inflation.
Along with increasing the minimum wage, Proposition A requires some employers to provide paid sick and family leave starting May 1. Businesses with revenue of $500,000 or more must provide one hour for every 30 hours worked, up to five days per year for businesses with fewer than 15 employees and seven days per year for larger businesses.
Overstreet, who is also a member of the City Council in Boonville, with a population of about 8,000, admits she didn’t pay close attention to the details of Proposition A. She expected a more modest increase and had hoped to hold prices steady in 2025. Instead, she will notify customers of a rate hike, she said.
She needs three employees to cover the hours she is open.
Overstreet hires young people, often for their first job, to care for boarded dogs, and starts them at minimum wage. Over the course of a year, the increase will add $3,247 to employer payroll costs for every full-time minimum wage employee — $3,016 for additional wages and $231 for additional Social Security and Medicare taxes
“With minimum wage rising, that’s at least one extra dog that I need per day, which I guess you could say, is no big deal,” Ovestreet said. “But this is a small town, and I’ve only had that shop for two years.”
Proposition A, placed on the ballot via initiative petition,
passed in November with 58% of the vote with support from unions, workers’ advocacy groups, social justice and civil rights organizations, and a coalition of more than 500 business owners.
There was no large-scale opposition campaign prior to the election. But a court challenge filed in early December by
major business advocacy groups asks the Missouri Supreme Court to invalidate the vote. And legislation filed in advance of this year’s session seeks to exempt 96% of private employers from the higher minimum wage.
Randy Vines, co-owner of a St. Louis business that also began as a home-based operation and a backer of Proposition A, said he’s sympathetic to Overstreet’s dilemma but argues that more money in the hands of workers helps the economy.
Other costs can squeeze profits as well, said Vines, who founded STL-Style, which makes merchandise themed to St. Louis for retail and wholesale markets, with his brother..
If the price of T-shirts goes up, for example, that has to be part of his pricing, he said.
“We’re kind of at the mercy of what the markets are doing and what the industry is doing in general,” Vines said. “So when costs go up for manufacturers, we have to, you know, pass that on.”
Minimum wage history
For most of the time since a federal minimum wage of 25 cents an hour was
established in 1938, there was no Missouri law mandating a separate state rate. In 1990, lawmakers extended the minimum wage to all businesses, including those exempt under federal law.
The first ballot measure setting the Missouri rate above the federal requirement passed in 2006. It boosted the state wage
to $6.50 an hour and required future adjustments based on inflation. The federal rate at the time was $5.15 an hour and had not been changed since 1997.
In 2018, when adjustments had increased Missouri’s wage to $7.85 an hour, voters
passed a proposal boosting the rate in yearly increments until it reached $12 an hour at the start of 2023.
An inflation adjustment set it at $12.30 an hour for 2024. If Proposition A had failed, the inflation-adjusted wage for 2025 would have been $12.65 an hour, the Department of Labor and Industrial Relations stated in a news release.
The current federal minimum wage is $7.25 an hour, a rate that has been unchanged since 2009. The highest inflation-adjusted minimum wage was the Feb. 1, 1968, increase to $1.60 an hour, which is
equal to $14.76 an hour.
Prior to November, opponents argued that increasing the minimum wage would
cause inflation, job losses and slow the state’s economy. Supporters point to research that calls those
assumptions into question, noting that the state’s unemployment rate has fallen faster since the start of 2019 than adjoining states that did not boost their minimum wage.
“Working families are the drivers of the economy,” Caitlyn Adams, executive director of Missouri Jobs with Justice Voter Action, said in a news release issued Dec. 30. “We are proud to take another step forward in building an economy that works for all.”
As he is leaving office, Gov. Mike Parson made job gains and low unemployment the top two bullet points in a news release listing the accomplishments of his administration, which began in June 2018.
Missouri added nearly 190,000 new jobs, saw more than $17 billion in new business investment and enjoyed unemployment that was as low as 2.1%, the lowest ever recorded, the release stated.
The impact of the increase will be significant for the economy,
proponents estimated in filings used by State Auditor Scott Fitzpatrick to write the fiscal summary of the proposal. Based on 2022 data, backers said 330,000 Missourians making minimum wage will get a pay raise, and almost 200,000 earning more than the minimum would likely receive raises because their pay is tied to the minimum. Wage costs in 2026 will be about $850 million more than 2022.
Rollback efforts
Business groups opposed to Proposition A didn’t mount a campaign to defeat it at the polls. Instead, they are asking the Missouri Supreme Court to declare the election invalid, alleging the ballot language was misleading and incomplete.
And instead of ordering a second vote, the challenge seeks to have the initiative proposal tossed completely for combining the minimum wage increase with the requirement for businesses to provide paid sick and family time.
The court refused to hear the case before the increase took effect. Instead, the court
appointed Cole County Circuit Judge Josh Devine as a commissioner to take evidence in the election challenge and report his findings by Feb. 10.
That could make it possible for the court to rule by the time the sick and family leave provision takes effect May 1.
By that time, there should be clear signals from lawmakers on whether they intend to step in.
A bill filed by State Rep.-elect Jeff Vernetti, a Republican from Camdenton, would exempt businesses employing almost half of all Missouri workers from the higher minimum wage.
The bill would exempt seasonal businesses or those
employing 50 or fewer workers. The bill would freeze the minimum wage for those businesses at $12.30 an hour.
Vernetti represents the tourist regions around the Lake of the Ozarks, where he owns a small Italian grocery and is a partner in a baseball/softball complex that hosts tournaments and other events.
Under his bill, the grocery would qualify for an exemption as a small business and the ballpark business would be exempt as a seasonal operation.
“I want to pay employees the most that they can possibly make,” Vernetti said. “I just think the market should dictate it.”
According to the
Bureau of Labor Statistics, Missouri had 231,753 private businesses in the first quarter of 2024. Of that number, 96% had fewer than 50 workers, employing 46% of the private workforce.
The state minimum wage law does not apply to government jobs. But it would have no effect on state government if it did — in 2022, lawmakers
agreed to set $15 an hour as the base wage for all state government jobs.
As a freshman, Vernetti said he knows he will have difficulty getting action on his bill. But he said he’s encouraged by the reaction from other new lawmakers he met on the freshman tour and hopes to get a committee seat that will allow him to push for it.
Proposition A passed overwhelmingly in high-population counties and failed in 79 of 94 counties where fewer than 25,000 votes were cast. That highlights the cultural and economic differences between urban and rural areas, Vernetti said.
“You couldn’t get a person in, say, St Louis city, to look for a job that’s even close to the minimum wage,” Vernetti said. “But in a lot of rural Missouri, those are important jobs. If it continues to increase, businesses are going to have no choice but to cut lower paying jobs altogether.”
A bill with a smaller impact, filed by State Rep.-elect Carolyn Caton, a Republican from Blue Springs, would rollback the minimum for
workers younger than 20. The minimum for those workers would be $12.30 per hour.
No bills changing the provisions of Proposition A have been filed in the state Senate.
Attempting to rollback the increase is short-sighted, Vines said. His business pays above minimum wage and has low job turnover even though most workers are part-time employees.
“If you’re at the point where you either have to pay everyone minimum wage and survive barely, or go under paying a little more than minimum wage, your business probably isn’t on stable footing anyway,” he said.
Overstreet, however, said she’s worried that customers will look for other options if she raises prices.
“Dogs are a luxury. They’re not a necessity,” Overstreet said. “I’ve had people leave already because they think I’m expensive.”
Boarding a dog overnight with Overstreet at Top Dog Training costs $40. Daycare costs $30. In much larger Columbia, about 25 miles east of Boonville, overnight boarding can be found starting at $55 and doggy daycare starts at about $40 per day.
“It’s good for them, the people receiving the minimum wage increase,” she said. “But like everything else you do, the rest of us are going to have to raise our prices on services or goods, essential or non-essential, luxury or not.”
