Missouri’s minimum wage just rose to $12 an hour. Future pay will change with inflation

Sunday didn’t just ring in the new year: It also marked an increase of Missouri’s minimum wage to $12 an hour, up from $11.15 last year. Kansas’ minimum wage has stayed at the federal level of $7.25 per hour.

Missouri’s increase marks the final step of a multi-year plan to raise the state’s minimum wage that began when voters approved it in 2018. Moving forward, the minimum wage will increase and decrease at the same rate as inflation. Here’s what to know about the new minimum wage law.

Who does the new minimum wage apply to?

The $12 per hour minimum wage requirement applies to private businesses that make an annual gross income of more than $500,000.

This means that public employees who work for city, state or municipal governments can still be paid under $12 an hour. Employees of small private companies that bring in income of under $500,000 are also exempt.

Tipped employees are required to make $12 an hour when tips are included. Their employers must pay them at least half of this amount, or $6 an hour. If tips don’t make up the difference, employers must provide extra wages to total $12 an hour.

Missouri state law defines a “tipped employee” as “any employee who regularly and customarily receives and retains compensation in the form of gratuities in addition to wages.”

“As a family business, we’re glad to see Missouri’s minimum wage going up for the new year,” said Andy Faucett, owner of Bambinos restaurant in Springfield, Missouri. “It’s an investment in Missouri communities. Raising wages has proven good for business time and again.”

According to MIT’s Living Wage Calculator, the minimum wage to cover a childless adult’s basic living expenses in Kansas City is $16.75 per hour. The minimum wage to support a family of four with one working adult, one nonworking adult and two children is $37.74 per hour.

My wages are below $12 — what should I do?

First, check to see whether your job is exempt from the new minimum wage based on the criteria above. If you work for the government, a small employer or receive tips as part of your job, you might not be eligible for the new minimum.

If you aren’t sure, you can contact the Division of Labor Standards at 573-751-3403 or email your concern to minimumwage@labor.mo.gov.

If you think you do qualify but aren’t being paid properly, you can file a minimum wage complaint with the Missouri Department of Labor. If they find your employer has been underpaying you, they can work to get you back pay.

Will the minimum wage rise again next year?

Not necessarily: It all depends on inflation. Moving forward, Missouri’s minimum wage will be indexed to match the changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) — a common metric for determining inflation to the cost of living.

If consumer goods and services get more expensive, as they have in past years, the minimum wage will go up to match. If they get cheaper, the minimum wage will go down. According to the text of the 2018 proposition, “the minimum wage established by this subsection shall be increased or decreased on January 1, 2024, and on January 1 of successive years” based on changes to the CPI-W.

Every September 30, this adjustment will be determined based on how much the CPI-W changed between that July and the previous year’s July. The percentage of this change, which many use as a measure of inflation, will then be directly applied to the current minimum wage and rounded to the nearest five cents.

For example, if the CPI-W rises by 3% between July 2022 and July 2023, the 2024 minimum wage will also go up by 3% to $12.36 per hour. We won’t know for sure until the end of September what next year’s minimum wage will be.

Do you have more questions about the cost of living in Kansas City? Ask the Service Journalism team at kcq@kcstar.com.