St. Louis' minimum wage has dropped after Missouri's governor said increasing it to $10 would take 'money out of people's pockets'

Jeff Haynes/Reuters

St. Louis' minimum wage has reverted to $7.70 after a brief increase to $10, due to opposition from Missouri Gov. Eric Greitens.

In July, Greitens announced that the increase would kill jobs.

"Despite what you hear from liberals, it will take money out of people's pockets." he said, according to the St. Louis Post-Dispatch.

St. Louis passed an ordinance in 2015 that mandated the city's minimum wage would increase to $10 by 2017. A court battle between Missouri's state legislature and the city of St. Louis ensued, but the city's minimum wage did go up to $10 in May 2017.

That wage was slated to increase to $11 an hour in January 2018. But a recent bill in the Missouri legislature gave Greitens the ability to prohibit cities from creating a different minimum wage than the one used in the rest of the state.

The new law went into effect on Monday, which means roughly 35,000 people are seeing their wages fall.

The reversal comes as many states are looking to increase their minimum wages. Last March, California Gov. Jerry Brown agreed to raise the state's minimum wage to $15 an hour by 2022. Many US cities have plans to hit the same rate even earlier.

Greitens's claim that raising the minimum wage would "kill jobs" is not supported by economic research. The National Employment Law Project released an exhaustive report in 2016 looking at every federal minimum wage hike since 1938. The investigators found that year-over-year employment increased 68% of the time after each wage hike. What's more, the industries most affected by minimum wage more often saw jumps in employment: 73% of the time in retail, and 82% in leisure and hospitality.

"These basic economic indicators show no correlation between federal minimum-wage increases and lower employment levels," the authors wrote. The only times when minimum wage increases correlated to a decline in employment were during or near recessions. In most other cases, there was a neutral or positive relationship.

When it was first created in 1938, the US federal minimum wage was 25 cents. As a percentage of GDP per capita, that would equate to a wage of about $20 an hour today.

Some local business owners in St. Louis welcomed the wage cutback, but other St. Louis residents lamented the loss of that extra cash each month.

"If we're making $10 an hour, we're going to go right back out and spend that money," Wanda Roberts, a St. Louis minimum-wage work, told CBS News. With the reversal, she said she'd "go back to struggling."

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