ST. LOUIS POST-DISPATCH -- A young St. Louis mother who hand-painted barrettes to tame her daughter's unruly locks, turned the hair accessories into a $6 million dollar business (WeeOnes.com) that sold 2 million hairbows in 2007 and employed 250 workers in Missouri. It's a success story that could only happen in America, right?
MP: Yes, it's a perfect example of starting a business from nothing, and "living the American Dream," except that in October, the company told workers they were closing the plant in Missouri and contracting the work out to a factory in Mexico. One of the main reasons?
High and rising labor costs, primarily from the 37% increase in Missouri's minimum wage from $5.15 per hour in 2006 to $7.05 starting January 1, 2009 (see chart above), which contributed significantly to losses for the company over the last few years. The market for their products is so competitive that the company couldn't increase the price of the bows to offset the higher labor costs without losing sales, so the company was forced to move production to Mexico, and now more than 200 Missouri jobs have evaporated - largely thanks to the minimum wage.
Bottom Line: The workers of Missouri need jobs in today's tough economy more than they need the "compassion" of their state legislators. Unfortunately, for purely political reasons (not economic reasons), Missouri's elected officials have priced some of its unskilled workers right out of the labor market into the unemployment line, and helped ship jobs to Mexico, all because of their "compassionate" annual increases in the minimum wage (now mandated in Missouri).
Question: Which option is better for the Wee Ones workers: Continued employment at $5.15 per hour, or being now unemployed at $0.00 per hour? I bet if they had a choice, they'd take the first option. Unfortunately, that would be illegal.
HT: Kevin Murphy
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