Missouri’s $15 Minimum Wage Is Here — What St. Louis Small Business Owners Need to Do Right Now
Published by William Buscher, CPA | July 2026
If you employ hourly workers in Missouri, your payroll costs changed on January 1, 2026 — and if you haven’t modeled what that means for your bottom line yet, now is the time.
Missouri’s minimum wage increased to $15.00 per hour on January 1, 2026, up from $13.75 in 2025. That’s a 9.1% jump in your minimum labor cost, approved by Missouri voters through Proposition A in November 2024 and signed into law under HB 567 by Governor Mike Kehoe in July 2025.
Here’s what every small business owner in the St. Louis area needs to understand.
Who It Applies To
The $15.00 rate applies to most private employers in Missouri. There is one notable exemption: retail or service businesses with annual gross revenue under $500,000 are not required to pay the state minimum wage — but they are still subject to the federal minimum wage of $7.25 per hour. If your business crosses state lines in any way, federal law applies regardless of your revenue.
Tipped employees are a separate category. Employers must pay tipped workers at least $7.50 per hour (50% of the minimum wage), with the expectation that tips bring total compensation to at least $15.00 per hour. If tips fall short, you’re required to make up the difference.
One thing to note: HB 567 also eliminated the automatic annual inflation adjustments that were originally built into Proposition A and set to begin in 2027. The $15.00 rate is now fixed — no automatic increases beyond that without new legislation.
The Wage Compression Problem Nobody Is Talking About
The $15.00 floor is getting attention. What’s getting less attention is what it does to your existing pay structure.
When your entry-level rate jumps, employees who were already earning $15, $16, or $17 per hour suddenly feel underpaid relative to new hires. This is called wage compression, and it’s one of the most disruptive side effects of a minimum wage increase for small businesses.
To retain experienced employees, many businesses find themselves raising wages across the board — not just at the bottom. That multiplier effect can turn a payroll increase that looks manageable on paper into something significantly more expensive in practice.
Before you assume you know the impact, model it out. Map every employee’s current wage against the new floor and look at the full ladder, not just the bottom rung.
Four Practical Steps to Take Right Now
1. Update your payroll immediately if you haven’t already. If you’re running any hourly employees at or below $13.75, you are now out of compliance. Update rates in your payroll system and post the updated Missouri Minimum Wage Summary Poster — this is a legal requirement. The Missouri Department of Labor has English and Spanish versions available for download at labor.mo.gov.
2. Model the full labor cost impact — including compression. Pull your full payroll roster and map every hourly employee’s current wage. Calculate the direct cost increase for anyone under $15.00, then look at employees above that threshold and honestly assess whether you’ll need to adjust those rates to maintain retention and morale.
3. Revisit your pricing. Labor is typically the largest operating expense for service businesses. A 9% jump in minimum wages may justify a pricing review — particularly for businesses like restaurants, contractors, and personal services where labor is a direct component of service delivery. Many business owners absorb wage increases rather than adjusting prices. Some absorption is strategic; habitual absorption erodes margin.
4. Review your entity structure and tax strategy. Higher payroll costs change your breakeven point and may affect the economics of your business structure. If you’re operating as a sole proprietor or single-member LLC and have been putting off evaluating an S-Corp election, a payroll cost increase is a good trigger to revisit that conversation. There may also be deductions and tax planning strategies worth reviewing in light of your new cost structure.
A Note on What Comes Next
The wage increase is here and it’s real. The businesses that manage it well won’t be the ones that simply comply — they’ll be the ones that use it as a trigger to look more carefully at their labor efficiency, pricing strategy, and cost structure across the board.
If you’d like to model the specific impact on your business or talk through your tax and entity structure in light of these changes, I’m happy to schedule a free 30-minute call.
William Buscher is a CPA and licensed Missouri Realtor serving small business owners and real estate investors through Amplifi Accounting, LLC, based in St. Louis County, Missouri.
Leave a Reply