On the first day of the 2016 Legislative Session an initiative to raise the statewide minimum wage was filed. The next day, Governor Inslee endorsed the initiative in his State of the State address.

The momentum leading up to the debate over a statewide minimum wage has been building. Since 2013 Seattle, SeaTac and Tacoma approved higher minimum wages, giving Washington four separate minimum wage laws. As a state, Washington boasts one of the seven highest minimum wage in the country, sitting at $9.47 an hour. The initiative would incrementally raise the minimum wage to $13.50 by the year 2020 and allow employees to earn up to seven days of paid sick and safe leave per year.

This is either the greatest thing or the worst thing to ever happen to Washington, depending on who you ask.

The Numbers

As of now, the only hard numbers for how many workers would be affected by this increase come from the Washington Budget & Policy Center. In a recent blog written by Executive Director Misha Werschkul, the group said that 730,000 people would see a rise in their wages and that “Women and people of color would specifically benefit.” According to the group, nearly 30% of women and over 40% of Black and Latino workers in Washington make less than $13.50 per hour. This totals to a $2.5 billion dollar in additional earnings, which the group says would most likely be spent on consumer goods.

Erin Shannon, Director, Center for Small Business at the Washington Policy Center shared demographic details of minimum wage earners from 2013. According to her, “Of those who do earn the minimum, most are young, are usually enrolled in school and work part time. Very few minimum wage earners are the sole providers for a family.” Her analysis revealed the average family income of a minimum wage earner in Washington to be $47,540 per year. She also says that nearly 60 percent are either living with family, or have a spouse who also works. And, eight percent are single parents with children.

When it comes to the effects of increasing the minimum wage, research shows conflicting evidence on both sides of the issue. An Economic Letter from the Federal Reserve Bank of San Francisco shed light on the range of estimates from recent research. They concluded, “Among the studies that find job loss effects, estimated employment elasticities of −0.1 to −0.2 are at the lower range but are more defensible than the estimates of no employment effects.”
The Players

Standing united are proponents of the minimum wage, led by the Washington Labor Council and the Raise Up Washington Coalition.  These groups think that an increase in the minimum wage is good for the economy and will reduce dependence on government programs. Their “rising tide lifts all boats” logic seems to play well with voters.

The opposition contends that a higher minimum wage would hurt the economy through the loss of jobs and higher prices for consumers. Bob Battles, Director of Government Affairs at the Association of Washington Business (AWB) explained that industries with high percentages of minimum wage workers operate on slim profit margins and some even compete globally, meaning that they are price takers and have to eat any increase in input prices.

Jan Gee, President of the Washington Food Industry Association (WFIA), represents medium sized, independent grocers throughout the state. Her coalition, consisting of the National Federation of Independent Businesses, the Retail Association, Washington Association of Neighborhood Stores, and the Washington Farm Bureau, are also opposed to a statewide increase in the minimum wage.

Noticeably absent from the coalition is the Restaurant Association, which, like the associations mentioned above, has a high percentage of minimum wage workers and slim profit margins.

What To Do
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According to Scott Dilley, Associate Director of Government Relations at the Washington Farm Bureau, there are some in the business community who want to “preempt” the initiative. That means passing a statewide minimum wage through the legislature, rather than by vote. When asked about the Restaurant Association, Dilley said, “They’ve taken a slightly different point of view.”

The Restaurant Association, according to Gee, have found a workaround. Restaurant owners are choosing to add mandatory gratuity and vying for tip credit in minimum wage legislation would mitigate the impact of a higher minimum wage on the restaurant industry. But, in the words of Bob Battles, “Tip credit won’t work for everyone.”

Regarding the apparent fragmentation within the business community, Battles said “Everyone has been invited to be part of the discussion.”

A Statewide Solution/The Polls

It appears that the Restaurant Association may be learning from Washington’s cities and choosing not to fight a losing battle. Although the most recent Elway Poll, released in 2014, showed that only 46% of state voters supported a $15 minimum wage, evidence that a slightly lower minimum wage can pass in the Puget Sound has opponents worried. Given the area’s political clout, fighting a $13.50 minimum wage would be an uphill battle.

Stephanie Davenport of the Washington Restaurant Association stated, “We support the minimum wage being increased the right way. That means Washington’s minimum wage law should recognize all forms of taxable compensation provided to employees, policies should assist businesses in creating important first time jobs, increases in minimum wage should be phased in to allow businesses time to adapt, and all employers should be treated equally and consistently.”

For Scott Dilley and the farmers he represents, compromise isn’t as attractive. Dilley says he favors local control, and doesn’t want to have “Seattle-based politics pushed onto rural areas.” His comments reveal another wrinkle in the debate, one that often arises in state politics: the divide between Seattle and the rest of the state.

When asked to comment on reports that Seattle added restaurant jobs after a wage hike in April 2015, Jan Gee echoed Dilley’s sentiments, saying “You cannot compare what is happening in Seattle to a grocer over in Ellensburg or a small computer service company in Centralia.” Stephanie Davenport made a similar comment: “Seattle is a unique economic area that doesn’t represent the rest of the state.”

This geographic divide translates into a political one. For Jan Gee, the initiative is more about politics than policy. In her words: “Labor is running the initiative not because they want to increase entry level wage, they are doing it because it’s an election year, to motivate potential liberal voters.” Although some might say this is a stretch, it’s true that labor politics are shifting. Unions like SEIU are joining large coalitions and using their organizing resources to push for policies (like minimum wage) that don’t necessarily stand to benefit or increase membership. David Rolf, a prolific figure in the labor movement acknowledged the shift in a recent article in the American Prospect, saying, “We can preserve the dying model, or we can use the resources of our model to give birth to what replaces it.”

Moving forward

Last session’s brief brush with minimum wage proposals revealed passing something through the legislature to be politically unfeasible. This year, faced with the initiative, there is still uncertainty about whether or not the business community will rally together. Stephanie Davenport of the WRA stated, “It is unclear if the broader business community will attempt to challenge the initiative.”

However, this year, there may be more willingness on the part of the opposition to take a seat at the table. Business groups like AWB may be willing to consider minimum wage legislation that takes statewide differences in purchasing power into account and/or considers total compensation, rather than just hourly wages. AWB’s press statement following the initiative’s filing indicated that the group intends to put forth a compromise. Whether or not others join them is anyone’s guess.

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