Article by Erik Smith. Published on Friday, September 30, 2011 EST.
L&I Announces Official Calculation – New Rate Takes Effect in January
UPDATED Sept. 30, 8 p.m. with additional comments.
By Erik Smith
Staff writer/ Washington State Wire
OLYMPIA, Sept. 30.—Washington employers once again will pay the highest minimum wage in the country, the state Department of Labor and Industries announced Friday, news that came as a shock to none but nevertheless brought groans to many in the state’s business community.
Washington’s minimum wage will rise from $8.67 an hour to $9.04 on January 1, making this state the first in the country to top the nine-dollar mark. The 37-cent increase comes because Washington ties the minimum wage to the federal Consumer Price Index for urban wage-earners and clerical workers, which has risen 4.2 percent since August 2010.
It is a simple math calculation that comes every September, the result of an initiative approved by voters in 1998. So in no way was it a surprise. But Washington’s top-flight ranking didn’t exactly send business dancing in the streets. Washington was tops in minimum wage when the initiative took effect, and over the last decade, as a result of the indexing, Washington has increasingly become an outlier. Most states right now are in the $7 range, either adopting the federal minimum wage of $7.25 or staying rather close to the mark.
“It is one more example of Washington state public policy making it harder to put people back to work, and it is particularly frustrating at a time when we have record-high unemployment,” said Patrick Connor of the National Federation of Independent Business. “We need to be doing more to try and make it easier to employ people, instead of driving up the cost of adding an employee.”
About $19,000 a Year
What it means is that a minimum-wage worker in this state would make $18,803 a year before taxes, if employed full time. The average wage in this state stood at $48,162 in 2010.
But you might say the lowest-paid workers are catching up, due to the indexing mechanism. According to the Department of Employment Security, the average increase for calendar year 2010 was 2.1 percent.
Biggest single factor in the CPI increase was the rising cost of fuel.
The state Labor Council, sponsor of the initiative, said the mechanism is working just as it was supposed to. “This increase is great news for Washington’s lowest-paid workers,” said spokesman David Groves. “It’s a small, desperately needed raise for folks struggling to meet basic needs. At slightly over $9 an hour, that’s still poverty wages for thousands of Washington families struggling to afford a tank of gas or a trip to the doctor. A full-time minimum wage worker will earn less than $19,000 a year before taxes.
“Our minimum wage is working exactly as voters intended. It’s taking the politics out of the issue and maintaining the value of the minimum wage so it doesn’t erode with inflation. And it gives employers small incremental increases that they can plan for, as opposed to the sudden spikes that occurred in the past.”
Democratic Congressman Jay Inslee played it up, perhaps sensing an issue for his upcoming campaign for governor:
“In 1998 voters in every single Washington county approved a progressive minimum wage law that ensures even our lowest-paid workers are guaranteed a paycheck that keeps up with the cost of living.
“These workers are some of our hardest workers. It’s the barista who serves your morning coffee, the college student working evenings at a local bookstore, and the janitor who makes sure the wastebasket by your desk is emptied every night. They have families to support, an education to pay for, and bills to pay.
“Today’s news is a reminder that our number one priority must be rebuilding our economy, creating living-wage jobs and ensuring our children have access to the quality education that prepares them for those jobs.”
Big Effect on Specific Industries
The wage hike doesn’t affect all businesses, just those that pay the minimum wage. State stats from 2009 indicate that of the state’s 2.7 million workers, only the equivalent of 67,000 full-time workers are affected, though that figure understates the actual number, because many minimum-wage earners are employed part-time. Greatest effect comes in the retail, restaurant and agricultural sectors.
“It’s not surprising news, because we know that this time of the year we should expect the announcement to be made, but you know, it has been a tough year for restaurants, and this just feels like another straw on the camel’s back,” said Anthony Anton of the Washington Restaurant Association in a KOMO radio interview Friday. “It has already been a tough year, with food costs up across the board for the year, and now we have another increase on the labor side. It is going to make tough times even tougher for a lot of folks.”
Scott Dilley of the Washington State Farm Bureau said the increase demonstrates that the state ought to rethink the wage-setting mechanism. “We are still suffering through the effects of the worst economic downturn in our lifetimes,” he said. “The need for jobs is paramount, and the agricultural industry is well positioned to provide those jobs.
“However, raising the minimum wage to $9.04 limits the ability of our farmers to provide jobs, especially when growers are not automatically paid more for their crops. Farmers are price takers, not price makers. Raising labor input costs for farmers at the same time as other input costs (such as fuel and fertilizer) are going up creates more strain and uncertainty for our growers.
“We need to look for ways to reform our state minimum wage rate so that out-of-state farmers don’t continue to have an advantage over our own growers.”
And there are many who dispute the idea that the increase is a boon for the lowest-paid. “The increase in the minimum wage is bad news for the unemployed, young and inexperienced workers in Washington,” said Brandon Houskeeper of the Washington Policy Center. “Today the unemployment rate for our state remains at more than 9.3 percent, well above the national average. Increases in the costs to operate a business will limit the number of jobs available in the already tight job market, and will likely lead to even more workers forced into unemployment.”
Your support matters.
Public service journalism is important today as ever. If you get something from our coverage, please consider making a donation to support our work. Thanks for reading our stuff.
