Minimum wage law buoys pay for all of us

From the Everett Herald:

John Burbank, Executive Director

Minimum wage workers will see a small boost in their paychecks this week. That’s because the people overwhelmingly approved an initiative back in 1998 to increase the minimum wage and then index it to inflation. The idea is simple: The lowest paid workers should at least be able to realize the value of their work, rather than letting inflation eat away at their hard-earned income.

Back in 1998, this measure was opposed by the Washington Retail Association, the Washington Farm Bureau and the Washington Restaurant Association, among other ideological business outfits. They argued that increasing the minimum wage could have “a devastating impact on communities…” and that “(t)he marketplace has proven to be a much better regulator of the economy than the government.”

More than a decade later, we can measure the veracity of their charges. The unregulated big banks, the crown jewel of the marketplace, took down our entire economy. 

Meanwhile, economists have compared employment levels between 1990 and 2006 in every pair of neighboring U.S. counties that straddle the borders of states with differing minimum wage levels. The result: A better minimum wage raises earnings in low-wage jobs without any loss of employment.

Economists have analyzed the impact of increased minimum wages during the past three recessions, including this one, and found that these better wages boosted workers’ incomes with no decrease in employment. This is a good thing for employers as well. Increased wages tend to decrease turnover, decrease recruiting costs, decrease training costs, and increase workers’ commitment to their jobs.

Sometimes facts and law don’t matter. Attorney General Rob McKenna decided to incite an end-run around the law, suggesting that the minimum wage should not be raised, ignoring the legal requirement that the minimum wage be raised by the official inflation index, calculated for the previous 12 months. The Department of Labor and Industries ignored this extralegal advice and announced the legally mandated increase of the minimum wage of 12 cents an hour. So the Washington Farm Bureau, the Washington Retail Association and the Washington Restaurant Association decided to go back to the future, challenging the minimum wage increase.

They chose Ellensburg, the county seat for the Kittitas County Superior Court, to attempt this end run around the will of the people, who had approved the minimum wage initiative by a two-to-one margin. They were turned back by the judge, who denied their motion for summary judgment to hold off the minimum wage increase. The judge found that the plain meaning of the statute required an increase whenever the Consumer Price Index has increased over the previous 12-month reference period. As a result, the new minimum wage went into effect on New Year’s Day.

So what does this mean for the 143,000 minimum wage workers in Washington? Simply, a 12-cent wage adjustment to keep up with inflation. That’s about a $5 pay increase a week, or $250 a year for a full-time worker. Not a lot, but a lot better than no raise at all, especially when you are making a pittance to begin with.

It may be instructive indeed to go back to the future. Our state minimum wage in 1968 was $1.60 per hour. That would be equal to about $10 an hour in today’s dollars. So even with an increase of 12 cents, to $8.67 per hour, minimum wage workers today are earning almost one and a third dollars less than their parents who may have been minimum wage workers in 1968.

We are not just talking about teenagers. More than half of minimum wage workers are older than 25, a quarter are parents, and, in the restaurant industry, one-third are over 35. These minimum wage workers are the canary in the coal mine for middle class workers. The minimum wage creates a crucial floor for all wages. Without it, especially in this Great Recession, wages would plummet, while the migration of income to the wealthy would accelerate. And that would jeopardize all workers who depend on their earned incomes for their livelihood.

So Washingtonians should give themselves a pat on the back. We voted in our minimum wage and insured that it keeps up with inflation. It’s a lifeline for current wages and future earnings, for all of us.

Tagged with: , , ,
Posted in A Fair Deal at Work, Column, Minimum Wage

Leave a Reply

Search the blog

Subscribe to the blog

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Like what you’re reading?
Reader support helps preserve our independent voice for the middle class - please chip in to help out!