Still Working Well: Washington’s Minimum Wage and the Beginnings of Economic Recovery

Report | January 21, 2004

Executive Summary

In 1998, Washington voters overwhelmingly approved an initiative to increase the minimum  wage and to make annual cost of living increases automatic beginning in 2001. While the  lowest wage earners in much of the rest of the nation have suffered a steady erosion of income,  with no increase since 1997, low wage workers in Washington have been able to maintain their  purchasing power. Minimum wage workers in Washington earn $7.16 an hour in 2004, or an  annual income of $14,893 for full time workers. Although this level of income is inadequate to  meet basic family expenses in any community in Washington, it is well above the $5.15 an hour  and $10,712 in annual income earned by workers in the 38 states that rely on the federal  minimum wage.

Critics of Washington’s path breaking minimum wage law have repeatedly pointed to our state’s  relatively high minimum wage as a cause of our higher than average unemployment rate.  However, the data do not support a causal connection. The United States as a whole and  Washington state have continued to lose jobs since the official end of the recession in  November 2001, but Washington has lost jobs at a lower rate than the national average. In fact,  8 of the 11 states that had a minimum wage above the federal level in 2003 are doing better at  job creation than the United States as a whole. The jobs Washington has lost have been  concentrated in high wage sectors, especially manufacturing. Low wage sectors of our state  economy have done relatively well, and are even experiencing some job growth. At the same  time, Washington’s working age population is estimated to be growing at a faster pace than the  national average.

Washington’s unemployment rate has been consistently above the national average for  decades, including during periods when the state minimum wage matched the federal level.  Since 1970, Washington’s annual unemployment rate has fallen below the national rate in only  3 years – 1990, 1991, and 1997.1

Washington’s minimum wage COLAs have contributed to the economic security of our state’s  hard working low income earners, even when high unemployment has meant they had little  power to bargain with their employers. Our state’s minimum wage law is certainly not the cause  of our state’s high unemployment.


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