Minimum wage hits $8.07

OLYMPIA – Jessica Barragan recently took a minimum wage job at Wendy’s to help make ends meet. The single mother already works one job at the Burger Ranch in Yakima, but needed more money to provide for her three young sons.

“It’s hard to support them on minimum wage,” she said. “It would be nice just to have help with the extras.”

Barragan, 23, is one of 80,000 to 90,000 full- and part-time workers who will receive a 14-cent raise Tuesday when Washington’s minimum wage, already the highest in the country since 2001, goes to $8.07 per hour.

The increase keeps the state 7 cents ahead of California and Massachusetts, which both increase to $8.

The state recalculates the minimum wage each September according to changes in a federal consumer price index. The adjustment is required by Initiative 688, approved by voters in 1998. Opponents of the automatic escalator say it puts pressure on businesses that are alrea`dy struggling, but supporters say that the naysayers’ fears have not materialized.

“The sky hasn’t fallen yet,” said Rick Bender, president of the Washington State Labor Council, which pushed the initiative. “It’s helped the state’s economy. It’s helped take a little bit of pressure off. Maybe they only have to work two jobs instead of three.”

About 2.5 percent of the state’s jobs are paid the minimum wage, according to the state Employment Security Department. It applies to workers in agricultural and nonagricultural occupations alike, though roughly 40 percent are in the restaurant industry. Workers between the ages of 14 and 15 can be paid 85 percent of the adult minimum wage.

This year, Congress gave the nation’s lowest paid workers their first raise in a decade, raising the federal minimum wage from $5.15 to $5.85 an hour in July. It will rise to $7.25 an hour in 2009.

Association of Washington Business President Don Brunell said the state’s mandatory increases are an extra burden on small businesses facing high costs for unemployment insurance, workers’ compensation, health care and regulations.

“You have a growing gap between the states that are on a federal minimum wage and a state like Washington that has the automatic escalator. The question is, are they going to be able to afford somebody or are they going to mechanize or just not be in the business anymore.”

But a study last year by Washington State University found that the yearly increase does little to harm business and benefits the vast majority of low-paid workers.

The WSU study used a computer model allowing researchers to observe the economic impact of just the minimum wage increase, without other factors. The model showed that Washington’s economy absorbed the wage increase with little job loss. The main industries losing minimum wage jobs would be agriculture, food service and bars.

But those other factors – including the rising cost of goods – means others may be feeling the pinch as restaurants try to absorb the cost.

Since the state’s minimum wage law took effect, menu prices have been creeping up.

According to a survey conducted by the Washington Restaurant Association, eight years ago, you could get a hamburger, fries and drink at a full-service restaurant for $6.26; now, the average price for that same meal is $14.07. The association says that among the rising costs restaurants face, minimum wage increases are part of the problem.

“Restaurant owners understand that they can’t raise their prices enough for consumers to absorb that all the time,” said association spokeswoman Camille St. Onge. “So what do you do? It’s hard to pinpoint where a tipping point would be, but good business owners are cognizant we have to do something different.”

Ed Schaeffer, co-owner of The Mustard Seed Asian Cafe in Spokane, said the minimum wage increase will cost $38,000 next year for the restaurant’s two locations.

Washington is one of seven states that doesn’t allow a tip credit – where tips can count as part of their wages toward the minimum wage.