Business

State’s rising minimum wage still scrutinized

Washington’s minimum is the maximum, and hurrah for us.

As of Jan. 1, the lowest-paid employees in the state began receiving $8.55 for an hour’s work – tops in the nation. Youngsters ages 14 and 15 get $7.27 an hour.

Those paychecks have fattened steadily since 1998, when Washington voters by a 2-1 ratio approved an initiative that raised the minimum to $6.50 an hour by 2000, with subsequent increases tracking the consumer price index, the measure of inflation in the economy.

About 6 percent of Washington’s total work force of 3.5 million earns the minimum.

Meanwhile, the federally mandated minimum, set at $5.15 an hour in 1997, remained unchanged until 2007, when Congress passed a bill that will take it to $7.25 an hour in July. There is no provision for indexing, so the rate will remain fixed until Congress revisits the issue.

When he was campaigning, President-elect Barack Obama said he wanted to take the federal minimum to $9.50 an hour by sometime in 2011, but nothing has been reported about his intentions to follow through on that commitment. He has not mentioned the minimum wage in any of his statements about our economic straits and the bailout plan he is formulating in response.

But his choice for labor secretary, Hilda Solis, was a leader in the fight to boost California’s minimum wage. Those efforts helped get her elected to Congress, and that’s a political lesson she has likely not forgotten.

Organized labor has long been the champion of the minimum wage. Unions, however, are making the Employee Free Choice Act, a bill that would allow them to organize workers by getting a majority to sign cards – no secret ballot – a priority. Jeff Johnson, the Washington State Labor Council’s Olympia lobbyist, said the national minimum wage is a “back burner” issue.

As Republican gubernatorial candidate Dino Rossi discovered last fall, suggestions Washington revisit its minimum wage just plain burn.

Perhaps no one misstep did as much to damage his campaign as his statements suggesting a “training” wage for young workers would be an acceptable way of getting them a first job. Although he said adult workers would not be exposed to wages as much as $1.50 an hour below the minimum, the nuances were lost in ads run by Gov. Chris Gregoire that had workers, many elderly, questioning how Rossi could be so out of touch with the financial duress they were experiencing.

But businesses, particularly those in the hospitality business, continue to press for a review of the minimum wage law. With unemployment rising, a high minimum wage can be the difference between hiring or retaining workers.

“When times are good, you can pay people,” said Don Brunell, president of the Association of Washington Business.

Now, with discretionary income drying up, the restaurants that employ many on the minimum wage are closing, he said. People are going to lose their jobs and earn nothing.

Brunell said businesses want the state to re-examine training wages, a tip credit for restaurant workers, and the index used to adjust the wage level. Using one based on clerical workers in an urban environment – Seattle – makes little sense for the rest of Washington, he said. The sting this year – 6 percent – was particularly acute because it captured all of the increase in energy prices during the summer, and none of the decrease since.

Johnson said labor is not necessarily opposed to a study of the minimum wage law’s impact over the past decade, noting that many have already concluded the effect has been beneficial. And when it comes to economic stimulus, he said, what makes more sense than putting more money in the pockets of those workers most likely to go out and spend them?

“It’s a good thing,” he said.

Indeed. A minimum wage adjusted for inflation preserves its purchasing power, which peaked 40 years ago, when gas was 30 cents a gallon and a McDonald’s hamburger 15 cents.

And the minimum wage was $1.60 an hour.



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