December 31, 2010 in Opinion

Editorial: Minimum wage should reflect good, bad times


The Spokesman-Review Editorial Board

Members of The Spokesman-Review editorial board help to determine The Spokesman-Review's position on issues of interest to the Inland Northwest. Board members are:

In the spirit of a new year, let’s call a modest truce and concede that the economy stinks, and there is suffering enough to go around.

People earning minimum wage are struggling, though probably not as much as those who have lost their jobs. Businesses that rely heavily on minimum-wage workers are struggling, too, though probably not as much as those enterprises that have closed their doors for good.

And while there is a legitimate debate to be had over the level of Washington state’s highest-in-the-nation minimum wage, this isn’t the most promising time for it. Nevertheless, it is timely to give the law – affirmed by state voters in 1998 as Initiative 688 – a tune-up.

Like a thermostat that cranks the furnace up but never back down, Initiative 688 has been shown to have a significant flaw.

Effective today, the wage will increase by 12 cents an hour, a judge having rejected a business group’s attempt to cancel it.

The most defensible rationale for Initiative 688, which harnessed the state’s minimum wage to the federal consumer price index, was to let the buying power of a minimum-wage job keep up with the cost of living. Adjustments would occur regularly and gradually rather than go years between abrupt updates, based on emotional arguments and fluctuating political numbers.

In 1998, however, no one was thinking that the cost of living would go anywhere but up.  The CPI rose only 1.6 percent that year, but that was the lowest annual rate in more than 30 years. The number hadn’t actually gone down since 1955, and the initiative language didn’t anticipate what would happen in 2009, when the CPI declined, and 2010, when it regained some but not all of the 2009 loss.

The state Department of Labor and Industries determined in October that only the past year matters, so the wage rate would rise accordingly. That might make sense if the minimum wage had been reduced in 2010, based on 2009, but it doesn’t work that way.

State Attorney General Rob McKenna thinks the department erred, but Kittitas County Superior Court Judge Scott Sparks refused to grant a summary judgment to halt the increase.

Thus, it appears, the wage can rise but never decline. Instead of keeping up with inflation, the minimum wage is allowed to creep ahead of it.

It may sound benevolent to ignore economic fundamentals – supply and demand, for example – in order to shore up low-income workers’ buying power, but it’s a deception that will backfire in the long run.

The biggest gift government could give to those at the lowest rungs of the income ladder is an economy that rewards investment and creates jobs and opportunity for all. 

The lawsuit over the 2011 minimum wage isn’t over, but the Legislature, which will be in session in a few days, shouldn’t wait on an unknown outcome. If the wage level was expected to keep pace with inflation, that’s what it should do, in bad times as well as good. Lawmakers can and should provide that clarity.

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