Editorial: Minimum wage hike ignores logic of initiative

If Hollywood made a movie about the scheduled increase in Washington’s state minimum wage, it should be called “The Ghost of Gain-Sharing.”

Gain-sharing, for those who have forgotten, was the Legislature’s chillingly irresponsible decision to guarantee state pensioners a windfall, based on the generous investment returns being realized in the bull market of the 1990s. That action came back to haunt them when the boom went bust and there was no provision to reverse course. When the market was robust, pensioners profited; when it faltered, pensioners were protected against loss – at taxpayers’ expense.

It took the state more than a decade to put a stake through gain-sharing’s heart.

Recently, the state Department of Labor and Industries disinterred the concept by declaring that Washington’s minimum wage – already highest in the nation at $8.55 an hour – will increase to $8.67 on Jan. 1.

That adjustment is based on the U.S. Department of Labor’s Consumer Price Index, as specified by a 1998 initiative intended to automatically tie the wage to the cost of living.

Problem is, as with gain-sharing, it works only one way. In 2009, the cost of living actually dropped, but the minimum wage held steady for 2010. It didn’t go up, but it didn’t go down either. So when the index began to move gently upward again, a question arose: Should an adjustment reflect just the recent CPI increase or the 2009 decline as well?

State Attorney General Rob McKenna’s office opined that the rate shouldn’t rise above where it would have been if pre-recession values were applied. L&I officials disagreed and ordered a 12-cent hike for 2011. Employer groups have taken legal action and asked the courts to see it McKenna’s way.

The core of the argument in the campaign for Initiative 688, the indexing plan that voters approved in 1998, was that low-paid workers’ buying power shouldn’t have to slip for years between sporadic adjustments that hinged on political will in Olympia. (An earlier initiative in 1988 had boosted the minimum wage to $3.85 an hour for 1989 and $4.25 for 1990, but it had grown only to $4.90 by 1998 when Initiative 688’s indexing provisions won voter approval.)

If that rationale was sound, the process ought to be consistent.

The argument is no less valid in a period when the index is in decline. If the courts don’t set the matter right, it will be up to the Legislature to exorcise the gain-sharing demon for good.