June 14, 2013 in City

Low wages may be good for business, but who else?

By The Spokesman-Review
 

Occasionally, we hear from the business community about the wonders of the business climate in Idaho.

Usually, though, those praising the Gem State’s business-friendliness don’t point out that one of the reasons is this: Employees are paid less – and in some cases a lot less – than most employees elsewhere.

The median hourly wage for an Idaho worker is $14.58 an hour. That’s almost two bucks an hour less than the national median – and five bucks below Washington’s.

Closer to home, there’s a gap of $2.47 an hour between the median hourly wages paid in Spokane and Coeur d’Alene. (The median is the exact midpoint of all salaries, as opposed to the average.) The median hourly wage in Spokane for May 2012 was $16.53; in Coeur d’Alene it was $14.06. The average annual salary in Spokane was $42,960, compared to $36,360 in Coeur d’Alene.

This new batch of federal data – the Bureau of Labor Statistics’ May 2012 Occupational Employment and Wages Survey (see some details below) – comes as Idahoans are being asked to sign a new petition drive to raise the minimum wage. A recent report on the survey in the Idaho Statesman was headlined thus: “Want to Earn More? Move.”

The minimum wage is doubtlessly a factor. Washington’s is the nation’s highest, at $9.19, and is pegged to annual increases in the cost of living. Idaho’s is among the nation’s lowest, at $7.25.

A new citizens’ initiative in Idaho aims to raise that. Supporters would need to gather 84,000 signatures to qualify for the 2014 ballot. The proposal would gradually raise the minimum wage over the next four years, eventually reaching $9.80 in 2017. Thereafter, the wage would be pegged to the Consumer Price Index. The proposal also includes a provision for offsetting tips – employers could reduce hourly wages for tipped employees.

This will doubtlessly attract opposition. There is plenty of debate over the economic effects of the minimum wage – and there are competing studies that both sides can point to. One area of study on the minimum wage has focused on border communities like Spokane and Coeur d’Alene; a study published in 2010 in the Journal of Economic Perspectives examined employment in neighboring counties with different minimum wages over a 16-year period.

Researchers were seeking quantifiable evidence of the “disemployment effect” – the much-argued position that higher minimum wages drive down overall employment. They found a disemployment effect of about zero – higher minimum wages did not, in their research, drive down overall employment.

Anne Nesse, a former Democratic candidate for the Idaho Legislature from Coeur d’Alene and organizer of the initiative, said that in the earliest stages of the effort, she’s heard a lot of support.

“I get tremendous approval on the street,” Nesse said. “Eighty to 95 percent approval on the street. ‘Tell me where to sign!’ ”

Nesse said the effort to raise the minimum wage fits into a larger continuum of religious, educational and cultural concerns that arise from years of growing wage inequality. Nesse said raising the minimum wage could help offset that gap – and offsetting that gap comes with enormous social benefits, from reduced crime to longer life spans.

Nesse also thinks that the minimum wage exerts an upward influence – if the bottom rung of the ladder is lower, the other rungs are, too.

“The bottom being so low in relation to the cost of living changes everything above it,” she said.

Whether that’s the reason or not, the newly released wage data definitely illustrates a gap in wages paid in Spokane and Coeur d’Alene at all levels. Some jobs – such as pharmacists, software developers and nurse practitioners– are paid nearly the same. Electrical engineers are paid better in Coeur d’Alene, though that is the exception.

For most of the occupations at the bottom of the pay scale, actually, the gap is rather modest. Dishwashers, waitresses, clerks and attendants – the median wage for those occupations in Spokane hovers around $9.50 an hour, and it’s 75 cents to $1 lower in Coeur d’Alene.

Swing to the top of the scale, and some of the differences are more pronounced. Chief executives earn a median hourly wage of $79.80 in Spokane, and $55.12 in Coeur d’Alene. Attorneys earn a median hourly wage of $42.76 in Spokane, and $34.57 in Coeur d’Alene.

Here are more details from the BLS report:

Washington’s earnings picture is generally much sunnier than the national average. The median hourly wage across all occupations in Washington was $19.47; the national median was $16.51. Washington’s average annual salary was $51,150, compared to $45,790 nationwide.

Seattle accounts for most of that. The median hourly wage in Seattle-Bellevue-Everett was $22.18, and the average annual salary was $57,560.

The most common occupations in both Spokane and Coeur d’Alene were: office and administrative support; sales; and food service, both preparation and serving. Of the 196,570 Spokane jobs analyzed in the report, those three categories accounted for 73,780 positions, or 38 percent. Of the 51,420 Coeur d’Alene jobs, those three categories accounted for 19,900 positions, or 39 percent.

As with any statistical report, there are limits to what these BLS figures tell us. Cost-of-living differences make comparisons of salaries between Seattle and Spokane tricky, and though the differences are less pronounced between Spokane and Coeur d’Alene, there are surely differences in the community beyond wages.

But that gap – $2.47 – is inarguable. It’s the reason we should think more carefully about what a good business climate means, and who it’s good for.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman. com. Follow him on Twitter at @vestal13.


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