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Flexibility more important than the ‘right’ wage

Fri., June 30, 2017

Two studies have been released recently on the impact of Seattle’s phased-in minimum wage, and they come to different conclusions. Proponents of the $15 wage tout the study from the University of California-Berkeley. Opponents point to the University of Washington study.

The UC-Berkeley study says pay increases have not resulted in the loss of work. The UW study says there has been a negative jobs impact among low-wage, inexperienced workers. The studies employ different methodology and both have their limitations, as do all studies on the subject.

But that doesn’t mean such laws shouldn’t be evaluated. We certainly hope the statewide minimum wage adopted via Initiative 1433 is scrutinized for its impact, especially outside the Seattle region, which has an inordinately booming economy.

The Seattle studies have more relevance for other large cities across the nation than they do for the rest of Washington state. The Minneapolis City Council will soon vote on a $15 minimum wage, and the Seattle studies are a part of that debate. Los Angeles and other cities in that metro area will raise the minimum wage from $10.50 to $12 on Saturday.

It wouldn’t be wise to extrapolate research on a single city with a unique economy to the state as a whole. Nobody can really say what the “right” wage should be.

The $15 minimum wage wasn’t predicated on careful studies searching for the sweet spot. By the same token, the federal minimum wage of $7.25 isn’t tied to research either, but that’s what Idaho uses. These wage rates represent the political realities of what can pass where they’ve passed.

Nineteen states increased their minimum wage this year. Two of them – New York and Oregon – have variable rates based on geography. Urban areas have higher minimums than rural areas. We’re keenly interested in the impacts of these laws, because they factor in the cost-of-living. Obviously a dollar goes further in Ritzville than Redmond.

Initiative 1433 disregarded this reality by imposing the same rate regardless. This year, the wage was raised to $11; then it’s $11.50 in 2018; $12 in 2019; and $13.50 in 2020.

Housing markets within the state vary widely. In May, the median home price in King County was $600,000. In Snohomish County, it was $400,000. In Spokane County, it was $202,000. In Pend Oreille County, it was $140,000. That metric alone cries out for a variable minimum wage to reflect local economies.

Under the just-passed state budget, the Legislature offers a cost-of-living salary allowance for teachers in high-cost areas. A flexible minimum wage would operate under the same principle.

For the first two years, lawmakers cannot amend or repeal the minimum-wage initiative without a two-thirds majority in both chambers. After that, it takes a simple majority. By then, if the data show a negative impact in less-wealthy communities, lawmakers should consider a more flexible policy, such as Oregon’s.

By 2020, the difference between Portland’s minimum wage and that of a small Oregon town will be $1.75. That’s a reality-based approach.