Battle Lines Drawn Over Proposed Increases In Minimum Wage Level

In Washington, D. C., President Clinton and congressional Democrats are clamoring for a $1 raise in the national minimum wage to $6.15 an hour over a period of two years.

In Olympia, a labor-backed bill would raise the Washington minimum wage from $4.90 at present to $5.75 next year, then to $6.50 by the year 2000. But facing stiff opposition from a Republican majority in the Legislature, advocates already are circulating an initiative petition to place the issue on this fall’s ballot.

In neighboring Oregon, where a similar popular initiative won passage with a landslide vote, the hourly minimum wage has leapfrogged from $4.75 to $5.50 to $6 in little more than a year. Next January, it will jump to $6.50 - highest in the nation at that time.

What has been the impact on business and the economy in Oregon?

“Very little,” reports the Oregon Commerce Deparment’s chief of economic forecasting, Paul Warner. “Our unemployment rate in this state is the lowest in 125 years. We’re in a labor crunch.”

Nevertheless, counters Jeff Hannum, chief labor economist for the Oregon Employment Department, those at the bottom of the wage ladder are being left in the lurch. The new minimum wage doesn’t even restore the purchasing power workers had 22 years ago.

“Taking inflation into account, today’s $6 minimum wage is worth 11 percent less than it was in 1976, when the minimum was just $2.30,” says Hannum. “Although globalization has generated strong job growth, it also has widened the wage gap in scattered smaller markets.”

In Portland and major markets of the Willamette Valley, starting wages already approach or exceed the minimum, the two economists agree. Elsewhere, however, the effect of a new higher minimum wage is being felt to a greater degree.

Based on Oregon’s experience, the two economists suggest, it may be that Washington, too, could readily support a sizable hike in the minimum wage. But, as with Portland and the Willamette Valley, the Puget Sound and Western Washington in general could absorb the increase more easily than the eastern two-thirds of the state.

“Oregon’s experience would probably apply in large measure to Spokane,” says John Schleede of Eastern Washington University.

“The unemployment rate in Spokane has been running around 4 percent,” says the dean of EWU’s College of Business and Public Administration. “Most people are working at jobs paying more than the minimum wage.”

“Traditionally, businesses have warned that as wages go up, they can afford to hire fewer people. I don’t think that would necessarily occur here, in the context of full employment and a growing economy.

“But whether that would hold true in Pend Oreille County, where unemployment is a lot higher, is another question.”

While “generally quite liberal” in the area of employee compensation, Schleede says, he fears too great an increase in the minimum wage might penalize teens and entry-level workers.

“If we just jack up the wages, I doubt that will create more disposable income in our area,” he advises. “The law of supply and demand tells us that fewer people will have jobs. It requires a balancing act.”

Chief executive pay scales draws fire

When it comes to the pay of chief executives, however, Eastern Washington University dean of business John Schleede readily concedes, “I have to change my tune completely - something ridiculous is going on there.”

Compensation for today’s chief executives is not obeying the same law of supply and demand that economists cite in opposing a higher minimum wage.

Last year, while average wages rose 3 percent, the pay of chief executives soared 17 percent, continuing a recent pattern that doubles CEO pay every four years.

“I can’t explain it,” says the dean. “And I’m not going to defend our American way of grossly overpaying chief executives.

“Some executives are much sought after because they performed well in the past and are expected to do so in the future,” says Schleede. “But more often, these CEOs seem to get exorbitant salaries more or less on the basis of being lucky enough to survive the political hurdles on the way to the top.

“I don’t think most of these individuals make that much of a difference in the success of companies. I am not pleased with executive pay.”

EWU business school reaccredited

EWU’s College of Business and Public Administration has won reaccreditation by the AACSB-International Association for Management Education.

Of about 3,500 business programs in the nation, fewer than one in 10 meet the criteria for accreditation, said Schleede.

“The business education process is alive and well at EWU,” says the EWU business dean. “Faculty and students were well thought of by the reviewers.”

A review team found the college has an excellent relationship with the business community, and offers “affordable, quality instruction” for the Eastern Washington area.

Tuccillo to address real estate forum

John Tuccillo of Washington, D.C., a consulting economist for the National Association of Realtors, will address the 1998 Real Estate Market Forum on Feb. 26 in the Spokane Ag Trade Center. He will speak at noon. The forum opens at 8 a.m.

The Spokane-Kootenai Real Estate Research Committee is staging the event in cooperation with the Spokane and Coeur d’Alene associations of Realtors.

, DataTimes MEMO: Associate Editor Frank Bartel writes a notes column each Wednesday. If you have business items of regional interest for future columns, call 459-5467 or fax 459-5482.

The following fields overflowed: CREDIT = Frank Bartel The Spokesman-Review