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Spokane, Washington  Est. May 19, 1883

Here’s how Democrats’ $15-an-hour minimum wage proposal could impact the Inland Northwest

Madelynn Knapton makes $7.25 an hour working a minimum-wage job at the Palouse Mall in Moscow. The University of Idaho junior said she has looked for work across the Washington state line less than a mile to the west, where the minimum wage is nearly double Idaho’s, but she hasn’t been able to land a job in neighboring Pullman.

“I’ve applied basically everywhere in both towns, and everybody is in the exact same boat,” the 20-year-old said. “It’s kind of infuriating, especially since the prices at the stores are literally the exact same. Places that are offering $7.25 just a mile down the road, it’s just obviously taking advantage of Idaho’s lower wage.”

Knapton, originally from Middleton, had to take a semester off from school at the beginning of the year after she lost a scholarship that covered her tuition and living expenses.

Unable to get enough hours at her retail job to make her $500 rent payment, she started cleaning houses in hopes of saving enough money to finish her degree, which she sees as her best shot to escape minimum-wage work. But even with the extra earnings and help from her parents, she fell behind on her electric bill and had her power cut off on a chilly February day.

Knapton is one of about 5,000 Idahoans and 392,000 Americans who earn the federal minimum wage of $7.25 an hour, according to the U.S. Bureau of Labor Statistics.

That national floor hasn’t been raised since 2009, the longest period without an increase since a federal minimum wage was first implemented in 1938. While most states require employers to pay wages higher than the federal minimum, Idaho is one of 21 states that use the federal minimum.

President Joe Biden and his allies in Congress have made increasing the federal minimum wage one of their top priorities, with most Democrats pushing for $15 an hour by 2025. A provision to raise the wage through the $1.9 trillion stimulus package Biden signed into law Thursday failed when a handful of moderate Democrats objected, but the party’s progressive wing has pledged to continue the “Fight for 15.”

“After more than a decade since the last federal minimum wage increase, the tides are turning, and there is overwhelming support for Congress to act,” Sen. Patty Murray, a Washington Democrat who chairs the Senate’s labor committee, said March 5. “We’re not going to give up.”

Republicans and some moderate Democrats say boosting the hourly minimum wage to $15 across the entire country – more than doubling it in states like Idaho – ignores regional variations in the cost of living and would force employers to lay workers off.

“You cannot compare the living conditions and costs in Idaho with New York or California or New Mexico,” said Rep. Russ Fulcher, a Republican who represents western and North Idaho. “For anyone to come in and say, ‘We’re going to just mandate from the federal level that the minimum wage is the same no matter where you go,’ that’s just irresponsible, and it’s a control grab from the federal government.”

Fulcher said he opposes any minimum wage increase, arguing the market should set the wage in each part of the country, but there seems to be a consensus among more centrist lawmakers in both parties that the wage should increase, if perhaps not to as much as $15 an hour.

Sen. Joe Manchin, a centrist West Virginia Democrat who wields a powerful swing vote in the narrowly divided Senate, said Tuesday on CNN he believes all 100 senators want to raise the minimum wage. GOP Sens. Mitt Romney of Utah and Tom Cotton of Arkansas introduced a bill Feb. 25 to increase the minimum wage to $10, and Manchin suggested a compromise at $11 an hour was possible.

But Rep. Pramila Jayapal, a Seattle Democrat who has spearheaded a standalone $15-an-hour bill along with Murray, said in an interview she isn’t interested in negotiating a compromise.

“It makes no sense to me at all to talk about anything other than the proposal that’s on the table, which is already a massive compromise,” Jayapal said. “Fast food workers began the ‘Fight for 15’ in 2012. We are nine years out and we’re still talking about 15 over five years.”

House Speaker Nancy Pelosi, D-Calif., said Thursday her party will “persist” in trying to raise the wage to $15.

Jayapal and Murray’s “Raise the Wage Act” would increase the federal minimum wage to $9.50 immediately upon enactment, then in annual increases, ending in a $15 wage floor after four years.

In Idaho, Knapton advocates for a minimum wage increase as part of the Red Republicans, a self-described Marxist faction of the Democratic Socialists of America, a group whose members include two of the most vocal proponents of a $15 minimum wage in Congress, Democratic Reps. Alexandria Ocasio-Cortez of New York and Rashida Tlaib of Michigan.

Knapton said her group advocates a living wage that rises along with inflation, not just a one-time increase to $15 an hour. The Idaho-based organization is calling for the state’s legislature to establish a commission of elected delegates from labor groups who would set the minimum wage annually based on the cost of living.

A $15-an-hour minimum wage, Knapton said, would open up options for her and her coworkers that are next to impossible with a minimum-wage job.

“I would be able to go back to school (and) just not have to calculate every single penny at the grocery store,” she said. “At $7.25, you can’t really leave town and look for places that have better wages. You’re kind of stuck. And maybe, like me, they could afford higher education, training, things like that if they made a little bit more.”

While minimum-wage workers are disproportionately young, roughly 57% of those paid at or below minimum wage are over 25, according to the Bureau of Labor Statistics.

“Most people view minimum-wage laborers as unskilled, young kids, which just isn’t true,” Knapton said. “Most of my coworkers have kids already, or multiple kids, and they talk about being able to afford school supplies and clothes.”

Leslie Orth, the executive director of the Post Falls Food Bank, sees that reality up close. Most of the roughly 75 to 100 families the food bank serves each week earn more than Idaho’s minimum wage, and she said the “working poor” are an increasingly large demographic in North Idaho.

“It’s younger families that are trying to juggle everything and want what every family wants, typically, to get married and have kids,” Orth said. “But if you’re only making $11 or $12 an hour, you can’t do it.”

But Orth is also an employer, and she faces a conundrum at the heart of the debate over raising the minimum wage. Most of her eight employees already earn between $12 and $18 an hour, Orth said, but an increase to $15 would strain the nonprofit’s finances.

“My budget would get busted very quickly,” she said. “We don’t sell a product, so it’s not like I can increase prices to offset that. What I’d probably do is just reduce hours, so they may be making more per hour but I would have to reduce the amount of hours they work in order to stay in my budget.”

Travis Thompson does sell a product, but he also worries about the impact a sharp minimum wage increase could have on his business. The owner of the A&P Bar and Grill in Sandpoint employs about a dozen people whose wages are supplemented by tips. Idaho’s “tip credit” lets employers pay workers as little as $3.35 an hour before tips, although Thompson said his employees all make at least $7 an hour as a base wage.

Restaurants have been hit hard by the pandemic, and Thompson said having to pay a higher minimum wage would force him to raise prices or lay off workers, if not both.

“Basically, there’s no margin to cover the increased cost of labor, so the food and drinks would be marked up directly proportional to those costs,” Thompson said. “If we can’t mark the food and drinks up enough to cover the extra costs, then we’d have to employ fewer people.”

While Thompson said he understands why a minimum wage hike sounds good, it would bring unintended consequences that could hurt not just employers but also some workers.

“The employees that are the highest-producing are the ones that end up staying,” he said. “It’s harder to hire and train somebody at the higher rate, because the return isn’t there. It hurts the newer employees that don’t have the skills.”

Jacob Vigdor, a professor of public policy at the University of Washington, is part of a research team that studied the effects of a 2014 measure that gradually raised Seattle’s minimum wage to $15 and beyond.

The study, Vigdor said, found the city’s wage increase boosted the incomes of more experienced workers while causing employers to cut hours for less experienced workers, who actually saw their earnings fall before eventually rebounding.

A Feb. 8 report by the nonpartisan Congressional Budget Office predicted the Democrats’ $15-an-hour proposal would lift 900,000 people out of poverty but cause 1.4 million workers to lose their jobs. Republicans and other critics of raising the wage have focused on the projected job losses, but Vigdor said that figure doesn’t tell the whole story.

“The Seattle evidence is saying, ‘No, they don’t lose their jobs, they just lose their hours,’ ” he said. “What this means is fewer ‘help wanted’ signs, and more of those signs are going to say ‘experienced person wanted.’ ”

Mike Lish, who runs D.Lish’s Hamburgers in Spokane, said he has grappled with what the role of a fast food restaurant like his should be as Washington’s wage floor has risen to $13.69 an hour.

“When you hire minimum-wage workers, chances are you’re going to be teaching them basic employment skills,” Lish said. “Yeah, on the surface it sounds great – everybody deserves $15 an hour – but is that truly the right thing? How do we get people into these minimum-wage jobs and then out of them?”

Lish said he sees his restaurant as a sort of training ground as workers move into better-paying jobs, and it makes him proud when his employees find careers they love. On a recent day, he said, he let an employee use the computer in his office for an online job interview.

“I would be sad to see her go – great employee – but it’s not fair to her if she has better opportunities,” Lish said. “I’m like, ‘Good for you! You’re not meant to be here and make a living. We need to teach you the skills that you need to be a good employee and move and do what you love.’ ”

Lish said the rising wages in Washington have forced him to raise prices.

“When you do that, it’s really kind of a coin toss,” he said. “Some people understand, and some people complain that their favorite burger went up 10 cents.”

Vigdor said Seattle, whose tech-sector boom has brought an influx of relatively affluent consumers, has been better able to absorb those rising costs than other parts of the country.

“If you’re facing higher labor costs and you want to raise the price of a latte to cover those extra labor costs, you’ve got a lot of people around who will pay that extra $1,” he said. “If you talk about parts of the country where you don’t have thousands of tech workers with six-figure incomes moving in every year, that puts a limit on what a business owner can get away with in terms of pricing.”

Although North Idaho’s labor market is far different from Seattle’s, Vigdor said, employers would have the same playbook. They would likely have to raise prices, cut back on hours and give those hours to the most experienced and productive workers.

“What you’d expect, if Seattle is any kind of predictor,” he said, is “that the business owners of North Idaho would figure out ways to make this work.”

Lish said his biggest problem with the effort to raise the federal minimum wage is its timing, during a pandemic that has strained the finances of restaurants and other employers who are counting on the federal government’s Paycheck Protection Program loans to plug revenue holes.

“I think this is a really bad time to be trying to put more pressure on small businesses,” he said. “I think this is something that could wait until after the pandemic. They’re already struggling, at the end of their rope, going through the stress of getting their PPP loans and just trying to stay open.”

Jayapal said she sees a wage increase as a crucial part of the federal government’s response to the pandemic.

“In this time of tremendous economic crisis for so many millions of people, I just think it makes no sense to talk about half-measures and half-steps. … They don’t go and trade in the stock market or put it away into savings, they spend it on food and housing and other things that help small businesses in their communities, so there is a net-positive effect,” she said of workers whose wages would be raised.

Fulcher said he sees the one-size-fits-all approach as a potential job killer and something Congress should stay out of.

“This is a classic example of government trying to insert itself where it’s not wanted or needed,” he said. “The market needs to set (the minimum wage). What they’re really doing by artificially setting it is they’re making it zero, because that’s what the number is going to be for a lot of people.”

Vigdor said both sides have legitimate concerns, but the question ultimately comes down to priorities.

“If you listen to Democrats talk about the minimum wage,” Vigdor said, “they’ll tell you this is a way to deliver more money to adults who are struggling to make ends meet, and in Seattle we saw that. If you listen to Republicans, they’ll tell you this is going to make it harder for people to get that first job. We also saw that.

“Everybody’s right, but this illuminates the basic tradeoff: that a low minimum wage gives the advantage to the young worker and a high minimum wage gives the advantage to the older worker. From a policy perspective, it doesn’t have to be a debate about who’s right. It’s a debate about values.”