Progress Report on the Minimum Wage Increase in Washington State
Last November, Washington State’s Initiative 1433 was approved and mandated a minimum wage increase to take effect at the beginning of 2017. The initiative increased the wage from $9.47 to $11.00. By 2020, the minimum wage will be as high as $13.50.
Because many urban areas previously increased their minimum wage limits, some experienced little to no impact. For instance, Seattle has a minimum wage of $15.00, so the initiative had very little impact on the city.
According to I-1433’s Fiscal Impact Statement, the primary purpose for the minimum wage initiative is to increase state revenue by taxing employers for unemployment insurance, which is ultimately based upon employee payroll.
However, according to Democrat Rick Larsen, the U.S. Representative for Washington’s 2nd congressional district, “Raising wages and establishing paid sick leave doesn’t just help workers; it helps small businesses. According to the Budget and Policy Center, raising the minimum wage to $13.50 would provide nearly $2.5 billion more in earnings annually in the Washington state economy”.
In announcing his support for the initiative, Larsen wrote that the minimum wage increase will truly benefit Washington’s hardworking citizens. “I speak to working families in our district, people are simply not earning enough to get by despite working long hours every week,” he said. “Raising wages means families can put food on their table, pay their rent or mortgage on time, and create a pathway to the middle class.”
Ron Powers, a business professor at Clark College, also sees the initiative having a profound benefit on Washington’s future economy, humorously saying that it would positively affect the middle class as “their children will earn more income, which is a step towards getting them out of the house.”
“America is a capitalist country. We aim for productivity. If we can earn more, it becomes an incentive,” said Powers.
However, according to Tracy Johnson, the director at Red Robin Preschool and Daycare, a small business located in Vancouver, some of the impact of the increase in wages has been negative. “I don’t think it should be as high as it is now, but it should’ve been more than what it was,” she said.
Because of the initiative, Johnson said, many preschools lost a lot of business. This is due to the fact that whatever it costs the business to function is reflected back in the prices that consumers pay, Johnson said.
Powers, the professor, agreed: “The businesses will not have to pay the higher prices, the consumers will,” he said.
Johnson has “always been against” the minimum wage initiative because of its impact on the community. “A lot of daycares shut down. A lot of small businesses are shutting down because of this,” said Johnson.
Workers are also facing some negative consequences. Haley Marie, who during the school year worked for her college’s library, said that her recent pay increase due to a promotion from low-entry worker to supervisor “didn’t really mean anything, because minimum wage was raised to nearly my level for all of the entry level workers, even though I had increased responsibilities.”
Marie said she has a “general understanding” of economics and believes that “while low income earners would technically make more money, other people might be laid off or prices go up, thereby offsetting the benefits of the increased wages.”
Due to the passage of the initiative, minimum wage will continue to rise until 2020. Despite the challenges, Powers, the professor, said he is “all for it, as a rising tide floats all ships.”
