Washington State Minimum Wage Increase — How will it affect the local economy?
As of January 1, 2017, the minimum wage in Washington state went up to $11 an hour. It’s now almost $4 more than the federal minimum wage.
The increase, while passed by Washington voters, resulted in controversy and concerns for both local and corporate businesses located in Washington. The main concern was whether or not it will affect the amount of jobs and hours available for low-skilled minimum wage jobs.
On November 6, 2016, residents of Washington State voted on Initiative 1433, which asked whether or not to increase the minimum wage to $13.50 by the year 2020. The vote was approved with 57 percent for the increase and 43 percent against the increase. The push for the initiative out-funded the opposition $51 to $1.
According to Ballotpedia, Washington’s minimum wage was previously $9.47 per hour. The federal minimum wage is $7.25.
The main concern for the large increase in minimum wage is how it will affect local businesses. Donny Batchelor, a small business owner who runs the burrito stand Chewy’s Burritos on Clark College’s campus, said he had to raise the prices on all of his food items by $0.50 due to the increase in minimum wage.
Chewy’s Burritos is a family run business, so pricing and hours are very much affected by any changes in wages and cost of goods. While prices have gone up due to the minimum wage increase, hours at the burrito stand will stay relatively the same, Batchelor said. “We run however many hours are necessary to continue operations,” he said.
Batchelor said even though he is a small business owner — meaning his business is very price sensitive — he supports the increase in minimum wage. “When people make more money, they spend more money. This will help small businesses in the long run because it will help stimulate the local economy,” he said.
With the model for the minimum wage increase to be over several years, eventually stopping at $13.50 an hour in 2020, Batchelor said that each year his prices will have to follow the same general trend of increasing. If he did not continually update his prices with the changes in minimum wage, he would run the risk of no longer being profitable.
Other businesses are seeing fewer impacts.
Tara Gilbert, a student at Mountain View High School, works part-time at the Bedford, a retirement home run by a large corporation known as Holiday Retirement. Since the minimum wage increase, Gilbert has noticed an increase in her paychecks. But the only thing that has changed is “our shift ends at a specific time period depending on the shift, and if you went over that before the increase, it wasn’t too big of a deal. Now the managers really push us to finish early or right on time.”
Bonnie Stahlberg, the general manager of The Bedford, said that the minimum wage increase has not had a significant impact on business. Employee’s wages have increased, but hours and shifts available have remained the same.
Stahlberg said: “We have a job to do here, and that is to take care of our residents and make sure we provide a quality service along with a nice, clean place to live in… However, we have pushed our employees to be as efficient with their time on the clock as possible.”
While this state-wide minimum wage increase has just taken effect in 2017, the city of Seattle, Washington has had its minimum wage increasing since April 2015. The minimum wage in Seattle before the increase was $9.47 per hour. Seattle’s increase also isn’t immediate, but will take place over time, with yearly increases eventually reaching $15 an hour in 2021.
The University of Washington conducted a study shortly after the increase in Seattle started, trying to figure out the short term impacts on the local economy in Seattle. The main concern was that low-skilled jobs paying minimum wage would have to raise prices, cut hours, and drop employees in order to counteract the increase in wages.
However, the Seattle Minimum Wage Study team at UW found “little or no evidence” that local businesses would see a significant increase in prices. These are only short term studies done after the increase, and are are used to show the “hopes and fears that workers and business managers expressed as Seattle began its initiative to raise the minimum wage.”
Only time will tell if the increase in minimum wage will either hurt or help Washington employers and employees. For now, employees will see an increase in their paychecks and employers will see some small price increases.