State's minimum wage to hit $7.16 an hour, highest in U.S.

By Shirleen Holt
Seattle Times business reporter

October 1, 2003

Washington's minimum wage will rise by 15 cents an hour in January, becoming the highest in the nation.

The increase from the current $7.01 to $7.16 an hour surpasses Alaska's $7.15 minimum, which is expected to remain steady in 2004. Oregon's minimum wage will rise from $6.90 to $7.05 an hour next year.

Once the increase takes effect Jan. 1, Washington's minimum wage will have risen nearly 40 percent since 1998, the year voters approved an initiative linking the hourly minimum to the cost of living. The federal minimum will remain at $5.15 an hour, where it has stayed since 1997.

Business interests were swift to react to the planned increase.

"We're in a recession. We have an extremely high unemployment rate. We're losing jobs, yet the minimum wage is going up," said Carolyn Logue, director for the local chapter of the National Federation of Independent Business, which represents 600,000 members.

"Small businesses are going to find it more difficult to hire unskilled workers and train them. In fact, some of them are finding it virtually impossible because they can't afford it anymore," Logue said.

The Washington Restaurant Association blamed rising labor costs for contributing to the loss of 8,300 hospitality jobs in the state last year.

"Restaurants simply cannot afford to incur any more costs and hope to stay alive," association president Gene Vosberg said. "The minimum wage has increased for five years in a row." This, combined with rising workers' compensation and liability insurance, is squeezing margins and putting the industry in crisis, he said.

Both business groups cited a 2003 study by Ohio University economists Richard Vedder and Lowell Galloway, who estimated the state's annual wage increases caused 30,000 job cuts between 1998 and 2001.

State economists, however, haven't found a link between the automatic increases and a sluggish economy. Just 9 percent of workers here earn less than $8 an hour, the lowest wage category the state tracks. Nearly 28 percent earn $24 an hour or more, according to the most recent figures available.

Figures from the state Employment Security Department also showed that most of the job cuts over the past three years occurred in high-wage manufacturing and technology industries.

The Economic Opportunity Institute in Seattle, a key supporter of the 1998 ballot initiative and more recently the proposed Seattle latte tax, says the annual increases are a good step.

The increase will add $6 a week to a minimum-wage earner's paycheck.

Yet at $7.16 an hour, Washington's minimum wage still has less purchasing power than it did in 1968, when it was an inflation-adjusted $8.14 an hour, the economic institute noted in a report released in January.

"In a recession, it is extremely important that we make sure that those people doing the lousiest jobs are not left behind and that their purchasing power is not taken away from them," director John Burbank said yesterday. "I don't think you should work full time and end up living in poverty."


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