By John Burbank
When my kids got their first jobs, I was happy that we in Washington had voted for a decent minimum wage. I knew that they couldn’t be completely taken advantage of, and that they would be doing better in Washington than in other states.
Now we have reason to celebrate again, because just on Tuesday our minimum wage kept even with inflation, with a cost-of-living adjustment of 1.67 percent, or 15 cents. Now the minimum wage is $9.19 an hour. That’s still behind what the federal minimum wage would have been if it had just kept up with inflation. Ronald Reagan began the bad habit of not raising the minimum wage to keep up with inflation, and we are still stuck with a federal minimum wage that keeps losing value. If it had kept up with inflation, the federal minimum wage would be $10.55 now.
The federal minimum wage hasn’t caught up in the past few years either. Since 2009, it has lost seven percent of its value. Compare that to Washington’s minimum wage, which keeps up with inflation year in and year out. That means that a Washington worker earning the minimum wage gets almost two dollars more than a worker in Idaho — $4,000 a year. That’s a good thing — for workers, for their families’ income, for reducing dependence on public assistance, and for the economy of our state.
Minimum wage workers spend their earnings in their local communities — at grocery stores and local restaurants. That means that these stores and restaurants employ more workers, often minimum wage workers, who also spend their money in town.
With a decent minimum wage, workers are more productive and stay longer with their employers, saving employers additional hiring and training costs. All in all, a good minimum wage creates a virtuous cycle of economic activity, for workers, for employers, for local communities, and for our state.
We in Washington voted for the automatic annual cost-of-living-adjustment for the minimum wage 15 years ago. We passed this initiative by a two-to-one margin. Just like the Social Security COLA, it made common sense then and it makes common sense now. We broke the ice for other states to increase their minimum wage. Now 45 percent of Americans live in states with minimum wages higher than the federal minimum. That includes blue states like Oregon and California, red states like Alaska, Missouri and Arizona, and states in between, like Colorado and Montana.
Unlike federal law, our minimum wage law includes tipped employees. That means your waitress is earning $9.19 at a minimum, not at the mercy of poor tippers and rude customers. If she was waitressing in Idaho, her minimum wage would be $2.13 an hour. That’s less than $4,500 a year for full-time work. Not much of an incentive to work. And for those critics who claim that our minimum wage undermines jobs, the fact of the matter is that in our state, it is minimum wage industries that are expanding employment.
Who are minimum wage workers? Over half are over 25 years old, and one fifth are over 45 years old. Women are the majority of minimum wage workers. About 170,000 workers in our state will see their wages go up this week thanks to the minimum wage COLA. Now 19 cents per hour isn’t much, but it is a lot better than losing ground. It adds up to about $400 a year.
What if that $400 a year went to minimum-wage employers, rather than to their employees? Would that be a good thing? With five of these employees, a boss may garner $2,500 a year. That would pay for a family trip to Hawaii. And that is just the point. A trip to Hawaii may be good for the boss’s family … and the Hawaiian economy. But it just drains money out of our state. Much better to have that $2,500 go to five workers, who will spend it in communities closer to home, helping themselves and helping our own local economies.
We talk a lot about middle class security and opportunity. The first rung on the ladder for getting into the middle class is a decent minimum wage. Without it, many of our fellow citizens would be consigned to a life of poor wages and little opportunity. With Washington’s minimum wage — the best in the country — they at least have the chance to hope for and reach for a good quality of life. That makes for a happy new year for all of us.
John Burbank is the Executive Director of the Economic Opportunity Institute (www.eoionline.org). He can be reached via email at email@example.com