By Jerry Fraser
In his column on Sept. 21, John Burbank promotes Initiative 1433, which raises the state minimum wage and provides sick leave for all workers. The sick-leave provision is good. It would provide a great benefit for workers and their families at little cost to employers.
However, raising the minimum wage statewide to the levels in I-1433 would be bad for many workers. Mr. Burbank implies that all low-income workers will benefit from raising the minimum wage. Some will, but many will lose their jobs. Employers will not hire or retain employees that do not provide more value to their business than the cost of those employees. Employers can raise prices, but this will cause sales to drop, which in turn will reduce the number of workers they need. Higher wages will also force employers to increase automation and take other measures to reduce the number of jobs.
The number of jobs lost because of a higher minimum wage depends on how much higher the minimum wage is above the natural market value of unskilled labor. This varies across the state. The minimum wages defined in the initiative may have little impact in the Puget Sound region where the economy is booming and the demand for workers is high. In places like Yakima or Prosser, where the economy is less robust and the cost of living is lower, it could result in significant job loss, causing many people who are currently making ends meet to be driven into deep poverty and homelessness. Any state-wide minimum wage should be based on the region with the lowest regional economy.
Another implication in Mr. Burbank’s column is that wages are the only cash income for low-income workers. In reality, a single mom with a minimum-wage job and two children would also receive Earned Income Tax Credit of $5,460 annually, which results in an effective wage of $12.28 per hour. Note that this is more than the same amount of additional wages because the EITC is not subject to FICA or Medicare taxes. Also, this single mom gets noncash benefits such as free medical insurance, food stamps, and free school breakfast and lunch for her children. If this single mom loses her job because the value of her labor is less than the legislated minimum wage, she will be much worse off.
Another group that will be worse off is entry-level workers. Many jobs that high-school students want during the summer will be eliminated, so these kids will be idle instead of gaining experience, developing a work ethic and earning a few dollars. Also, those who are less capable than average, such as people with Down syndrome, will be shut out of the job market, which would be a tragedy for them.
Mr. Burbank uses 1968 as a baseline for the historical minimum wage. This is misleading because the 1968 minimum wage was an outlier. The average minimum wage between 1963 and 1973 was about 12 percent lower than this, which is about the same as the minimum wage today, and there was no EITC in those days.
Mr. Burbank’s fantasy statistics don’t account for the economic reality of reduced prices and improved products resulting from productivity increases. Productivity increases should be shared by all of us, not only by the workers in those industries that can implement productivity improvements. In the long run, competition will drive prices down and/or provide better products. For example, cars cost roughly the same now adjusted for inflation as they did in the 1960s, but today’s cars are safer, more efficient, more reliable, need less maintenance, and last at least twice as long as 1960s cars.
I-1433 is well-intentioned and would help some workers, but would harm many others, especially those at the lowest end of the economic spectrum. I recommend a “no” vote on this.
Jerry Fraser lives in Snohomish.
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