Study effects of laws boosting minimum wage

The state of Oregon is the latest to join the march of states and municipalities that are raising their minimum wage rates in answer to calls to close the nationwide gap on income inequality and stagnant wages.

Its governor on Wednesday signed legislation that over the next six years will boost its minimum wage from the current $9.25 to $15 an hour in Portland and to lower amounts in the state’s smaller cites and in its rural areas.

For years, Washington state’s lowest-income workers enjoyed the highest minimum wage in the nation following the passage of Initiative 688 in 1998 that raised the wage floor and provided for annual adjustments based on the rate of inflation. The state’s current rate is $9.47 an hour, which now puts it behind California and Massachusetts at $10, Alaska at $9.75 and Rhode Island and Vermont and Connecticut at $9.60. Minnesota’s rate increases to $9.50 for large employers this summer. For comparison, the federal minimum wage is currently $7.25 an hour.

That march of other states past Washington hasn’t gone unnoticed here.

A coalition of state labor groups and others, Raise Up Washington, currently is collecting signatures for an initiative that seeks to increase the minimum wage to $13.50 over four years. It would also require employers to allow employees to accrue an hour of sick leave for every 40 hours worked. The campaign needs to collect 246,372 valid signatures of registered state voters by July 8 to qualify for the November ballot.

As well, state Sen. Steve Hobbs, D-Lake Stevens, proposed legislation that would have raised the wage to $12 an hour over four years and also included a provision for sick leave. Hobbs’ bill, Senate Bill 6087, got a hearing before a Senate committee but has gone no further during a session that wraps up next week.

Before Oregon, of course, the cities of Seattle and SeaTac, passed their own increases to $15 an hour.

Those wage increases in cities and states across the country also have provided a boost in the debate about the effects of the increases on income, on jobs and on the businesses who are paying salaries and benefits. While supporters consider the increases necessary to providing liveable wages to families, critics have countered that the raises will work against those families as employers pull back jobs or even go out of business.

As yet, there’s not a lot of clear data from which to draw conclusions. An article in Forbes last September pointed to a spike in Seattle’ unemployment rate, but that was countered by commentary last month in the Los Angeles Times that noted that both Everett and Bellevue, which hadn’t passed similar minimum wage laws, saw similar spikes in the unemployment rate for the same period.

Fortunately, the issue is being studied by a team working through the Evans School of Public Policy and Governance at the University of Washington. Initially focused on Seattle’s law, the study has been expanded to Chicago to track the impact of the minimum wage increases on the larger labor market, on businesses and nonprofits and in families’ daily lives.

The team’s first comprehensive report is expected this June, but some initial findings it released found only negligible impacts on consumer prices in 2015 when the wage increased to $11 an hour. But it also reported a 7.7 percent increase in restaurant prices but didn’t have the data to make comparisons to prices in the surrounding area.

The UW team’s June report won’t provide all the answers sought, as much will depend as wage rates are phased in over the next several years. A study of the effects of Oregon’s new law, because of the different rates it sets for different regions, also would be beneficial.

But the UW study should allow some guidance to voters and to other municipalities as this and other options for promoting jobs that secure liveable wages are considered.