Building an Economy that Works for Everyone

Washington AG would block voter-approved minimum wage increase – how will Governor respond?

In an opinion that could affect tens of thousands of Washington jobs, Attorney General Rob McKenna has recently interpreted the state’s voter-approved minimum wage law to block a 12-cent cost of living adjustment to the lowest-paid workers in the state.

Initiative 688 was approved by voters in 1998. It raised Washington’s minimum wage in steps to $6.50 in 2000, and tied future annual minimum wage increases to the cost of living for urban wage and clerical workers (CPI-W). From September 2009 to August 2010, inflation increased 1.4%. Per Washington law, the state minimum wage for 2011 should therefore increase by 12 cents, from $8.55 to $8.67 per hour, effective January 1, 2011.

But McKenna has advised the state Department of Labor and Industries (L&I) that no minimum wage increase is authorized for 2011 due to deflation that occurred in 2009.** In so doing, McKenna ignores statutory language stating, “The adjusted minimum wage shall be calculated using the consumer price index…for the twelve months prior to each September 1st…” (emphasis added).

Governor Gregoire will make a final recommendation to L&I about a minimum wage increase for 2011 on September 30th.

Over 65,000 minimum wage jobs in Washington affected

The most recent update from the state Employment Security Department (ESD) indicates that in the second quarter of 2009, the overall num­ber of minimum wage jobs was at an all-time high of almost 67,000, exceeding the record set in 2000. Put another way, 6.4% of all Washington jobs – where a job is any employee-employer relationship – paid the minimum wage. Since workers within about $1.00 of minimum wage also experience raises when the minimum goes up, the Governor’s decision will directly affect far more than the apparent number.

According to the U.S. Department of Labor, half of all minimum wage workers nationwide are over 25 years of age. Accommodation and food services are the single biggest employers of minimum wage workers in Washington. ESD estimates that for the four quarters ending in the second quarter of 2009, accommodations and food services hosted 35 percent of the state’s minimum wage jobs. Another 17 percent of these low-wage jobs were in agriculture, and 17 percent were in retail trade.

Major impact on local families – minimal impact on local businesses

Even with the highest minimum wage in the nation, full-time minimum wage workers in Washington fall short of what families need for a basic budget. A two-parent, two-child household working full-time (2080 hours) at minimum wage would earn $35,568 per year. In Seattle, annual expenses for the same family are approximately $49,835; in Spokane/Spokane County, $41,738; in Chelan County, $39,795.

Previous claims that minimum wage increases would hurt job growth have been debunked both by Washington’s experience and those of other states across the country. And as of 2007, the president of the Association of Washington Business – one of the state’s major business lobbies – said the group is no longer fighting regular increases in Washington’s minimum wage.

State and historical comparison

Washington was the first of now ten states (AZ, CO, FL, MO, MT, NV, OH, OR, VT, WA) to annually adjust its minimum wage for inflation, and is one of 14 states with a minimum wage higher than the federal rate of $7.25. Washington’s minimum wage is currently the highest in the nation, at $8.55 per hour. Oregon’s minimum wage is governed by a law similar to Washington’s, and will increase by 10 cents to $8.50 per hour in 2011.

In comparable dollars, Washington’s minimum wage is actually lower than it was 40 years ago. The state minimum wage was $1.60 in 1968; if it had kept pace with inflation, in 2010 it would be $10.05 — $1.50 anhour higher than today.

** Washington’s minimum wage law protects low-income workers by ensuring the minimum wage holds steady even when the cost of living declines during an economic downturn, as it did between September ’08 and August ’09. Accordingly, there was no COLA increase in the minimum wage for 2010.

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