Building an Economy that Works for Everyone

Marilyn Watkins: The minimum wage is not a living wage

Good morning. I am Marilyn Watkins of the Economic Opportunity Institute. Thank you for allowing me to testify this morning.

To  put the discussion in context, I’d like to share some data with you. These data illustrate three key points:

  1. Washington’s minimum wage has kept pace with one measure of inflation over the past decade, but it has not kept pace with overall wages. And business profits have increased substantially more than employee compensation over the course of the decade.
  2. Washington’s wage remains below a “living wage” for all but a single adult.
  3. The latest and best studies of minimum wage that control for regional variations find no evidence that a higher minimum wage results in fewer jobs – overall, in restaurants, or for teenagers. A higher minimum wage does result in higher incomes and less turnover for low wage workers.

Compared to the national median wage as calculated by the Social Security Administration, our state minimum wage has trended down over the decade. In 2000, someone working full-time, year-round at Washington’s minimum wage earned 42% of the national median. In 2011, our minimum wage is 40% of the projected national median wage.

According to data from the U.S. Bureau of Economic Analysis, between 2000 and 2008 (the latest year for which we have full data, if we adjust those figures by the annual CPI-W):

  • Gross profits of Washington businesses increased by 30%
  • Total compensation of employees in the state increased by 12%
  • Washington’s minimum wage declined slightly, by less than 1%

I would also note that the price index for the full year 2010 is above the year 2008 – even though from the months August 2008 to August 2010 the index did not increase.

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