It’s time for state lawmakers to address the minimum wage issue – not because it’s a job buster as some critics claim, but because the law is flawed and does not allow for corrections in times of economic chaos such as the recession that continues its death grip on this state and nation.
Washington voters set the minimum wage policy through Initiative 688, which qualified for the November 1998 general election ballot.
The ballot title was clear: “This measure would increase the state minimum wage for workers 18 years and older from $4.90 to $5.70 per hour, effective January 1, 1999, and to $6.50 per hour, effective January 1, 2000. Beginning in 2001, the state minimum wage would be annually adjusted. The adjustment would be calculated each September 30, using the consumer price index for urban wage earners and clerical workers, and would take effect on January 1 of the following year.”
As noted by the state Department of Labor and Industries, Washington is one of 10 states – with Oregon, Vermont, Ohio, Nevada, Montana, Missouri, Florida, Colorado, and Arizona – that adjusts the minimum wage based on inflation and the consumer price index.
Washington has tied its wage to the consumer price index for urban wage earners and clerical workers (CPI-W) since August 2009. The CPI-W is a national index covering the cost of goods and services needed for day-to-day living.
Because of growth in that index, and the starting point, Washington has led the nation in the amount of money that must be paid to hourly workers. Our $8.67 hourly rate stands in sharp contrast to Georgia and Wyoming who have the lowest minimum wage in the nation at $5.15 an hour.
Twenty-three states tie their minimum wage to the federal minimum wage – $7.25 an hour or just a little bit more than $15,000 a year for a full-time wage earner. Four states pay less than the federal minimum wage and five states have no minimum wage regulation. The remaining 18 states are all above the federal rate.
While we can have a debate about the wisdom of tying Washington state’s minimum wage to the CPI, it’s clear that the drafters of the initiative didn’t envision declines in the CPI and that has led to conflicting legal opinions on how and when the minimum wage should be increased.
Lawmakers must clear up the ambiguity with corrective legislation. What’s unclear in the law is what happens when the consumer price index declines then rebounds – as has happened with the national economic recession. The dip and rebound have led to opposing legal opinions on how that should affect the minimum wage.
This issue should not hinge on legal opinions, but instead should be based in state law. It’s better that legislators set important public policies.
The Legislature should readjust the policy to reflect economic reality, but they should not adjust the rate based on the common criticism that a high minimum wage is a job killer.
Writing for the Economic Policy Institute in May, Jeff Chapman, said, “It is implausible that the minimum wage contributed to manufacturing’s woes and the contraction of the Washington labor market.”
Chapman said, “Clearly, more powerful forces – including trade imbalances, the overvalued dollar, a national recession, the Asian financial crisis, and a terrorist attack that deeply affected the aerospace industry – have been the primary causes of Washington’s job losses.”
Chapman said, “Restaurants, an industry much more likely to be affected by a minimum wage hike, added about 2,500 jobs between 2000 and 2003 despite the recession. (During this same period manufacturing lost 65,000 jobs and all industries combined lost 49,000 jobs.) If the minimum wage were the cause of job loss in Washington, one would expect losses to be concentrated in industries more affected by the minimum wage. The fact that the contrary is true is evidence that job losses in Washington are not due to the rise in the minimum wage.”
While some will debate Chapman’s contention, what is clear is the Legislature must correct the minimum wage law so it can take into account retractions in the consumer price index.
