Talk about forward thinking. For 16 years now, the state of Washington has boasted the highest minimum wage in the U.S. — currently $9.32 per hour, a full two dollars and change more than the federal mandate of $7.25.
When west coast voters passed the initiative in back in 1998, opponents claimed that a higher wage would kill jobs. Coincidentally, this is the same argument that is being used by politicians, business groups and lobbyists who are fighting against President Barack Obama’s push for a $10.10 minimum wage. As the debate continues, Bloomberg analyzed the numbers in Washington state, and the results are surprising.
MORE: These Billionaire GOP Donors Support the Idea of a $12 Minimum Wage. Will the Party Follow?
After Washington’s minimum wage increase passed, which increased wages over two years to $6.70 and linked future increases to inflation as measured by the Consumer Price Index, unemployment in the state spiked for a three-year period. However, in the years that followed, unemployment gradually decreased. For four of the past five years, Washington’s unemployment rate has been below the national average — as well as below the averages for the Western and Southern regions. Overall, Bloomberg reports that Washington’s job growth has continued at an average of 0.8 percent annually, outpacing the national growth rate of 0.3 percent.
An added bonus? Poverty in the state trailed the U.S. average for at least seven years as well. And payrolls at Washington’s restaurants and bars — employees of which are particularly vulnerable to minimum wage laws — have expanded by a whopping 21 percent. In other words, after 15 years of implementation, Washington’s minimum wage increase is successful. “It’s hard to see that the state of Washington has paid a heavy penalty for having a higher minimum wage than the rest of the country,” Gary Burtless, an economist at Brookings Institution and former U.S. Labor Department worker, told Bloomberg.
MORE: Art That Reveals the Hidden Role of Low-Wage Labor in L.A. Extravagance
How do the results seen in Washington line up with those projected nationally? A report by the Congressional Budget Office published in February found that President Obama’s proposal of raising the minimum wage to $10.10 would reduce employment by 500,000 workers — a talking point that has been levied by opponents of the wage increase. However, the same report found that a higher minimum wage would lift 900,000 people out of poverty.
So while it’s true that raising the minimum wage would create higher costs for employers — which could lead to job cuts — the increase in pay will likely be pumped back into the economy by citizens who are spending more money than they would be able to if they were being paid at a lower rate.
That might not be enough to convince Congress, but just take a look at this sobering map created by the National Low Income Housing Coalition, which shows the hours per week that minimum-wage employees would need to work in order to afford a two-bedroom apartment. In Washington, these employees would need to clock 81 hours a week — and that’s despite the fact that they are paid the the highest minimum wage in the country. For the 19 states that adhere to the federally-mandated $7.25 an hour … well, let’s just say it doesn’t look like these employees will be affording the apartment of their dreams (or even any apartment) anytime soon.
ALSO: Why This Sportswear CEO Decided to Improve the Lives of His Factory Workers
Tag: Congressional Budget Office
These Billionaire GOP Donors Support the Idea of a $12 Minimum Wage. Will the Party Follow?
Could common political ground between Democrats and Republicans be on the horizon? It looks like some influential conservative donors are shifting their ideology ever so slightly to increasing the minimum wage — a legislative issue that Democrats are pushing for as we near the midterm elections. In January, wealthy Silicon Valley executive and conservative donor Ron Unz put forth a California ballot measure that would raise the minimum wage to $10 an hour in 2015 and $12 in 2016. His perspective was this: raising the minimum wage would put more money in the average Americans’ pockets, which in turn would make them less reliant on government aid. Now Peter Thiel, the billionaire co-founder of PayPal and GOP donor, is weighing in on Unz’s plan, saying, “I actually think that it’s a very out of the box idea — but it’s something one should consider seriously.” Thiel, who has donated millions of dollars to GOP causes over the year, including $1 million to the anti-tax group Club for Growth and nearly $4 million to the Endorse Liberty PAC in support of presidential candidate Ron Paul in 2012, agrees with Unz’s assumptions that a higher minimum wage could reduce people’s dependency on welfare. “Given how low the minimum wage is — and how generous the welfare benefits are — you have a marginal tax rate that’s on the order of 100 percent, and people are actually trapped in this sort of welfare state,” he said.
MORE: Art That Reveals the Hidden Role of Low-Wage Labor in L.A. Extravagance
The idea of a minimum wage increase has been a hot topic of late. President Barack Obama called on Congress to work together to increase the minimum wage to $9 an hour by 2015 in his State of the Union address, saying that the move would raise the income of millions of working families. “It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets,” he said. The current federal minimum wage of $7.25 — which is used in about 30 states that don’t mandate their own — translates to a $15,000 annual salary, which the President noted is well below a living wage in many areas of the country.
Recently, House Democrats filed a “discharge petition” in an attempt to dislodge their bill that increases the minimum wage to $10.10 an hour, which would move the vote to the floor. While it seems unlikely that the petition will get the required votes, some Republican lawmakers have said that they are open to discussion on the issue. Others stick to their opposition, citing a bipartisan Congressional Budget Office report that says that raising the minimum wage would cost the economy 500,000 jobs. Democrats, on the other hand, cite another aspect of the same report — that raising the minimum wage would lift 900,000 people out of poverty. OK, so maybe legislators aren’t finding their common ground quite yet. But if there’s one certainty in politics it’s that politicians follow the money. If major conservative donors continue to push for a minimum wage increase, we might hear some GOP lawmakers singing a different tune.
ALSO: Why This Sportswear CEO Decided to Improve the Lives of His Factory Workers