Keep the Minimum Wage High

You probably heard this one before: Having a job is the new raise.

True enough. In this desultory economy, few workers are likely to barge into the bosss office demanding a raise and a company car. Theyre just happy to have a boss. But some jobholders in Washington state actually got a sweet pay hike this month. On January 1, the states minimum wage went from $8.67 an hour to $9.04 an hourthe highest minimum wage among the 50 states.

Woo-hoo! For minimum-wage earners lucky enough to work a 40-hour schedule, that pencils out to an extra 15 bucks a week. Those keeping score at home will note that this latest increase takes the annual gross for a minimum-wage worker in Washington from $18,033 to $18,803 a year. A family of three is officially poor in this country if its income is $18,530 or less, so one way to look at the 37-cent pay raise is that it lifted at least some people out of official poverty and into, well, the outskirts of poverty.

As ridiculous as it sounds, thats something to be proud of. Elsewhere in this issue, an academician suggests that forgoing this years increase in the minimum wage might create more jobs and help jump-start the economy. He may be right, but do we really need to rescue the economy on the backs of those who can least afford to carry out the offensive?

Bear in mind that, as recently as the boom times of 2007, the federal minimum wage was $5.15 an hour. The Fair Minimum Wage Act that year implemented phased increases that raised it to $7.25 by 2009. Thats where it stands today, except in 18 states whose higher standards supersede the federal minimum.

Ten of those statesArizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washingtonlink their minimum wages to a consumer price index. Unless lawmakers or voters decide otherwise or the Tea Party in these states stages a coup detat, the minimum wage rises automatically every year if the cost of living goes up. This has been the case in Washington since 1998, when voters approved Initiative 688, providing for a new minimum of $5.70 an hour effective January 1, 1999 (up from $4.90), and $6.50 an hour effective January 1, 2000. After that, the wage has been annually adjusted to reflect any increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers. The index measures the average change in the prices of goods such as food, clothing, shelter and fuel, and of services such as visits to the doctors office. No shocker that the big culprit this past year has been fuel, whose price has left many workers running on empty.

Anyone who took ECON 101 a generation ago probably remembers reading that establishment of a minimum wage was inevitably linked to higher unemployment. Research since then has suggested otherwise, and further research has refuted the refuters. Economists cant decide if a minimum wage is like a diet thats high in fiber or high in Cheez-Its.

This difference of opinion is probably why theres such a wide variance in state minimum wages, ranging from Washingtons $9.04 to Georgia and Wyomings $5.15with the federal minimum tucked squarely in between.

Regardless, if viewed as a living wage, no states minimum is doing anyone any favors. Had it kept pace with inflation since 1968, when it was $1.60 an hour, the federal minimum would be $10.39 today, making Washington states minimum look almost decentbut not quite.

In other words, were number one. And still trailing badly. Lets not make it worse.

JOHN LEVESQUE is the managing editor of Seattle Business magazine.