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New Washington State Minimum Wage Goes Into Effect

Washington State’s minimum wage has been the highest in the U.S. for the past decade, and now labor advocates can claim another small victory: the minimum wage just rose 37 cents to $9.04 per hour. Washington’s minimum wage applies to workers in all industries and across every sector; however, 14 and 15 year-olds may be paid at a lower rate ($7.68 per hour), which is 85% of the adult wage rate.

The Department of Labor & Industries re-adjusts the state minimum wage every September, as mandated by the voter-approved Initiative 688.  That initiative went into effect in 1998, and requires the state to adjust its minimum wage according to changes in the federal CPI-W, a national index of the cost of goods and services necessary for daily living. The index increased 4.3% over this past year.

L&I provides employers with poster announcements of the new 2012 minimum wage; these can be printed and displayed as needed. The announcement is offered as a convenience only; neither L&I nor Washington State law requires businesses to display these. However, employers do need to post the “Your Rights as a Worker” poster, which gives general information regarding the minimum wage and other related topics.  These workplace posters are available free of charge from any L&I office, and can be downloaded from the L&I website.

Does the Minimum Wage Increase Unemployment?

Some economic theorists argue that a minimum wage set above a so-called “natural market wage” produces higher unemployment – especially for unskilled workers or others who might be considered a “risk” to employ. However, experts hotly debate this question using a wide variety of data, economic theory, and historical cases.

Seattle Times editorialist Bruce Ramsey cautiously suggests that higher unemployment could result from higher wages. He bases his misgivings about the new minimum wage on comparative state figures for the number of workers experiencing underemployment (defined as officially unemployed — not working and looking for work), workers employed part-time but seeking full-time work, “other marginally attached” workers, and individuals who want a job but are discouraged from looking. In light of these figures, Ramsey offers the following account:

“Combined, these ‘underemployed’ were the biggest problem in Oregon, Alaska, Washington, Michigan and California, in that order. This was not for one year, but was an average of 2003 to 2010, which includes boom years and recession years. Notable was that every one of the five states with the worst underemployment has a state minimum wage higher than the federal minimum of $7.25: Oregon is at $8.80, Alaska $7.75, Washington $9.04, Michigan $7.40 and California $8.00. (The listdoes not include the changes since 2003.) The five states with the lowest underemployment from 2003 to 2010 were Nebraska, Delaware, New Hampshire, South Dakota and Virginia. None has a state minimum higher than $7.25. If you start with the states with the highest minimum and see where they fall, there is less correlation. Still, Washington and Oregon have the highest state minimums, and in the period of 2003-2010 they were third and first, respectively, in rates of underemployment. That is not proof of economic theory–there are lots of reasons why a state will do well or poorly–but it is suggestive.”

However, other experts refute these implications, citing studies that suggest a zero (or near-zero) net job loss resulting from higher minimum wage rates. In an interview with NPR, David Cooper, an analyst with the pro-labor Economic Policy Institute, argues the minimum wage is especially important to America’s struggling workforce now:

“When you have lines of the unemployed around the corner looking for jobs, there’s no real pressure for employers to raise wages,” Cooper says.

And in this age of Occupy Wall Street, Cooper says, pushing up that wage floor is one way to address growing income inequality.

“Increases in the minimum wage are essentially a shift from corporate profits to low-wage employees,” he says. “And we know that low-wage employees spend more of their money. They’re going to spend essentially every penny they get, so that increased demand is going to result in more economic activity and potentially more jobs.”

If you are involved in a wage or hour dispute with your employer, contact a Seattle Employment Attorney or Wage & Hour Violation Attorney to represent your case.

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Emery Reddy