Minimum wage hike is bad for business

Opinion from The Yakima Herald-Republic
Posted in the Bremerton Sun

January 11, 2003

Washington's unfriendly business climate got a little unfriendlier with the start of the new year. The minimum wage increased to $7.01 Jan. 1, giving Washington the dubious distinction of having the second-highest minimum wage in the country behind Alaska at $7.15. The federal minimum is $5.15.
The high ranking is largely because the wage is unrealistically tied to an arbitrary escalator that hikes the wage every year on New Year's Day. It ties the minimum wage to the federal Consumer Price Index for Urban Wage Earners and Clerical Workers, which increased 1.6 percent over the previous year. That index by definition is one that has no realistic application to farming economies.

This is a law that should be changed and that will take courage on the part of legislators since it was approved by voters in 1998 when the state's economy was very rosy. But if there ever was a session for lawmakers to change voter-approved laws, this is it. Gov. Gary Locke has already proposed doing so with three voter-approved initiatives to help balance the budget -- two dealing with education spending and one with a cigarette tax increase. If he's willing to take that kind of political heat, legislators also should step up to the plate on the minimum wage as well.

The reasoning behind the minimum wage is lost with the escalator. It was never designed to be a living wage. It was supposed to be an earnings floor for workers in entry-level, unskilled, often menial jobs, protecting a vulnerable work group from exploitation.

Conversely, workers wanting to escape the shackles of such marginal employment have the options of training and education to move up the wage scale.

Even the new $7.01 an hour minimum, which is up only 11 cents an hour over the previous year's, is not a lucrative income. But its annual escalation poses the real threat of pricing those unskilled workers out of the labor market if employers start upgrading or eliminating entry-level jobs to justify this constantly increasing salary.

Business costs are either passed on to customers and consumers or are absorbed. If the wage no longer justifies the job, as so often happens with minimum-wage jobs now, then layoffs and reductions in force can be close behind.

The state already has too many roadblocks for struggling businesses through such things as regulatory excesses, a business and occupation tax that is imposed on gross receipts whether a business makes a profit or not and family leave policies that were greatly expanded Jan. 1 to allow workers paid time off to care for ailing relatives.

The minimum wage escalator should not make the climate even more unfriendly.