Minimum wage law squeezes jobs out Washington ag groups press for reform

By PEGGY STEWARD
Capital Press Staff Writer

2/10/03

MOSES LAKE, Wash. – A newly released study concludes that Washington state’s minimum wage law has brought about job losses and increased poverty.

The state’s minimum wage is $7.01 per hour, the highest in the continental United States. The federal minimum wage is $5.15 per hour.

In 1998, Washington voters overwhelmingly passed an initiative linking the state’s minimum wage to the annual federal consumer price index. Since then, the state’s minimum has increased 36 percent.

Voters thought the law would help people who are lower on the economic scale. But it has actually had the opposite effect, according to the study by two Ohio University professors.

While unemployment in the Pacific Northwest has declined since the law passed in 1998, it has risen sharply in Washington state, the study said. Much of the rise came after the law passed and before the 2001 recession or the Sept.11 tragedy.

The study estimates that between 20,000 and 48,000 jobs have been lost in the state since the law was passed, raising the unemployment rate by at least one percentage point.

Efforts are under way in Olympia to reform the minimum wage law, said Jim Jesernig, former director of the state Department of Agriculture and now a consultant to agriculture groups. Jesernig told about those efforts and the new study at a meeting of the Washington Potato and Onion Association, a shippers group. The meeting was held Feb. 4 in Moses Lake, coinciding with the 42nd annual Washington State Potato Conference and Trade Show, Feb. 4-6, also in Moses Lake.

“It’s great to be No. 1 if you’re a football team,” Jesernig said. “But it’s not great to be No. 1 in unemployment.”

The minimum wage law hits agriculture particularly hard, the report said. Ag workers are generally paid less than the average for non-ag workers, and as the minimum wage has increased, ag employment has dropped off. Since farmers are price takers, they can’t pass increased labor costs on to buyers or consumers.

The study, “The Economic Impact of Washington’s Minimum Wage Law,” was written by Richard Vedder and Lowell Gallaway. Vedder was scheduled to present the study to a joint hearing of the state Senate Commerce and Trade Committee and the state House Commerce and Labor Committee on Feb. 5.

The study will be cited by a coalition of 16 state business groups as they press for minimum wage reform.

The coalition will not seek to repeal the minimum wage law or its indexing provision, Jesernig said. “We’re proposing changes so it makes more sense,” he said.

The coalition will ask lawmakers to tie indexing of the minimum wage to the state’s unemployment rate, instead of to the federal consumer price index.

The coalition is also proposing to create a training wage for new hires, who could be paid 75 percent of the minimum for 90 days. A teen wage is also being proposed, and local wage ordinances would be pre-empted.

A proposal to allow credit for providing worker housing could benefit agriculture employers.

The escalating minimum wage hurts rural areas and Eastern Washington, Jesernig said. Those areas are largely dependent on farming and food processing.

A nearly $2 differential between the state minimum and the federal minimum makes it hard for state businesses to compete, Jesernig said. Minimum wage reform is especially important for the state’s economic development, he said.

Ag groups in the reform coalition include Hop Growers of Washington, Washington Asparagus Commission, Washington Association of Wine Grape Growers, Washington Christmas Tree Growers Association, Washington Food Industry Association, Washington Growers Clearing House, Washington Potato and Onion Association, and the Washington Farm Bureau.

Other groups in the coalition include the Association of Washington Businesses, Independent Business Association, Washington Association of Neighborhood Stores, National Federation of Independent Businesses, Pacific Northwest Ski Areas Association, Washington Restaurant Association, Washington Retail Association and the Washington State Hotel and Lodging Association.

The study is available on the Washington Farm Bureau’s website at www.wsfb.com.