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The Effects of WA's Higher Minimum Wage

PHOTO: Economist Dean Baker says today's minimum wage ought to be at least $10 an hour.
PHOTO: Economist Dean Baker says today's minimum wage ought to be at least $10 an hour.
October 3, 2012

SEATTLE - When Washington's hourly minimum wage increases in January, it will mean $6 more per week for full-time workers at that pay rate.

The 15-cent increase raises their annual income to a bit more than $19,000. That's enough for a single person to live on in most counties. Add just one child, however, and you'll need at least $6 more per hour to make a household budget work - and in the state's biggest cities, $14 or $15 an hour more.

At the Center for Economic and Policy Research, economist Dean Baker says a state minimum wage that keeps up with inflation is good - but over the years, low-wage workers have fallen behind. He says today's minimum wage ought to be at least $10 an hour.

"If you take it a step further, the minimum wage used to actually increase more rapidly than inflation. Through the '40s, '50s, '60s, it rose more or less in step with productivity growth. If it continued to do that, it'd be around $18 an hour now."

Baker says the biggest effect of a minimum-wage increase won't be on individual workers, but on the state's economy, since low-wage workers are more likely to spend their paychecks, boosting retail sales. Four in five minimum-wage workers in Washington are adults, and 58 percent are women.

The increase brings Washington's minimum wage to $9.19 an hour. Baker says businesses either will cover the pay increase by raising their prices a bit or finding ways to increase productivity. He does not expect it to cause job losses.

"This is one of the most widely researched topics in economics, and the vast majority of the research finds little or no employment effect. So, the story that you raise the minimum wage and you're going to see big layoffs, and young people are going to take a big hit in terms of their employment opportunities - there's just almost no evidence to support that."

The Economic Opportunity Institute in Seattle says most of the job growth in recent years in Washington has been in minimum-wage positions, a trend that is forecast to continue.

Chris Thomas, Public News Service - WA