Minimum wage increase hurts economy
Washington Gov. Jay Inslee's proposal to increase the state's minimum wage represents a Band-Aid approach to economics. What is really needed is a means of growing the number of jobs that pay a living wage, not the minimum wage. But there is one thing to like about the proposal.
In his recent State of the State address, Washington Gov. Jay Inslee proposed increasing the minimum wage by, oh, $1.50 to $2.50 an hour, give or take.
His argument was that many Washingtonians stuck in minimum wage jobs cannot afford to pay the rent and put food on the table. Therefore, he says, it is incumbent on the state government to help them.
While we certainly agree that government is obliged to help those in need, jacking up the minimum wage isn’t the way to do it.
Besides, Washington state is already generous in its support for low wage earners.
The state already has the highest minimum wage in the nation. At $9.32 an hour, employers across the state are already doing their fair share for entry-level workers. In addition, minimum-wage earners get lots of help from the government. A family of four with one person earning the minimum wage and paying $500 a month in rent is eligible for about $441 a month in basic food benefits, the federal earned income tax credit, free or low-cost health care under the Washington Apple Health Plan, free family planning and contraceptives, help paying utility bills and even help finding cheaper housing.
If they have small children, they can get $50 a month from the Women, Infants and Children supplemental nutrition program, called WIC, and help with child care costs or through Head Start. And anyone seeking help can apply in 12 languages in addition to English.
The notion that Washington state needs to increase its minimum on the order of 16 to 27 percent misses the mark. What the governor should be talking about is growing the number of good-paying jobs. The goal should be for government to open its doors to businesses, large and small, so workers can get a job that pays more than the minimum wage. The goal is to encourage private enterprise to come to Washington. Increasing the minimum wage does the opposite.
Let’s take a look at the impact a higher minimum wage would have on a business such as a farmer. A farmer must pay the minimum wage, or its equivalent as a piece rate, to employees over 16 years old, according to the state Department of Labor and Industries. If the legislature were to hike the minimum wage, say 20 percent, that farmer would not receive 20 percent more income. He would either have to pare his payroll or find another way to reduce his labor expenses, such as automation or switching to a less labor-intensive crop.
In essence, a higher minimum wage means fewer jobs.
The one thing we like about Inslee’s proposal is the fact he’s willing to be held accountable for Washington’s out-of-control minimum wage growth. Currently, the wage automatically increases each year, based on a formula that tracks inflation. That’s why the state has the highest minimum wage already, and politicians can shrug their shoulders and say they can’t do anything about.