What increase came first – the inflation or the wage?
Washington state’s minimum wage increased Jan. 1 to $8.55 per hour. As with every wage increase, workers are glad to see a higher number on the right side of their paycheck while small business owners find themselves looking over their books, trying to find a way to make up the difference.
The state makes sure the minimum wage keeps pace with cost-of-living increases and often the wage increase means a hike in the cost to deliver goods or services, according to local officials.
"It’s an interesting dilemma," said Vickie Maples, Sequim-Dungeness Chamber of Commerce executive director.
"Workers make more money due to cost-of-living increases but the cost for goods and services goes up as a result."
Washington has the highest minimum wage in the nation. Its neighbor to the east requires the federal minimum wage, $6.55 an hour. Oregon employers must pay at least $8.40 an hour.
"The Washington minimum wage increase reflects increases in the consumer price index and is considered just enough to meet the most basic of expenses," said Economic Opportunity Institute spokesman Aaron Keating. "It is just enough to keep pace."
The Economic Opportunity Institute, a Washington nonprofit working on economic security issues, tracks how well different family budgets handle the cost of housing, health care, transportation, child care and other necessary expenses.
According to the institute, the 2009 wage increase will result in the same buying power minimum wage workers had in 2000, when Washington’s minimum wage was $6.50.
Washington was the first of 10 states to annually adjust its minimum wage for inflation and is one of 23 states with a minimum wage higher than the federal rate of $6.55, according to Keating.
A full-time minimum wage employee in Washington will make $17,784 before taxes this year.
"Even with the highest minimum wage in the nation, full-time minimum wage workers in Washington earn only just enough to stay above the federal poverty line and far less than required for a family budget," an institute December 2008 report reads, further indicating accommodation and food service industries and their employees are the most affected.
Maples agreed that service industries would be impacted first, but said changes to wages have a ripple effect throughout the economy.
"Even those businesses unaffected directly will likely see increases in the costs of goods and services they need to do business," she said. "Employers always want to give a livable wage, but that bottom line is beginning to loom because of this economic uncertainty."
Maples said the best way to ward off a local economic downturn, both in the face of an economic slump and a minimum wage increase, is to shop locally. She said a strong local economy has the potential to shield employees from losing hours or their jobs.
"Buying goods and paying for services through local businesses will make all the difference," she said.
"Employers have less of a problem paying or hiring employees, those minimum wage employees can put that 6-percent increase back into their and other people’s jobs and dollars raised here are kept here rather than floating off out of the area, leaving Clallam County with fewer dollars around than it had before."
