Washington’s minimum wage just jumped by 28 cents to $7.63 per hour, the current highest in the nation. While many minimum wage earners accept the extra cash without thinking further than a slightly-less-squeezed wallet, some realize that the high minimum wage could ultimately cause as many problems as it solves.
Small businesses are the first to feel the pinch when minimum wage is raised. They must then raise prices to maintain profit levels, which could directly impact the very people the raise is supposed to help – for example, fast-food restaurants, although not the healthiest choice, are a cheap and convenient option for students who are paying their own way through school. This compensatory hike in merchandise and service costs could easily do away with the extra money generated by the raise for any worker who patronizes businesses affected by the higher cost of work.
Initiative 699, approved by Washington voters in 1998, requires a minimum wage adjustment to match cost-of-living increases and inflation. But how much is this really helping the people it targets? Although a minimum wage increase is beneficial to some groups, such as students who are only working for pocket money, it is still, according to a minum wage worker in Pullman, WA, “impossible to support a family working only minimum wage, unless both parents work full-time” This scenario is problematic not only in that it removes children from meaningful interaction with either parent, but in that it can make costly child care necessary, again nullifying most of the benefit of high minimum wage and wiping out most of what young parents can earn, even if both join the workforce. Families can find themselves struggling to make ends meet, sometimes forced to depend on state-funded relief programs, wondering why, with the highest minimum wage in the country, they are unable to get ahead. The unseen countermeasures taken by the grocery stores, the laundromats, the department stores, are sucking the extra money right back out of the minimum wage earner’s pocket.
Washington’s only fellow in this dubiously effective attempt to ease the struggles of marginal groups through annual aggrandization of the minimum wage is Oregon, which at 7.50 per hour has the next highest in the country.
An even further removed and further reaching effect the higher minimum wage could have is driving businesses and therefore jobs, out of Washington to states more conducive to healthy small-business growth. Those companies that do stay will inevitably find ways to counter the cost which may, as we have seen, cancel out any benefits offered by the extra money. Additionally, they may cut hours to reduce expenses, or use machines to take the place of workers. Eventually all these things could create an unhealthy job market in Washington, resulting in higher pay for those who have jobs, but fewer available jobs and less job diversity. Increased competition for jobs could also become a factor, with Idahonians frequently crossing the border in search of better pay than their $5.15 per hour. Housing costs, both for owners and renters, are less in many areas along the border of Idaho, causing many people to choose Idaho as their state of residence and Washington as their state of employment.
There are many subtleties and aspects to an annual raise in the minimum wage whose results will only be evidenced with time and surveillance of the effects on Washington’s economic state and its populations. While unlikely to create an immediate economic crisis, the effects could be detrimental enough that the need to question the worth of the annual raise as a social aid system will become clear. Studies should be done periodically to check for ineffectiveness and negative effects, and to ascertain that the system has not simply become a beaurocratic habit, accepted because no-one wants to challenge the status quo.