This year, the talk of the hiring world in Seattle is about the minimum wage and how high it should be raised.
This year, the talk of the hiring world in Seattle is about the minimum wage and how high it should be raised. With last year’s election bringing in not only wage-hike supporter Ed Murray as mayor, but also Kshama Sawant, the country’s first openly socialist politician to sit on a major city council, the push for raising the city’s minimum wage to $15 per hour has more momentum behind it than ever before.
The response from businesses to Sawant’s “15 Now” campaign has been predictably negative. A spike to $15 an hour — especially if it is done all at once, with no phasing in for small businesses — would immediately lead to mass layoffs, higher prices and the closure of several mom-and-pop stores due to the higher labor costs, warned Forbes contributor Tim Worstall in September.
Should job seekers be worried that these higher wages will knock us all back into a stagnant hiring market? Not necessarily, according to the results of several studies on the effects of raised minimum wages in other cities. The jump from the state’s current $9.32-per-hour minimum to $15 is a hefty 61 percent increase, but some economists say the benefits may even outweigh the costs.
The best news for job seekers is that Washington state’s $9.32 figure is the highest statewide minimum hourly wage in the country, more than $2 above the $7.25 national minimum. Yet despite this added burden on employers, the annual rate of job growth over the past 15 years (0.8 percent) is significantly higher than the national average during the same period (0.3 percent), according to a recent Bloomberg report.
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Also, the article says, payrolls at restaurants and bars in Washington state, which were considered vulnerable to labor cost increases, have expanded by 21 percent since 1998, when the state’s minimum-wage increases began to be tied to inflation.
Other studies suggest that while some entry-level jobs may disappear, there will be relatively few added layoffs as a result of a higher minimum wage. That’s because a majority of consumers have shown that they are willing to pay a little extra to make sure employees earn a decent living.
A recent Snagajob survey of more than 9,200 job seekers found that 72 percent said they were willing to pay more at fast-food restaurants that paid a higher wage. And a 2010 analysis from the University of California, Berkeley, found that the 17 states with minimum-wage laws that exceeded the national minimum wage showed little difference in employment rates compared to the rest of the states. The study also noted that most increased labor costs from wage hikes were absorbed by lower employee turnover rates and higher productivity from workers.
However this debate plays out, we may get a resolution soon. Mayor Murray set up a 23-member committee of business, labor and civic leaders in January to come up with recommendations about how and when to administer a $15-per-hour minimum wage citywide. The committee is to deliver a proposal to Murray by the end of April.