On January 1, 2012 Washington State’s minimum wage will increase to $9.04. Once again Washington State will lead the nation in having the highest minimum wage. Oregon’s minimum wage will increase to $8.80.
The minimum wage level of Washington State, Oregon and 8 other state’s is indexed to inflation and the consumer price index. In 1998 Washington voters passed Initiative 688. It was the first state to index it’s minimum wage to inflation and set the standard for other states to follow rather than every few years waging battles to try to increase the minimum wage when inflation went up. The other eight states are Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, and Vermont.
As CNNMoney notes, “Minimum wage rates in Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington will rise between 28 and 37 cents per hour on Jan. 1 …Rates in these states will range from $7.64 per hour (in Colorado), to $9.04 (in Washington) in 2012.” Nevada does not raise its minimum wage until July 1st and Missouri, even with an adjustment, does not exceed the Federal minimum wage.
Increasing the minimum wage has positive effects on the economy. As CNNMoney noted:
“The small boosts for 2012 are estimated to tack an extra $582 to $770 a year onto the paychecks of full-time workers, according to the National Employment Law Project, a non-profit advocacy group.
What’s more, the increases could be a mini-boost for the economy. The expected rise in consumer spending as a result of the wage increases would add $366 million to the nation’s gross domestic product and lead to the creation of more than 3,000 full-time jobs.”
The Economic Policy Institute calculates the actual impact in even broader terms.
Across these eight states, an estimated 1,045,000 workers will be “directly affected.” These are workers whose current wages are between the existing state minimum wage and the new Jan. 1 minimum wage. In addition, another 394,000 workers will be “indirectly affected” by the increase. These indirectly-affected workers are those whose current wages are just above the new Jan. 1 minimum, and are likely to also see a wage increase as employers adjust their overall pay structures to reflect the new minimum (the “spillover” effect).
Despite the benefits of indexing the minimum wage to inflation, the national minimum wage is not indexed to inflation. Thus as the cost of goods like food and gas go up, the buying ability of minimum wage workers decreases. The current Federal wage is currently only $7.25. That’s just a little over $15,000 a year.
The federal minimum wage needs to be indexed to inflation. Congress has a dismal record of increasing the minimum wage. From 1997 to 2007, the minimum wage was stuck at $5.15 despite increases in inflation. In legislation passed in 2007 it went up to $5.85 in June 2007, then to $6.55 in June 2008 and then to $7.25 in June 2009. No further increase have been made in the last 2 1/2 years.
Barack Obama, as part of his transition team agenda, said he would work to raise the minimum wage and index it to inflation. We need to hold him to his promise and to put Democrats and Republicans on the spot as to standing up for helping low income workers make it in this economy. Republicans will voice all their usual objections but there is no better way to convince voters of whose interests they really represent than to challenge them to support working Americans by raising the minimum wage for the lowest paid workers.
And progressives in the states that have initiatives would be wise to run minimum wage initiatives with an inflation index in 2012. With all the attention on the vast disparity of wealth distribution in this country that has gotten worse, its time to put on the ballot measures that work to redress this imbalance and that point out the differences between the goals of Republicans and Democrats. Democrats have joined with Labor in working to help raise the pay of lower wage earners. Republicans have not.
On January 1, 2008 Washington State’s minimum wage will increase 14 cents to $8.07/hour. We will still be the highest in the nation.
California’s minimum wage will increase 50 cents to $8.00/hour. California will share second place with Massachusetts whose minimum wage is also rising to $8.00/hour.
Oregon comes in fourth – their minimum wage will go from $7.80 to $7.95 on Jan 1, 2008. Oregon’s minimum wage law was passed by voters as Measure 25 in 2002.
Earlier this year the Oregon Center for Public Policy released a study entitled “Job Growth Not Dampened by Minimum Wage Increases.” They noted that “… minimum wage cost-of-living adjustments have not led to the dire consequences predicted by the farm and restaurant industries that opposed pegging the minimum wage to inflation. “
Montana voters in 2006 also passed a minimum wage initiative like Washington’s that included the yearly increase based on the Consumer Price Index. Montana’s minimum wage will go up 10 cents to $6.25/hour in 2008.
Washington State’s minimum wage is adjusted each year based on increases in the Federal Consumer Price Index for Urban Wage Earners and Clerical Workers. The State Department of Labor and Industries adjusts the wage level based on a one year period ending August 31st . The adjusted wage goes into effect the following January 1st.
The wage adjustment takes place each year because in 1998 Washington voters passed Initiative 688. with a 66% yes vote. The initiative is fairly brief but it was the first in the nation to require that the minimum wage be increased each year to reflect any increase in inflation.
The initiative was a case study in how the initiative process can be used by progressives to both win policy issues with lasting impact and to aid progressive candidates. In an analysis of the campaign done after the election by the Economic Opportunity Institute they noted that:
“The minimum wage issue helped to define the policy debate of the 1998 elections. It did so by adding a progressive, populist, broadbased, and majoritarian issue about economic security to the ballot.
The minimum wage initiative contest drew the most votes (total votes: 1,904,205: yes-1,259,456, no-644,749) of all the ballot issues and candidate contests in the election, including the U.S. Senate race. The pro-initiative vote was the highest vote-getter for all candidates and issues, outdistancing Senator Murray’s vote by 156,000 votes and the next highest vote for a statewide initiative by 137,000 votes.
The initiative created a draw for voters. Polling indicated that turnout may have increased by as much as four percentage points, thanks to the minimum wage initiative. That is, when people found out that the minimum wage initiative was on the ballot, the turnout of voters increased by 4%. This was even more pronounced among voters with poor voting histories, who accounted for 52% of the drop-off voters who were moved by this issue.
The Seattle Post-Intelligencer noted in its lead editorial on November 5: “Murray’s better-than-expected showing may have been boosted by the presence on the ballot of Initiative 688, which raised the state’s minimum wage and made Washington the first state to link future minimum wage increases to inflation. That initiative doubtless produced an extra measure of voters who line up in Murray’s camp….The initiative passed with a higher approval rating, 67%, than any other statewide issue.”
The Democrats unexpectedly won 50% of the contests for the state House of Representatives, picking up 8 seats, moving from a 57-41 minority to a 49-49 tie, while the State Senate switched from a 26-23 Republican majority to a 27-22 Democratic majority. Of the contested seats, 4 seats were won with less than 2 percentage points separating the Democrat from the Republican, 1 seat was won with a margin under 3 percentage points, and 1 seat was won with a margin of less than 5 percentage points. We attribute these victory margins to the draw of the minimum wage initiative. “
Previously Washington State’s minimum wage was held hostage by business interests and state legislators that refused to act to raise the minimum wage to reflect inflation. Without this yearly adjustment workers saw the minimum lose purchasing power each year the Washington State Legislature didn’t act.
A 2004 study by Marilyn Watkins of the Economic Opportunity Institute noted that even with the passage of I-688 Washington new minimum wage had not kept pace with inflation when one considered that in 1968 Washington’s minimum wage was $1.80/hour. In 2004 when Washington State’s minimum wage was $7.16 she calculated that if it had kept pace with inflation since 1968 it should have been $8.40.
Based on the inflation increase between 2004 and 2008 I calculated that Washington State’s 2008 minimum wage would have to be $9.47 instead of $8.07 if we had kept pace with the minimum wage in 1968.
Unfortunately the recently passed Federal increase in the minimum wage, after 10 years with no increase, did not include the annual adjustment requirement based on inflation that Washington State initiated. Including an inflation increase adjustment each year must be a priority in the next minimum wage increase Congress enacts.
It is ridiculous to have to repeatedly fight the same battle year after year in Congress just to have the minimum wage keep pace with inflation. Minimum wage workers deserve better that getting a raise every 10 years which is how long Republicans prevented the last increase from occurring.
At least the takeover by Congress by the Democrats allowed the increase this year. Despite those that say Congress isn’t doing anything, they are doing something. If the Republicans were still in control there would not have been any increase in the Federal minimum wage this year. But you probably would have seen more tax loopholes and tax breaks for the very wealthy.
There is a basic difference between the Democrats and the Republicans and the minimum wage struggles in Congress demonstrate it. Democrats support helping those that need help on the lower income levels. Republicans support helping the millionaires by giving tax breaks that mostly benefit the very wealthy. Such efforts have lead to the increasing income disparity between the rich and the poor that divides America more and more.
In 1998 Washington State voters passed Initiative 688 to raise the state minimum wage from $4.90 to $5.70 in 1999 and then to $6.50 in 2000. We also became the first state in the nation to index future increases to inflation. This year the current minimum wage is $7.63.
On Jan.1, 2006 the Washington state minimum wage will increase another $.30/hr to $7.93. It will be the highest in the nation.
In 1998 the Federal minimum wage was $5.15/hr. Nine years have passed and it is still $5.15/hr.
Meanwhile members of Congress have voted several times to raise their salary for a “cost of living increase” during those same 9 years.. Their cost of living increase added $31,600 to their salary. This is equivalent to a $15/hr increase if one worked 40 hours per week for 52 weeks.
The cost of living increase Congress voted for themselves is triple the salary per hour that a minimum wage workers makes. Congressional salary currently is $165,200 per year.
Democrats tried repeatedly to raise the minimum wage but were defeated by the Republican majority. It’s time now with the Democrats taking control of both the House and the Senate to raise the minimum wage. Its only fair.
The New York Times in an editorial Nov 15, 2006 asks “Will Fair Pay Have its Day?”The editorial notes that because the minimum wage has not kept up with inflation in the past that “the purchasing power of the wage has dropped to its lowest level since 1955“. It also notes that “come December, the minimum wage will have remained unchanged for the longest period since it was established in 1938.” The current inaction on raising the minimum wage coincides with Republican control of Congress.
But Democrats, out of the boot of Republican domination of Congress can do the right thing and make future increases in the minimum wage automatic every year to take inflation into account.
If Congress thinks it is necessary for them to keep up with the cost of living, then the same is even more so for someone making minimum wages.
This year there were six states that had initiatives on the ballot to increase their state minimum wage. And in all six states, voters passed them by wide margins. What is also significant is that the state minimum wages were also indexed to increase as inflation increases.
This is significant because in the past voters or legislatures raised the minimum wage, only to have workers see its value diminish each year as inflation increased living costs. Then the battle would have to be fought all over again.
This happened in Washington State. In 1988 after continued inaction by the Washington State Legislature, a coalition of groups, including the Washington State Labor Council, in 1988 got Initiative 518 passed. It raised the minimum wage to $4.90. Despite repeated attempts in the state legislature this remained the minimum wage for the next 10 years.
So in 1998 Washington citizens again had to file and pass an initiative to raise the minimum wage. But this time the coalition was wiser, not wanting to have to repeat this cycle over and over of going to the legislature and being ignored as inflation increased living costs but the minimum wage stayed the same and then having to run another initiative. This time the initiative was written to index the minimum wage to inflation.
Initiative 668 supporters collected some 288,357 signatures and put the measure on the Nov. 1998 ballot. I-688 overwhelmingly passed with a 66.14% approval to 33.86% disapproval.
Washington State was the first state to pass a minimum wage increase indexed to inflation. Initiative 688 to the people raised the minimum wage from $4.90 to $5.70 in 1999 and then to $6.50 in 2000.
Increases after that were calculated each Sept 30th using the consumer price index for urban wage earners and clerical workers and went into effect Jan 1st of the following year.
This year the minimum wage is $7.63. On Jan 1, 2007 it will increase 30 cents to $7.93.
State Minimum Wage initiatives passing this year:
Arizona ….. $6.75 …….passed… 66% to 34%
Colorado …. $6.85 …….passed… 53% to 47%
Missouri …. $6.50 …….passed… 76% to 24%
Montana ….. $6.15 …….passed… 73% to 27%
Nevada …… $6.15 …….passed… 69% to 31%
Ohio …….. $6.85 …….passed… 56% to 44%
Meanwhile the Federal minimum wage is stuck at $5.15. It has not increased since 1997. Legislation to increase the Federal minimum wage was killed by Republicans in campaign politics earlier this year. The newly elected Democratic majority in Congress has vowed to raise the minimum wage in January.
Current language does not include indexing the minimum wage increase to inflation. Congress needs to do this to be fair to working class families. Their own pay is indexed to inflation.
see http://usgovinfo.about.com/library/weekly/aa031200a.htm “A cost-of-living-adjustment (COLA) increase takes effect annually unless Congress votes to not accept it.”
Write or email or call Congress and urge that they index the minimum wage to inflation. Don’t hold workers hostage to future Congresses. Minimum wage workers deserve better.
previous posts by MajorityRulesBlog:
Senator Cantwell Opposes Republican’s Attempt to cut Washington’s Minimum Wage
US Representatives Reichert, McMorris and Hastings Vote to Cut Washington’s Minimum Wage
for further history and analysis of Washington State’s Minimum Wage also check out the Economic Opportunity Institute’s excellent collection of policy briefs, issue papers, and other links on this issue.
Thank you Senator Cantwell for speaking out against the phony hypocritical tactics of the Republicans in Congress regarding their so called minimum wage increase.
In a guest post on the Northwest Progressive Institute’s blog Cantwell said:
“I cannot support what amounts to a minimum wage penalty for over 122,000 Washington minimum wage earners. Why would the federal government work to lower the maximum wage rather than setting a minimum protection?
I am not buying this cynical Republican ploy.”
Workers and families not just in Washington State, but also in California, Minnesota, Montana, Nevada, Oregon and Alaska, would actually see a decrease in their already low wages because of the so called tip provision.
But in a sop to the Restaurant Industry, the proposed legislation in Congress does not just affect these seven states. It would put into law for all states the use of tips to pay the minimum wage. The new Federal statute would preempt any future action by other states to raise state minimum wages in the future, without including tips in calculating the minimum wage base.
Republicans in the same bill are also pushing to further cut estate taxes for multimillionaires. The estate tax is frequently on property and stocks that have appreciated in value. Eliminating the estate tax on this property lets this appreciated value escape taxation when it is passed on to the next generation.
Loss of funds from the estate tax will further limit the ability of the Federal Government to provide a safety net for our country’s most needy families. This is too great a cost to trade off for a minimum wage increase that actually cuts the wages for many present working families.
Again thanks Senator Cantwell for speaking out and helping to clarify what the Republicans are actually proposing!
This is another reason why Senator Cantwell deserves our help in getting re-elected. As I was driving home today I heard on the radio that McGavick says he supports this legislation.
You can make a donation to support Senator Cantwell’s re-election by clicking here on the MajortiyRulesBlog ActBlue link. All monies will go to the Cantwell campaign.
You can also help the campiagn in other ways by going to the website for the Cantwell campaign.
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