Minimum wage goes up Jan. 1

Pay hike a boon for workers and a burden for employers

By Cami Joner, Columbian retail & real estate reporter

Published:

 

Washington’s Minimum wage

Year — Hourly pay

2012 — $9.04

2011 — $8.67

2010 — $8.55

2009 — $8.55

2008 — $8.07

2007 — $7.93

2006 — $7.63

2005 — $7.35

2004 — $7.16

2003 — $7.01

2002 — $6.90

2001 — $6.72

2000 —$6.50

1999 — $5.70

Source: Washington Department of Labor & Industries

Clark County’s lowest-paid workers will start the new year with a raise.

That’s good news for fast-food worker Kristie Miles, an 18-year-old employee of a Vancouver KFC restaurant.

“Even though the cost of living will go up, it will help pay for that,” said Miles, a biology major at Washington State University Vancouver.

Local economists and business owners, however, have different opinions on the economic effects of the state’s 37-cent minimum wage increase, set for Jan. 1. Washington’s minimum wage will bump up to $9.04 per hour, up from $8.67. It is the 13th increase since a 1998 voter initiative required the yearly adjustment, according to the state’s Department of Labor & Industries, which oversees the rate hike.

Some economists say the small increase has only a minimal effect on the bottom line. But restaurateurs and retail merchants — businesses that employ the majority of minimum wage workers — say they are faced with a choice between increasing prices or reducing staff to cover the rate hike.

“It’s challenging, especially in Washington because we’re the highest (minimum wage),” said Val Hadwin, who owns 15 regional McDonald’s restaurants with her husband, Matt Hadwin.

That’s because the chain’s specialty menu items are priced the same nationwide, said the Hadwins, who have 12 McDonald’s stores in Vancouver and one each in Camas, Battle Ground and Kelso. The couple’s Vancouver company, North Star Restaurants Inc., employs about 650 workers, most of whom are paid hourly wages.

But Scott Bailey, the state’s regional labor economist, predicts a higher minimum wage will have very little impact on the overall economy, resulting in an approximate 1 percent increase in consumer prices. It would add about five cents to the cost of a $5 hamburger and fries, said Bailey, who has studied the effects of minimum wage increases from the year 2000 through 2010.

Bailey said his 10-year analysis found no evidence that Washington’s annual minimum wage increases — anywhere from a 11-cent to 80-cent raise — affect pay rates for middle-income and high-wage earners.

“It doesn’t launch wage increases across the board,” Bailey said.

Washington’s annual minimum wage increase is tied to the federal Consumer Price Index for urban wage earners and clerical workers. The index rose 4.2 percent during the 12-month period ending in August, compared with a 1.4 percent increase during the same period in 2010, according to the Washington state Department of Labor & Industries.

Vancouver-based KFC owner Scott Dickinson said the minimum wage hike comes at a difficult time, as his seven-restaurant chain continues to struggle to balance higher food costs and serve cash-strapped customers. The price of chicken — KFC’s main menu item — continued to rise through 2011.

“All anyone has to do is walk into a grocery store and realize that we are paying those same increases in the restaurant industry,” said Dickinson, owner of Vancouver-based Dickinson Northwest Inc.

Bill Conerly, an economist and principal of Lake Oswego, Ore.-based Conerly Consulting LLC, said Washington’s annual minimum wage increase will affect the job market over time, causing some employers to cut staff and hire fewer workers. “As the minimum wage goes up, the number of people hired goes down,” Conerly said.

The Hadwins said their chain would not rely on leaner staffing to make up for the minimum wage increase.

“Our quality can’t suffer. We have to deliver the same quality,” Val Hadwin said. “Sometimes we just take it and sometimes we raise the prices. The choices are very slim.”

Dickinson said the mandatory raise in minimum wages would force his company to give across-the-board raises. But he would rather give pay raises based on performance standards.

“Now, we have to give everybody the same wage and there’s no room for top performers to get a higher wage,” he said.

Meanwhile, Miles — the 18-year-old Hazel Dell KFC employee — said she has no complaints about the pay bump. She sees her job as a starting point toward her future, helping pay tuition and rent. She plans to work her way up to a managers’ position.

“From there, I want to work my way through college and become a nurse,” Miles said.

The state’s minimum wage applies to workers in all industries, including agriculture, although 14- and 15-year-olds may be paid 85 percent of the adult minimum wage, or $7.68 per hour.

Washington’s minimum wage is highest in the nation, followed by Oregon’s minimum wage, set to increase by 30 cents, to $8.80 per hour, on Jan. 1. Starting Sunday, Washington’s minimum wage will be $1.79 above the federal minimum wage of $7.25 per hour.

Washington is one of 10 states that adjusts its minimum wage based on inflation. The others are: Vermont, Ohio, Nevada, Montana, Missouri, Florida, Colorado, Arizona and Oregon,. California’s minimum wage is $8 per hour. In Idaho, minimum-wage workers are paid the federal minimum wage.