Tuesday, November 29, 2022
Nov. 29, 2022

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In Our View: $15 Minimum Wage has Pros, Cons

UW studies Seattle wage’s effects; building skills still best way to advance

The Columbian
Published:

At the risk of repeating ourselves … oh, heck, we’ll just go ahead and do it: If you wish to improve your earning power, improve your skills. Developing skills that are valuable to employers — whether through education or experience or natural talent — is the surest way to increase your income.

That is what The Columbian wrote editorially in 2013, when a national discussion was taking root over the efficacy of a $15-an-hour minimum wage, and it still holds true. Yet while Seattle and many other cities and states have increased minimum pay for workers, the discussion over the issue often remains mired in redundant talking points. Proponents often view the minimum wage as a panacea; critics decry it as a “job-killer.” Now, according to ongoing research by a team of economists at the University of Washington, neither view is entirely accurate — or completely unfounded.

Commissioned by the Seattle City Council, the study examined the impact of a minimum-wage increase in the city. About 18 months ago, the minimum wage was lifted to $11 an hour for employees at large companies that do not offer benefits. It was part of a gradual effort that will result in a minimum of $15 an hour for such employees, and a lower pay scale for workers at small companies or those that do offer benefits.

The study examined the effect last year when the top minimum wage was $11 in the city, finding: “Increased wages were offset by modest reductions in employment and hours, thereby limiting the extent to which higher wages directly translated into higher average earnings.” In short, there were some benefits and some detriments — which was to be expected despite the rhetoric on both sides of the issue.

Opponents of increasing the minimum wage long have declared that such an action would force some companies out of business, but the study concluded, “We do not find compelling evidence that the minimum wage has caused significant increases in business failure rates.” The investigation did find that, in total, low-wage workers are being offered fewer hours and that there are slightly fewer jobs available than could be expected without the wage increase. But those who do have jobs are pocketing more money for their efforts. The average hourly wage for workers affected by the increase went from $9.96 an hour to $11.14, with some of that being attributable to Seattle’s red-hot economy.

In other words, it is difficult to pinpoint a vast impact — either positive or negative — from Seattle’s wage increase. And the experiment will bear further watching in order to assess its long-range impact. So, too, will an increase in Oregon, which last year passed an innovative minimum wage that will be higher in Portland and lower in rural areas. Either way, it is likely that a reasonable increase to the minimum wage will not have an extreme impact on either workers or companies; the ultimate goal remains finding the sweet spot that best improves the local economy. Statewide, Washington’s minimum wage this year is $9.67 an hour — a number that is adjusted each year according to the cost of living.

Meanwhile, the most important thing is to remember the surest way to go about increasing your wages — improve your skills. Regardless of the minimum wage in a given area, employers will be willing to pay more for valued employees and for those who enhance a company’s profitability. And that is a fact that bears repeating.

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