Washington’s minimum wage is scheduled to jump to $12 per hour in January, the third in series of four annual wage hikes prescribed by Initiative 1433.
The increase is certain to have an impact on the businesses that employ an estimated 6,800 minimum wage workers in Clark County, but a local economist expects the impact of the latest wage hike to be relatively minimal compared to the larger increase scheduled for 2020. Still, the pay bump will be a welcome New Year’s gift for the people receiving the increase.
In 2016, state voters approved I-1433, which increased the minimum wage to $11 at the start of 2017 and $11.50 in 2018. It will rise to $13.50 in 2020, and starting in 2021 the state’s Department of Labor and Industries will be required to make annual minimum wage adjustments based on the consumer price index. In 2016, the state-mandated minimum wage was $9.47.
January also marks the start of implementation for Washington’s Family Leave Act, which requires employers to provide up to 12 weeks of paid leave per year for qualifying employees. The program is funded by an insurance program under the state’s Employment Security Department.
Employees will not be able to claim the paid-leave benefits until 2020, but employers and employees are required to begin paying insurance premiums in January.
Both policy changes have the potential to affect the finances of businesses in Clark County and throughout the state. A handful of cities including Seattle and SeaTac have previously passed ordinances raising their minimum wages beyond the state level, but Vancouver isn’t one of them.
Businesses prepared
A few Clark County business owners who spoke to The Columbian expressed concern about the upcoming changes, but others said their wages were already above the state minimum, and most expressed support for the measures.
“I’ve never started anyone at below $12,” said Mara Fox, owner of the Love Potion perfume shop in downtown Vancouver. “I think that people should have a living wage, and I’m really happy they’re starting the paid family leave.”
Fox opened her store three years ago after moving to Vancouver from California. She currently employs four full-time staff. She said she was more surprised by Washington’s high business taxes than the employee pay requirements.
Other businesses offered similar assessments.
“The only new one is going to be the medical leave act,” said Lisa Bella, an executive assistant at the New Vansterdam cannabis retailer at 6515 E. Mill Plain Blvd.
The store already pays more than the new minimum wage, Bella said. She described the impact of the family-leave premiums as relatively minimal, accounting for about $3 per paycheck for the store’s budtenders.
Joey Chmiko, owner of Nonavo Pizza in downtown Vancouver, said his restaurant has used $12 as the starting salary for new employees for the past two years, so the January increase won’t have an immediate effect for the restaurant and its seven employees.
The restaurant will have to make an adjustment in 2020 when the minimum wage rises to $13.50, he acknowledged, but he said the change would be handled like any other expense. Labor and material costs rise over time, he said, and businesses have to account for that when planning their budgets and setting their prices.
“It’s like asking ‘are you going to be ready to pay the farmer more for vegetables?'” he said. “You always want to adjust and prepare, but at that point (in two years) everything goes up a bit.”
Still, he said, there is an upper limit to what restaurants can handle. Chmiko said he chose to open his business in Vancouver in part because the business climate was accommodating, but he added that it’s becoming increasingly difficult for new small businesses to get started — and additional state requirements add to that difficulty.
“It affects small businesses, yes — it’s tough,” he said. “In small businesses, the margins are very slim.”
The Building and Industry Association of Clark County expressed concern about how the cost increases might impact the home-building industry, noting that some builders operate with just a few skilled employees and losing one for weeks at a time could be damaging, potentially resulting in a rise in home prices to offset the costs.
“If a builder with three employees loses an employee for six to 12 weeks, it can substantially affect building schedules and costs and is not easily remedied through a temporary worker for a myriad of reasons,” BIA president Aaron Marvin said in an email. “Building schedules and budgets are not elastic and if this occurs, small companies may not survive the next economic downturn and, at a minimum, housing prices will rise accordingly.”
The minimum wage increase would also raise costs for developers, albeit by a small amount. Still, those costs ultimately would be passed on to home buyers, he added.
The increase is unlikely to affect any businesses at the Port of Vancouver, all of which tend to pay more than the minimum wage, according to Port Commissioner Don Orange.
“I don’t know of anyone at the port paying minimum wage,” he said. “Our job at the port is to try to attract good-paying jobs.”
Several Clark County-area businesses declined to comment for this story, including Burgerville and Papa Murphy’s.
Support for wage hikes
Orange is the former owner of the local auto maintenance business Hoesly Eco Automotive, which he sold to a longtime employee earlier this year. Speaking as a private citizen rather than as a port commissioner, he said he supports the upcoming minimum wage increase, as well as subsequent increases.
“I absolutely think this needs to be done,” he said. “Twelve dollars is still incredibly difficult — that’s less than $100 a day, before you get taxed. To afford anything on that kind of a wage is very difficult.”
Orange testified in support of raising the minimum wage at a state Senate hearing in 2015, when the legislature was considering a measure that would have raised the minimum wage — which was $9.47 at the time — to $12. The bill didn’t make it out of the Republican-controlled Senate, but voters approved I-1433 the following year.
Speaking about the upcoming wage increase, Orange said the momentum is shifting toward higher wages, pointing to Amazon’s recent decision to raise the minimum salary for workers in its warehouses.
“A decent wage is good for business,” Orange said. “People spend their excess income on things that small businesses provide, like meals at restaurants.”
Those comments were echoed by Jeff Anderson, secretary-treasurer of the United Food and Commercial Workers union for Oregon and Southwest Washington.
Washington has been at the forefront of minimum-wage growth since the 1970s, he said, and the state’s economic and job growth indicate that the increases have been beneficial for businesses by boosting spending in the local economy.
“Demand creates jobs, not the other way around,” he said. “Future minimum wage increases will create future jobs.”
Impact on industries
Scott Bailey, Southwest Washington regional economist for the state Employment Security Department, characterized next month’s increase is relatively small. Using jobs data from 2017, he estimated that there are approximately 6,800 minimum wage jobs in Clark County that will likely see a boost, with the restaurant and retail sectors each representing about 1,800 jobs from that total.
“Those are the two industries that tend to be impacted the most,” he said.
Using data from 2017, when the minimum wage was $11, Bailey estimated that a 50-cent increase in the minimum wage would result in roughly $5.5 million in additional payroll costs for Clark County — an increase of less than one-tenth of 1 percent of the county’s total payroll costs, which were $7.9 billion in 2017.
The burden varies between industries, however. Some industries that generally pay more than the minimum wage would barely be affected, Bailey said, while others would bear the brunt. The restaurant industry, for example, would see an overall payroll cost increase of seven-tenths of 1 percent.
“2020, when it goes up to $13.50 — that’s more than a 10 percent increase, so that will have more of an impact,” he added.
Cost-of-living concerns
Most cost-of-living expenses for Vancouver residents are likely similar to the costs faced by residents elsewhere in the state, Bailey said, but rent is the major exception.
“I think the big difference between areas is primarily rent,” Bailey said. “There’s probably some retail price differences, but that’s probably dropping because of Amazon and online shopping.”
The wage increase comes at a time when Vancouver-area residents are facing increasingly high rent costs — a recent report from the online service Apartment List found that median rents in Vancouver are $1,400 for a one-bedroom apartment and $1,650 for a two-bedroom, matching or slightly exceeding the equivalent costs in both Seattle and Portland.
At the United Food and Commercial Workers Union, Anderson praised the recent and upcoming minimum wage hikes in both Washington and Oregon, but said that they’re still not enough to allow minimum wage workers to be self-sufficient in the Portland metro area, including Clark County.
“This is a step in the right direction,” he said, “but it’s certainly not the completion of self-sufficiency.”
