As Washingtonians rang in the new year, a big change took place. The state’s minimum wage rose by nearly a dollar, and its minimum threshold for salaried workers increased to $52,743.60 for all employers, regardless of size.
What caused such a large increase? State law and a 5.83 percent surge in the federal consumer price index from the year before.
It may have come as good news for some employees who make minimum wage, but not so for others.
One Vancouver resident posted on The Columbian’s Facebook page that her wages went up with the increase.
“Then so did gas, groceries, basic necessities, waste water, taxes and cable. So it’s a wash plus more,” wrote Alicia Cheatham.
Not all local businesses have been overly impacted by the news, but many have.
“This doesn’t affect any of my team, but it’s because we have no choice but to pay these wages with the minimum wage so high,” said one retailer in downtown Camas, who asked to remain anonymous.
Business has been slow, but the company expects to cut its staff back in January and February.
“They know it’s coming; They don’t love it at all, but we have no choice,” said the retailer, who keeps full-time staff on the same schedule but cuts back part-time staff in winter. The retailer went on to mention that if the minimum wage wasn’t so high, they could possibly schedule part-time employees more during slow times.
“I always feel bad, but that’s just the way it is, I guess,” they added.
The change has not come at an ideal time for the restaurant industry, which is being hit with the omicron variant as well as normal seasonally slow business.
Most of the service team at Brendan Greenen’s Grains of Wrath Brewing in Camas are paid minimum wage plus tips. And when he raises wages, he raises them across the business, even for employees not making minimum wage. He said he supports paying his team more and creating opportunities for employees to make a good living; but for Greenen, the timing is frustrating.
“It’s a good amount, especially this time of year,” Greenen said. January is the slowest time of year for restaurants, he added. And the recent COVID spike has contributed to a decline in the brewery’s business, a 50 percent decrease from just the week before.
“It’s compounding right now,” he said.
It’s not just labor costs that have increased for Greenen. He’s also paying more for grain to brew beer and for food served in his restaurant.
“I don’t like to do price hikes immediately,” the business owner said. “I feel like that’s fairly reactionary.”
But with increased costs, Greenen said he likely will have to raise prices at his restaurant within the next 60 days.
One coffee shop owner in downtown Camas, who asked to remain anonymous, said their shop is also seeing a decrease in sales.
“We have increased our prices, which I am assuming will be the norm,” said the owner, mentioning their irritation at supply costs rising but supplies not being readily available.
For some, the impact of the minimum wage increase is minimal. “We only have one employee that it affects — so, it is not too big of a problem,” said another downtown Camas retailer.
Law drives change
The minimum wage rose due to a required cost-of-living adjustment made by the state Department of Labor & Industries. Based on state law, the agency must automatically change the rate based upon the federal Consumer Price Index for urban wage earner and clerical workers.
Initially, an annual increase was approved by Washington voters in 1998, requiring a cost-of-living adjustment each year from 2001 to 2016. A subsequent timeline for adjustments was approved by voters in 2016, eventually raising the minimum wage to $13.50 in 2020 and then tying annual increases to the Consumer Price Index.
The cost-of-living adjustment raised the wage to $13.69 per hour in 2021. As of Jan. 1, it reached $14.49 per hour, though teenagers age 14 or 15 can be paid 85 percent of the adult’s minimum wage — $12.32 per hour.
The minimum threshold for salaried employees who are exempt from overtime pay also increased; it’s calculated based on the minimum wage. A schedule was put into place that raised the threshold over the course of eight years, beginning in 2020. In 2022 and 2023, that increase must be 1.75 times the minimum wage for employers with 50 or fewer employees, while in 2024 and 2025, it must be two times. In 2026 and 2027, that will increase to 2.25 times the minimum wage before finishing at 2.5 times the minimum wage in 2028.