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Seattle workers welcome higher wages with start of new year

Jan 2, 2017, 9:15 AM | Updated: Jan 3, 2017, 5:53 pm
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(AP file photo)
(AP file photo)

As the first wave of Seattle workers celebrate the $15 an hour wage that advocates fought for, minimum wage earners across Washington state are also seeing a bump in pay.

The state’s minimum wage increased to $11 an hour on Sunday as part of the first of a multi-step increase approved by voters in November.

Related: Portland wants Seattle to adopt its CEO tax

The wage increase is a 16 percent jump from the former $9.75 an hour, according to Associated Press.

Initiative 1433 incrementally raises the state’s rate over the next four years to $13.50 an hour. The new law also requires employers to provide paid sick leave starting Jan. 1, 2018.

The new wage applies to all jobs. Workers who are younger than 16 years old can be paid 85 percent of the adult minimum wage — $9.35 per hour — next year.

For employers in cities that already have higher minimum wages — Seattle, Tacoma and the City of SeaTac — the local minimum wage rate will apply as long as it is higher than the state minimum.

Under the new law, the statewide minimum wage will increase to $11.50 in 2018, $12 in 2019 and will hit $13.50 an hour in 2020.

Washington state joins 18 others across the country that have raised their minimum wages. Those states include Alaska, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Maine, Massachusetts, Michigan, Missouri, Montana, New Jersey, New York, Ohio, South Dakota, and Vermont.

Seattle’s wage hike

In Seattle, employers with 501 or more workers that do not pay toward medical benefits must pay $15 an hour. Employers who do pay toward medical benefits must pay $13.50 an hour.

Employers with 500 or fewer workers that do not pay at least $2 an hour toward medical benefits — or their employees do not earn an additional $2 an hour in tips — must pay $13 an hour. Those who do must pay workers $11 an hour.

Prior to the new year and higher wages, University of Washington Economics Professor Jacob Vigdor told KIRO Radio there had been “no wondrous benefit” from the higher wages. Vigdor and his team studied data from 2015 and found most businesses were paying around $13 an hour.

“Our most optimistic assessment is that your paycheck is going up about $5.54 a week as a consequence of the minimum wage increase,” he said at the time.

Vigdor said that, in general, “businesses are doing fine.”

“The drawback to this is that one way they are making things work is cutting back on staffing,” he said. “Seattle is doing pretty well because of the strong economy but we didn’t think any of that good performance was because of the minimum wage. We think the minimum wage is actually putting a little bit of a drag on the Seattle economy, and holding back growth and jobs and hours. When it comes to incomes, at the end of the day we are finding effects that are pretty small, and we are not sure if they are negative or positive.”

And that’s important to note, Vidgor said, that only initial observations can be made. There is lot more data to go through to determine the entire picture of how the minimum wage is impacting Seattle businesses and jobs.

Not all businesses doing so well

Though business owners haven’t all targeted Seattle’s minimum wage as the reason for shutting down their establishments, it frequently comes up in conversation when talking about the decision to close.

Related: Seattle businesses we’ll miss in 2017

The former owner of Louisa’s, for example, told KIRO Radio the city’s minimum wage was “definitely a factor” in the sudden closure of the cafe and bakery.

Despite businesses doing OK with the wages, Vigdor pointed out in April that small businesses have had a tougher time.

Good luck, Millennials

As workers across the country enjoy higher wages with the start of the new year, the long-term outlook doesn’t look quite so bright for some.

A recent study found that the chance of people born in the 80s earning more than their parents dropped to around 50 percent.

Stanford University Professor of Economics Raj Chetty told NPR:

If you look at kids born in the 1940s, in the 1950s and compare their incomes at age 30 to what their parents were earning at age 30, adjusting for inflation, you find that 90 percent of them were earning more than their parents. But when you look at kids born in the 1980s, kids turning 30 today, that number has dropped to 50 percent. It’s basically a coin flip as to whether you will do better than your parents for the current generation.

The Associated Press contributed to this story.

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Seattle workers welcome higher wages with start of new year