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Washington’s minimum wage to rise to $9.04 an hour beginning in January

Washington State’s minimum wage will rise thirty-seven cents an hour to $9.04 beginning in January, the Department of Labor & Industries announced today.

Initiative 688, which voters overwhelmingly passed in 1998, requires the Department of Labor & Industries to adjust the minimum wage annually to account for inflation. (I-688, which NPI’s Steve Zemke was involved with, remains one of the most popular initiatives in state history).

In a news release, L&I explained how it calculated the new minimum wage:

The 37-cent increase reflects a 4.258 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI­W) since August 2010.

The CPI-W, which is used in this calculation, is a measure of the average change in prices over time of goods and services purchased by urban wage earners and clerical workers. Goods and services are determined as those things people buy for day-to-day living such as food, clothing, shelter, and fuels, and services such as doctor visits.

According to the Bureau of Labor Statistics’ news release, over the last 12 months the prices of most categories of consumer goods rose. The largest cost increases occurred for fuels and the lowest cost increases were for education and communication services.

Oregon is also set to raise its minimum wage in 2012, to $8.80 an hour, as required by Measure 25, passed by voters in 2002. (Measure 25 is Oregon’s equivalent of Initiative 688). Since the mid-2000s, Washington and Oregon have consistently maintained the highest minimum wages in the country.

Economists regard the minimum wage as one of the best examples of a price floor – a legal minimum price imposed on a market by government.

Although price floors (and price ceilings) do not always make sense, the minimum wage does because it prevents wage abuse. We, as a society, have an interest in preventing private businesses from engaging in an unchecked race to the bottom. Our collective economic security is not well-served when businesses treat their workers like indentured servants.

As the late Paul Wellstone once said, We all do better when we all do better.

While markets are efficient and useful in many respects, they do not guarantee that people will be fed, clothed, or sheltered. The market doesn’t care about the well-being of a starving, homeless worker who can’t find a job, the aspiring student who can’t afford a college education, the family that cannot pay its bills while also taking care of sick relatives. But we as a society ought to care. And that is why government regulation of markets is essential.

Left to their own devices, markets can fall apart or fail… catastrophically. That’s because markets are human inventions – they can only self-regulate to a certain extent. Markets are fairer and more stable when they are properly regulated and policed by government.

Winston Churchill once said, “Democracy is the worst form of government, except for all those other forms that have been tried from time to time.” He could have said the same thing about mixed-market economies.

We need only look at history to see why safeguards like the minimum wage are necessary. We at NPI are proud that Washington has the highest minimum wage in the United States, and we look forward to seeing working men and women who make minimum wage get a raise beginning on January 1st, 2012.

2 Comments

  1. Krystal Congrove
    Posted October 9th, 2011 at 5:58 PM | Permalink

    Finally, some good news for working men and women!

  2. Kenny Labrune
    Posted October 18th, 2011 at 7:31 PM | Permalink

    The Washington Restaurant Association may not like the idea that their members do not have the legal right to pay slave wages, but the truth is, even the minimum wage is not a living wage. You can’t raise a family on a minimum wage job or even two minimum wage jobs.