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.