During the first two weeks 2015 legislative session, two bills to raise the state minimum wage were introduced. The first bill is House Bill 1355/Senate Bill 5285—the “revised versions of last year’s effort to increase the state minimum wage to $12.” The new version of the bill extends the phase-in period from three years to four years. The Washington Policy Center reports that the “phase-in would begin in 2016 with a $10 wage and by 2019 every worker in the state would earn a minimum of $12 per hour, with subsequent years increased annually according to inflation.”
The House Labor Committee will hold a hearing on HB 1355 today. The Senate version of the bill, SB 5285, has not yet been scheduled for a hearing.
The second bill is Senate Bill 5384. The bill “seeks to increase the minimum wage by a much more complicated method, but with almost the same result as HB 1355/SB 5285.” SB 5384 proposes to go about achieving the result by tying minimum wage to increases in Washington’s per capita personal income. According to the Washington Policy Center, the bill “would increase the minimum wage an additional 3% every year (on top of the annual increase that is indexed to inflation) the state’s per capita personal income increased over the previous year and was greater than the U.S. per capita personal income.”
SB 5384 is not only complicated, it’s also misguided in its approach. The Washington Policy Center,
Per capita personal income has no relation to the labor market, so the connection is completely arbitrary. Simply put, per capita personal income does not reflect income distribution; a small wealthy class can increase per capita income far above that of the majority of the population. If Bill Gates gets richer, or Warren Buffet moves to Washington, per capita personal income for the state will increase, but changes in the labor market operate on completely different factors.
The argument is ostensibly that if personal incomes are rising then minimum wage workers should “share in the prosperity” by getting a raise. The problem is there is no connection between the two measures (per capita personal income and entry-level wages). You might as well link automatic minimum wage increases to yearly Cascade snowpack levels.
The Washington Policy Center predicts that both bills would likely accomplish the same wage ($12 minimum wage) during the same amount of time (four years). The primary difference is that SB 5384 threatens “much longer-term implications.” The Washington Policy Center,
The data tracking the per capita personal income of Washington between 2000-2013 shows an increase in every year but one (2009), and our state’s has been higher than the U.S. each of those 13 years. So under SB 5384, between 2000-2013 the additional 3% increase would have been triggered in all but one year.
Assuming the same trend in Washington’s and the U.S. per capita personal income continues over the next five years (triggering the extra 3% increase each of those years) and assuming inflation increases an average of 2% each year (between 2000-2013 the average inflation-indexed minimum wage increase was 2.7%), under SB 5384 the minimum wage would be $12.09 by 2020.
Those estimates put the results of SB 5384 similar to what would happen with HB 1355/SB 5285—about a $12 minimum wage. However, there is a significant difference. SB 5384, unlike HB 1355/SB 5285, “would continue to increase the extra 3% every year based on per capita personal income.”
Notably, both bills have been unable to reach a majority of support in either Chamber, signaling that Democrats can’t even pass an increase in the House of Representatives they control. HB 1355 has 41 co-sponsors, its Senate version has 20 co-sponsors. SB 5824 has a mere 9 co-sponsors.
Jim Thomas says
All this does is create MORE of a hostle business environment in the State…don’t you think that new businesses look at these things before they decide where to locate? There are many other States that have a much better environment and Washington will continue to lose companies and their tax base because of the Libs and their shortsightedness.
Seattle’s unemployment rate for 4Q 2014 was below the state average, and below the national average. In January 2015, the Puget Sound Business Journal rated Seattle as “the best place to look for work.” It sounds like the entire state could benefit, if it adopts policies more like we have here in Seattle.