By Erasmus Baxter
Students making minimum wage will see an increase in their financial straights next month when the state minimum wage jumps two dollars and fifty-three cents to $11.00 an hour.
The minimum wage is increasing as a result of Initiative 1433, Raise Up Washington, which passed in November with 57 percent of the vote statewide. Supporters of the initiative out-fundraised opponents by a ratio of 51 to 1, according to Ballotpedia.
The initiative will increase the minimum hourly wage to $11.00 in 2017, $11.50 in 2018, $12.00 in 2019 and $13.50 in 2020. After that, the minimum wage will increase based on the rate of inflation, as it does currently.
In addition, the initiative mandates that employers provide paid sick leave. Sick leave accrues at 1 hour for every 40 hours worked, and can be used after 90 days of employment. It can also be used to care for sick family members or to deal with incidences of domestic violence.
Proponents contend that the current minimum wage does not provide enough money for many full time workers to support themselves or their families. They point to the economic benefits that increased spending power for consumers would bring. In addition, they point to the public health benefits of paid sick leave.
Opponents of the initiative claimed that an increased minimum wage would hurt business and lead to increased prices. They said that increasing the statewide minimum wage didn’t account for differing costs of living across different regions of the state.
Western student Augustus Lull works for Campus Dining Services and says he’ll use his increased pay to help pay for his education, but he voiced some concerns.
“I imagine that theoretically, in response to wages going up, prices of things could go up,” Lull said. “But it’s just theoretics. We’ll have to see.”
Assistant professor of economics Dr. Adam Wright is the economics department’s labor expert. He says that while production costs will go up for companies using that pay minimum wage there is no cause for alarm.
“Past estimates of the effect of minimum wage increases on employment or hours worked typically find little or no response. That is, it doesn’t appear that employment decreases after minimum wage hikes,” he said in an email. “However, the minimum wage increases used in these estimates are much smaller than Washington’s $6 (63 percent) increase over the next four years.”
“Will employment remain unresponsive this time around? I don’t think we have historical data that allows for a confident answer, but extrapolating current estimates points in that direction.”
“Another possibility is that firms raise prices to compensate for higher costs. This is unlikely to happen in industries where goods are non-essential or consumers have a significant number of alternative options, like fast food. Any increase in prices at McDonald’s will be met with a relatively large drop-off in demand due, in part, to people choosing to eat at home.”
In the meantime, the Associated Students (AS) board of directors is taking steps to address the new minimum wage. At their meeting on November 22 they discussed implementation and budget options. The increased wage will increase costs for paying hourly AS employees by $46,00 over the next fiscal year. They have also decided to increase the wages of salaried employees to keep pace at an estimated cost of $140,000 over the fiscal year.
AS VP for Business and Operations Mary Moeller said in an email that budget shortfalls would likely be absorbed by AS reserves. However, discussions were suspended on November 30 upon news that University vice presidents “don’t want the AS to make salary decisions until they set some standards at the university level (and explore legal implications with the Student Business Office),” according to Moeller.
Looking forward, there is another discussion that we should be having around the minimum wage, according to Wright.
“This and other minimum wage increases likely hasten something that already threatens low-skill jobs: automation. Increasing the cost of human labor makes working automation an even more attractive alternative for businesses,” he said in an email. “That isn’t to say we should nix the minimum wage simply to stall the inevitable automation revolution. It means we need to start thinking about the large populations of people who will be rendered unemployable by the march of technological progress, which now may be coming sooner rather than later.”