Why we oppose $15 an hour minimum wages
By Jim Szymanski, Director of Public Affairs
From time to time, the Washington Retail Association publicly takes a delicate stance against attempts across the state to raise minimum wages by nearly 60 percent per hour. It’s an easily misunderstood stance if you don’t understand how business often works.
How would motorists react if gasoline went from $2.25 a gallon to $3.60? It could mean a few less trips to a restaurant or movie and maybe a smaller family food budget.The same might be true if your rent jumped from $1,100 a month to $1,750. In economics, actions cause reactions.
That fundamental law is typically ignored or played down when elected officials take the popular position to fight for spikes in the minimum wage. The voices of businesses forced to react often are muffled or ignored.
The fallout from 60 percent spikes in the minimum wage is why the association consistently appeals for restraint. Otherwise, undesirable impacts are felt by employers, employees and consumers.
The very notion of a minimum wage is to introduce an employee to their first job or to start a lower-skilled worker off until they develop new skills.
In 1998, state voters approved an automatic escalator so that the statewide minimum wage, now $9.47 an hour, keeps pace with inflation. Proposals to go higher than the current rate of pay increases put even more undue pressure on retailers and make it much harder for them to compete and survive.
Consider the reliable and repeating economic ripples that follow huge spikes in the minimum wage:
- Prices have to rise to help meet higher payroll costs
- Higher paid employees also expect to be rewarded
- A patchwork of varying minimum wages makes it challenging for retail chains to manage the different pay rates. It’s also unfair to employees whose pay depends upon which store hires them, not the quality of their work.
- As prices rise, store revenue can dry up to the point where layoffs are necessary, employee hours are reduced or no hiring can occur. This especially hurts inexperienced applicants seeking their first jobs.
- Businesses along the Washington border with Idaho also face pressures because that state’s minimum wage is $2.22 an hour lower than in Washington. Customers are likely to cross the state line to buy from retailers where prices can be kept lower due to lower labor costs.
For these and other reasons, better managing allowable minimum wages is the Washington Retail Association’s top priority. We therefore support reforms that would better ensure the ability of retailers to compete and create new job opportunities instead of layoffs.
Reforms we support include:
- Creation of a training wage and teen wage to help employers create job opportunities as oppose to layoffs and hiring freezes.
- A law to pre-empt communities from exceeding the statewide minimum wage. This would prevent growing the patchwork of varying minimum wages that already exists across the state.
- Removal of the automatic escalator while placing authority for the minimum wage with the state Legislature. State legislators should be as accountable for how their actions impact businesses and members of Congress, who vote on the federal minimum wage.
Retailers want good employees and to reward them with fair wages to meet their needs. But wild swings in the minimum wage and pockets of wages much higher than the statewide minimum create serious financial challenges for retailers with multiple store locations and endanger the livelihoods of stores, especially small businesses in rural locations.
Deserving workers are entitled to earn as much as the market will allow. But the businesses that write the paychecks have to first survive before the raises can be paid.