Washington State minimum wage increases

Sebastian Squire, News Reporter

The minimum wage for Washington State increased by $1.25 on Jan. 1, 2023, due to an annual adjustment. The Washington State Department of Labor and Industries announced the change on Sept. 30, 2022, citing an increase in the consumer price index.

The 8.66 percent increase increased hourly wages from $14.49 to $15.74. Despite the increase, workers are still grappling with record inflation in light of economic uncertainty, some of which is likely due to the pandemic and Russia’s invasion of Ukraine

The wage increase is based on the Consumer Price Index (CPI), an oft-cited official measure of inflation. The CPI reflects the increase in cost of a certain predetermined “basket” of goods, made up of basic household necessities.

Associate Professor of Economics Jan Crouter explained that the government typically increases the minimum wage to raise the standard of living and to promote equity.

“To the extent that a large portion of the labor force affected by the minimum wage is composed of primary wage earners, women and people of color, there’s an important equity rationale for imposing or increasing the minimum wage,” Crouter said.

Despite the intentions, raising the minimum wage does not always translate into greater purchasing power among workers. 

“Employers paying a higher wage will seek to limit the increase in their total labor costs by reducing their employment of minimum wage workers (cutting work hours and/or cutting jobs),” Crouter said. “For the lucky workers whose employment falls only a little relative to the increase in their wage, their purchasing power increases, all else equal. But for unlucky workers, their work hours (or jobs) are cut a lot, and their purchasing power will decrease.” 

Crouter added that, in a competitive market, the results of raising the minimum wage can be mixed.

“At any rate, my understanding is that empirical studies of the effects of increases in minimum wages have yielded different conclusions about these magnitudes, and interestingly, sometimes these employment effect magnitudes were small; sometimes [they were] not statistically different from zero. [This] suggests that aggregate workers’ purchasing power was increased,” Crouter said.

Crouter explained that if the effect — producers facing rising labor costs and increasing prices as a result — is on an economy-wide scale, then raising the minimum wage can result in inflation, meaning the increase in the cost of living over time.

“The empirical evidence seems to be mixed on this. As an aside, note that inflation is both a rationale for increasing the minimum wage and a possible consequence of increasing the minimum wage. This, in theory, gives rise to a potential wage-price spiral,” Crouter said.

Shannon Null, the General Manager of Bon Appétit at Whitman College, said that the organization does not expect any changes in food prices or service.

“Our service and hours of operation will be unaffected by the wage increase,” Null said. “The increased minimum wage will not affect our food prices or meal plan costs.”

In regard to hiring, Null hopes that the increase will encourage more student workers to apply for jobs.

“It’s hard to say for sure whether or not the increased minimum wage will encourage more students to work with us, though we certainly hope so,” Null said. “We are always hiring students.”

Kim Rolfe, the Director of Career Development at the Career and Community Engagement Center, explained that the impact of the minimum wage increase is so far unclear. 

“Our analyses of student employment trends typically occur near the end of the academic semester when payroll data is available and summer internship programs have completed their recruiting,” Rolfe said.

According to an April 2022 Pew Research poll, 62 percent of Americans support raising the national minimum wage to 15 dollars per hour. Among those who disapprove of an increase, 71 percent supported an increase to less than 15 dollars.

The federal minimum wage has remained unchanged since 2009 and stands at 7.25 dollars per hour.