Whatcom minimum-wage earners are getting a raise, but they might not see much of it
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Effects of minimum wage increase
Voters passed Initiative 1433 in 2016, directing the state to steadily increase minimum wage. The next jump will have a large impact in Whatcom County. We explore those effects in this series, a bonus to subscribers.
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Thousands of Whatcom County workers will be getting a significant raise on Jan. 1, which could have some interesting impacts on the local economy.
The hourly minimum wage is set to rise from $12 to $13.50 in Washington, a 12.5% increase. In 2018 Whatcom County had 6,747 jobs that paid the minimum wage, according to data from the Washington State Employment Security Department. In 2018 Whatcom employers would have paid $13.2 million more to meet next year’s minimum hourly rate, according to the state.
What kind of occupations tend to start at minimum wage Whatcom County? According to the employment department it is a varied list, including cashiers, food preparers, dishwashers, drivers, farmworkers, hairstylists, hotel clerks, lifeguards, housekeepers, taxi drivers and telemarketers.
Will this mean more money is circulating in the local economy as lower-wage workers have more to spend? It depends, said James McCafferty, director at the Center for Economic and Business Research at Western Washington University. Here are a few factors McCafferty cited that may lessen the impact:
▪ The household net income could end up lower as people move into higher tax brackets or fall off social assistance programs.
▪ Employers might cut back on worker hours, lowering the take-home pay.
However, if there is a solid increase in the amount of money coming into a household, that typically leads to an increase in quality of life.
“They would spend more which creates a multiplier effect, which means it depends on what they spend their new dollars on. Some expenditures will do more than others,” McCafferty said in an email.
Washington state, and in particular the Seattle area, has seen its share of big minimum wage increases in recent years. The University of Washington has come out with several research papers trying to figure out its impact on the economy.
If those studies tell us anything, it is that existing workers will benefit with higher wages, said Anneliese Vance-Sherman, a regional labor economist for the state. However it makes it harder for younger people entering the job market. Those entering the labor market for the first time may find fewer opportunities and fewer working hours.
One other factor to consider is if the wage increases lead to more automation. Hart Hodges, also director at Western’s business research center, said as employers look to increase productivity, they will weigh whether hiring more people or investing in equipment better achieves that goal.
