Seattle University's student newspaper since 1933

The Spectator

Seattle University's student newspaper since 1933

The Spectator

Seattle University's student newspaper since 1933

The Spectator

Specs in the City: Minimum Wage Increase Too Quick for Comfort

    This week, in economic warfare, the debate of fair and honest income wages on.

    In this year’s election, SeaTac became the city to offer the highest minimum wage in the country with a whopping $15 an hour standard for businesses with more than 25 employees.

    But the 63 percent leap from the previous minimum wage is too much, too fast. If we want this to work for small business owners and the unemployed, we have to take it slow.

    It is true that the public is right to demand a higher minimum wage—the current hourly wage in Washington state is $9.32 an as of January, but research shows that families are not able to live above the poverty line at such an income, according to CNN. At that wage rate, a family of four would earn about $18,000 a year—the poverty line is $19,530.

    According to the Atlantic, the federal minimum wage has never been paced with inflation or productivity. So, while a family of three in the 60s could have sustained themselves above the poverty line on minimum wage, today’s family of three cannot.
    If the numbers of wage and productivity and inflation had been congruent since 1968, minimum wage would have risen to $21.72 an hour by now, reported Bloomberg last year.

    But we messed up.

    We missed our chance and today, though we should easily have a $15 minimum wage, we don’t—not even close. Now, as communities push to raise the wage rate, we are forgetting about the pieces of the puzzle. We are forgetting about the economic viability of such actions. Wages must not only be increased, but they must also be sustained.

    Therein lies the challenge of the small business owner.

    With all eyes on SeaTac as an example of the struggles and successes of this wage change, local businesses are vocal about the coming budget and employee cuts. While workers are celebrating, employers are eliminating jobs.

    According to Fox News, one SeaTac organization said it plans on closing an entire restaurant—leaving 200 people unemployed. The general manager of Cedarbrook Lodge, a hotel in SeaTac, was quoted in the same article saying he too will have to make cutbacks.
    “We’re going to be looking at reducing employee hours, reducing benefits and eliminating some positions,” he said.
    Not only will the stark increase in minimum wage cause lay-offs, but also the pool of applicants for those limited jobs will become more and more competitive as more people fight for a smaller number of available positions. In such an environment, skill and experience will win out over inexperience every time—as an employer, if you can only have one person, you will want someone good.

    And if your workers are skilled, you won’t need as many.

    The Washington Research Council reported the wage hike would eliminate 5 percent of jobs, replacing an addition 5 to 10 percent with more-skilled workers. According to the Seattle Times, that is nearly 1,000 jobs lost in SeaTac alone under this wage increase.

    If the increase spreads to other cities, we are likely to see a similar pattern of job loss.

    Even businesses that do not have to comply with the rate increase because of their small size will be competing for skilled workers. Employees are going to want the highest wage possible—even if that means leaving the smaller business.

    Mike Condon owns a coffee shop in SeaTac and was interviewed in a recent article in the Wall Street Journal. Because he has fewer than 25 employees, he does not have to comply with the standard of $15 an hour. But his business will suffer anyway, he says. Condon predicts the minimum wage increase will make it more difficult to hold on to his employees when they can apply for jobs elsewhere for the higher wage.

    In addition, with all this competition, there is one group in particular that is not benefitting from the wage increase—the unemployed. People with jobs, as long as they can keep them, are golden.

    But not everyone is so lucky.

    Though an increased minimum wage will help the employed, the jobless are left competing with more skilled workers for less work.
    According to the Bureau of Labor Statistics, Seattle has an unemployment rate of 5.4 percent after a jump up from 4.8 percent in one month late last year. According to The Seattle Times, such a quick leap in unemployment hasn’t happened since the recession.
    If we want to keep people employed while also keeping them well paid, a wage hike to $15 won’t accomplish that—at least not yet.
    We have our eyes in the right direction, but our sights are set too high.

    For a minimum wage that is fair and sustainable, we need to be willing to move slowly and intentionally in a way that allows our local and small business owners to keep up with the pace.

    Otherwise, we’ll be sending soldiers into a wage war without any backup. And they probably won’t get very far.

    View Comments (2)
    More to Discover
    About the Contributor
    Colleen Fontana, Author

    Comments (2)

    All The Spectator Picks Reader Picks Sort: Newest

    Your email address will not be published. Required fields are marked *

    • P

      Peter Fontana
      Feb 13, 2014 at 7:12 pm

      Agreed Colleen, I would even wager that increasing the minimum wage is never the right choice in any economic situation. The minimum wage was never meant as an economic manipulation tool when it was created, it was meant as a protection for workers from being taken advantage of. Minimum wage should be put back in its rightful place, as merely a protection.

      Simple economics reveal that if a business owners labor costs go up than so must his prices to keep pace and pay the bills. Therefore minimum wage increases are direct causes of inflation. So even those who benefit in the short term will soon be in the same boat economically when inflation causes the cost if living to catch up.

      Almost more importantly, if you look at studies of the demographics of people working minimum wage jobs, it is overwhelmingly high school and college kids. So a minimum wage increase actually usually hurts the people who are hovering at the poverty line by causing inflation and less skilled workers getting paid closer to their wage making them less valuable to the employer. Meanwhile we are giving more spending money to kids who buy none essential items creating false demand and indirectly driving up inflation.

      Raising the minimum wage is a simplistic fix to a complex problem that has unfortunately been made prominent by political propaganda, because it is easy to understand and instantly gratifying to a less educated mass of unemployed people.

      Overall, time, real effort, resources and money is much wiser spent to build unemployed worker training / apprenticeship programs that incentivize employers to hire people that need training.

      However, these are not on the political landscape because they require much more effort and organization to accomplish.

    • J

      Feb 10, 2014 at 12:09 pm

      In other words, the increase in minimum wage will benefit ones in the labor force that are most skilled, but there is really no true ‘winner’ from this whole ordeal. The issue is definitely more complex than merely raising or capping the minimum wage, but thank you for the great article that kept the writing simple and digestible in one quick read!