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What kills jobs, disproportionately hurts the young and vulnerable, and will do nothing for the more than 320,000 unemployed Washingtonians?
If you guessed raising the minimum wage, you're right.
Last Friday, Washington's Department of Labor and Industries (L&I) announced a 37-cent increase in the state's minimum wage starting in January. This will bring our state's minimum wage to $9.04 per hour.
Washington state has the highest minimum wage in the nation, and is among only 18 states with a rate higher than federal law requires ($7.25). We are one of only ten states to automatically index our minimum wage to inflation, thus raising it every year.
It makes no sense to increase the minimum wage amidst economic straits. At least, it makes no sense if you want to reduce unemployment--to get people working again. That's because, as one great economist put it, there is no free lunch.
When the state makes it more expensive to employ people, businesses will employ less people and will hire less new workers. And who doesn't get hired? Those who suffer most from a high minimum wage are entry-level workers and those with few skills. That is, minimum wage makes it harder to employ the most vulnerable people and those who are just entering the workforce.
If Washington policymakers were serious about job creation, they would drop the minimum wage to the federal level. This would let employers take risks on entry-level workers--investing in training people who don't yet have necessary skills, hiring students or recent graduates, creating new positions for low skilled workers who need the opportunity.
There is no free lunch. That may be a hard message for politicians, but it's the simple truth. A high minimum wage may sound good, but it turns out it's too good to be true. After all, if a $9.04 minimum is good, why not $15 or even $25? What unemployed Washingtonians need is a job, and reducing the minimum wage would be a good first step.
At the Freedom Foundation, this is the kind of hard but ultimately helpful truth we tell in Olympia and around Washington state. Will you help us? A great way to stand with us is to join our Citizen Action Network (it's free), a hub of information and activism that will be especially important during the special legislative session in November and the regular session next year.
Sincerely,
Eric Lohnes
Economic Policy Analyst
Freedom Foundation | | |
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