Is minimum wage increase a boon or bane for business?

YAKIMA — Barely two months remain before minimum wage workers in the state will notice something on their paychecks.

More money.

As it has almost every year since a voter-approved initiative created the law in 1998, the state’s minimum hourly wage will increase from $9.19 to $9.32, based on the federal Consumer Price Index, on Jan. 1. That also means an adjustment for employers, who disagree over the law’s impact on businesses.

“We really have no problem when the minimum wage goes up,” Essencia cafe co-owner Jean Scheid said. “I understand Washington is the highest in the country, but to me that’s really a sad statement.”

The federal minimum wage is $7.25, but a number of states have their own laws that set it higher than that. The second-highest minimum wage in the country is Oregon’s $8.95.

Scheid says she believes her employees, which range in total from 12 to 15 depending on the season, deserve to make a “living wage.” Anyone with children who is the sole bread winner in the home still doesn’t make enough at the state or federal minimum wage level to provide without subsidies, she said.

“In a lot of sectors out there people work for years on minimum wage,” Scheid said. “To me it’s a travesty.”

But Jar Arcand, the owner of Santiago’s Mexican restaurant, said higher minimum wages make it more difficult to spread the wealth. Arcand, who has owned his business for more than 30 years, says increases in the minimum wage add to other growing business costs that force him to cut hours for employees or raise prices.

“You have to be actively looking where you can save,” he said. “Every time you raise menu prices, you lose customers.”

A 13-cent increase appears negligible, but not over the course of even one year of doing business, Arcand said.

“When you’ve got thousands of hours on the payroll over the course of the year, that’s a lot of money and it’s got to come from somewhere,” Arcand said.

In recent years conservative lawmakers, including Sens. Janea Holmquist Newbry, R-Moses Lake, and Jim Honeyford, R-Sunnyside, have sponsored legislation to create exemptions to the law for some employers. Last year, they sponsored a bill that would have allowed businesses with 50 employees or less to pay new workers either the federal minimum wage or 75 percent of the state wage, which ever was greater.

That bill went nowhere, Washington State Labor Council spokesman David Groves said, because it sought to chip away at a popular state law.

“If you create incentives to have nothing but a bunch of trainees to chum through the workforce and keep wages low, you’re just opening a can of worms that shouldn’t be opened,” Groves said. “Fair is fair. A fair wage for a fair day’s work.”

The initiative passed in every county in 1998. In Yakima County it passed with nearly 59 percent of the vote.

Mike Gempler, executive director of the Washington Grower’s League, said growers are concerned about the minimum wage increases over time because it can force them to subsidize the wages of less productive workers.

Although agricultural pickers are paid a piece rate for every bin of fruit they pick, employers have to keep track of how much that amounts to per hour worked per week. That normally evens out to well above the minimum wage, but Gempler said less productive workers have to be paid extra to meet the minimum wage equivalent.

“Labor is probably the largest single input into growing tree fruit, so it does have a significant impact on our costs,” Gempler said.

He said that over time the state’s minimum wage law could impact Washington’s competitiveness with tree fruit industries in other states, such as Michigan and New York, where wages are lower.

Employers there “will find it easier to keep people on who aren’t as productive or slower for a number of reasons,” Gempler said. “It just puts a lot of pressure on the workforce here to be productive.”

Gempler said he favors a law that relies on an index that doesn’t trigger increases as regularly as the current model. The last time minimum wage didn’t increase since 1999 was during 2010, when it stayed at $8.55, the same was it was for 2009.

Arcand said he would at least like the option of a reduced wage for tipped employees, which is not allowed under state law. He said he would use that money to pay his kitchen staff better and give new hires incentives to perform better.

Groves said the current minimum wage continues to lag behind what it should be. He said progress is being made in cities such as Seattle, where a proposed $15 an hour minimum wage is gaining political momentum.

“The logic of a minimum wage is that someone who works full time shouldn’t work in abject poverty,” Groves said. “I think the momentum is moving in the direction of continuing to raise minimum wages.”

Scheid said she doesn’t foresee labor costs ever going up so abruptly that it would have to radically change how Essencia’s owners manage their costs.

“The increase is such a minimal amount, bottom-line wise,” Scheid said. “It’s just not going to impact my decision making.”