Thursday, January 11, 2007

minimum wage increase good?

The business community (at least part of it) is dreading the new federal minimum wage increase. In the majority of the articles I've read, small business owners have overwhelmingly stated that they think that the sizable increase to minimum wage is a moral obligation. At the same time, they fear that an increase in minimum wage is going to hurt their business; either they will have to cut jobs or increase prices, either way they are predicting a loss in their own yearly income.

Not being an economist, I couldn't tell you what I think is going to happen, nor do I think a model is necessarily going to accurately tell you how businesses will react and their bottom line along with it.

This morning I read an article in the NYTimes about Washington State. For about a decade, each year they have increased the wages of the lowest paid workers. Washington state did not crash and burn, losing all of its jobs to Idaho. Washington added 90,000 jobs in 2006, the interviewed business owners say they are doing more business than ever (maybe they got lucky), border residents have streamed to Washington for employment, and even the Association of Washington Business stopped fighting the minimum wage law.

To be fair, the percent of small businesses in Washington State's overall scheme is 2.4%. Can it be used as an accurate prediction for what is to come after all states adopt the new higher minimum wage? We'll all wait and see, but in my opinion, an increase in minimum wage has been a long time coming. It's about time.