Seattle took the minimum wage debate into its own hands Monday as local policymakers approved a gradual increase of the city’s minimum wage to $15 an hour, which will make it the highest in the country. At $9.32, Washington’s hourly minimum is already the highest for any state in the U.S.
The vote underscores efforts nationwide by cities and states to increase pay on the local level as the federal minimum wage debate in the nation’s capital divides policymakers. And the effort could gain momentum as the national conversation on income inequality and its economic consequences intensifies.
“It sends a big signal that people are fed up with the stagnant wages that we’ve seen,” says Heidi Shierholz, an economist at the Washington, District of Columbia-based Economic Policy Institute. “In this country, we used to see overall economic growth at the high end, at the middle and at the bottom. Since the 70’s, it’s really changed. We’ve continued to have overall economic growth, but it’s been captured by this thin slice at the top and you’ve seen real stagnation for the vast majority.”
As part of their platform for midterm elections, House and Senate Democrats, backed by President Barack Obama, are pushing for an increase to $10.10 from the current federal minimum wage of $7.25 an hour, which it’s been since July 2009.
“Every year that goes by without an increase, workers are effectively seeing a pay cut because wages are staying the same but the cost of living is going up,” says Tsedeye Gebreselassie, a staff attorney at the National Employment Law Project in New York.
The federal minimum wage was $5.15 for about 10 years leading up to 2007, after which time Congress voted to raise the hourly wage to $7.25 in graduated steps.
“In that decadelong period, you saw over 20 states take action to raise the minimum wage on the state level,” Gebreselassie says. “What we’re seeing now is the same thing, with the addition of cities doing it and both states and cities shooting for much more robust minimum wage levels than they have in the past.”
Opponents of a federal minimum wage increase say it’ll cost jobs, especially for lower-wage workers, as businesses would be more reticent to hire with the increased cost of labor. An August 2013 Pew Research study showed Republicans are about evenly divided on the topic.
Arkansas, Georgia, Minnesota and Wyoming all have minimum wages set lower than the federal minimum of $7.25 an hour, according to the Labor Department. When the state minimum is set lower, workers are paid according to the federal minimum. Twenty-two states, plus the District of Columbia, all have current minimum wages of at least $8.
So far in 2014, Connecticut, Delaware, Hawaii, Maryland, Minnesota, West Virginia and the District of Columbia have voted to raise their minimum wages, according to the National Conference of State Legislatures. Michigan’s is the first Republican-led legislature to have done so.
Another city to recently raise its minimum wage is San Francisco; as of Jan. 1, 2014, it stands at $10.74 an hour.
The move by individual cities to increase their minimum wage could be a drag on the competitiveness of businesses within the city limits, says Gary Burtless, a senior fellow of economic studies at the Brookings Institution in the District.
“It is going to force the city mothers and fathers of Seattle to think hard about the possible loss of businesses to the suburbs,” he says. “Because if there’s a big gap between the legal minimum in an adjacent suburb and in Seattle proper, then some businesses in Seattle are going to be hurt and businesses across the [city’s] border are going to be helped.”
Burtless says an increase on the federal level could mean “these adverse consequences are minimized.”
He and Shierholz are among 600 economists who earlier this year signed a letter addressed to Obama and congressional leaders urging for an increase of the federal minimum wage to $10.10, saying that it would provide a boost to the economic recovery.
“A minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front,” the letter read.