Washington State and the Minimum Wage
Bloomberg has an interesting article on the effects of the state's 1998 decision to dramatically hike its minimum wage and index it to cost of living. Key details:
In the 15 years that followed, the state’s minimum wage climbed to $9.32 -- the highest in the country. Meanwhile job growth continued at an average 0.8 percent annual pace, 0.3 percentage point[s] above the national rate. Payrolls at Washington’s restaurants and bars, portrayed as particularly vulnerable to higher wage costs, expanded by 21 percent. Poverty has trailed the U.S. level for at least seven years.
"At least seven years" is a cute way to put it -- Washington had a below-average poverty rate long before the minimum-wage hike -- but at any rate I was curious to see if there were different effects on different age groups. Here's the overall unemployment rate, which, relative to national trends, did rise a bit after the wage kicked in but settled back down:
Basically, Washington experienced a sustained youth-unemployment hike after the minimum-wage law went into effect. As the Washington Policy Center has noted, "Since 2002, well before the recent recession, Washington consistently ranked among the top ten states with the highest teen unemployment. The single exception was 2007, when Washington briefly broke out of the top ten to rank 12th."
It's always tough to draw conclusions based on data from a single state, and here the results seem decidedly mixed. Job growth has continued, even in industries where we might have expected otherwise, but the most difficult-to-employ people have suffered.
Robert VerBruggen is editor of RealClearPolicy. Twitter: @RAVerBruggen