Higher minimum wage levels help many workers, but there are tradeoffs

Minimum wage increases are controversial. Most workers favor them, and many business owners don't.

The Washington state minimum wage is $16.66 an hour. That's the highest state minimum in the United States. Seattle's increased to $20.76 this year, with some exceptions.

Nate Sanford is a Murrow News Fellow reporting for Cascade PBS and KNKX. He looked into the pros and cons of higher wages in the Seattle area for a recent article. KUOW’s Rob Wood asked him about it.

This interview has been edited for clarity.

Rob Wood: You built your story around a few main characters. The first is a young woman named Cadie Hood. She was working as a waitress and moved to Renton from Wyoming. She continued waiting tables and got a big hourly wage boost. Was she happy with the move?

Nate Sanford: Absolutely. I think living in Washington state, it's sometimes easy to forget how low the minimum wage is in some other parts of the country. Wyoming is one of about 20 states that still follows the federal minimum wage, which has been stagnant at about $7.25 an hour for more than a decade, and that's also with employers allowed to count tips towards most of that. So, Cadie was getting paid less than $3 an hour in Wyoming, which I think seems pretty crazy-low to a lot of us living in Washington.

After moving over here, her paycheck shot up to the state minimum, $16.66, and that's without exemptions on tips. It's a huge increase. But Washington is also a very expensive state. Things are still tough, right? But then last summer, a ballot initiative in Renton went into effect. That raised the minimum wage to more than $20 an hour. Cadie was really thrilled about that. She said it gave her just more stability, more time to kind of live life outside of work, and not be stressing about rent every month. Renton is one of about half a dozen local jurisdictions in the area that have done similar things and raised their wage above Washington's to about $20 an hour.

You also spoke to a co-owner of Cascadia Pizza in Maple Valley, Thomas Reinhard. He lobbied against the increases before they were implemented. Where does he stand now in all of this?

Reinhard was one of several people who spoke out last year when the King County Council was discussing raising the wage in unincorporated King County to above $20 an hour. That passed, and went into effect at the start of this year. He says it's been pretty tough for his business. One of the Cascadia Pizza stores is in unincorporated King County. He hasn't raised prices yet, but he says he's had to cut about five part-time staff positions and reduce hours. He said they've had to prioritize older, more experienced workers who are relying on this full time, and that's at the expense of maybe younger people, who don't have as much experience.

He's one of many business owners who've spoken out against some of these recent increases in the Puget Sound area. He also thinks that tips have gone down, which has actually made the wage increase less impactful for employees. Tips are really hard to track, so researchers I talked to you said it's kind of a gray area, where there's not a lot of good data on the effect that minimum wage increases have on tips. But anecdotally, in his experience, he says that's been a challenge.

Back in 2014, Seattle passed a minimum wage increase that got national attention. You wrote that opponents made some radical predictions about it. You spoke to University of Washington Prof. Jacob Vigdor, who worked on a multi-year study of that and subsequent increases. How does he see the outcomes now more than 10 years later?

Pretty mixed. Like you said, there were a lot of opponents at the time who were warning that it was going to drive businesses out of Seattle. It was going to decimate small businesses. His research found that wasn't really the case. The survival rate for businesses was quite high. Like, 99% made it through the wage increase, often by adapting, by maybe cutting hours or raising prices. And so that kind of apocalyptic vision, businesses fleeing Seattle, didn't really come to fruition.

At the same time, a lot of supporters of the increase at the time were hoping this would be really a dramatic, life-changing thing for a lot of workers that would really help reduce income inequality in Seattle. And we see that income inequality is still a big issue. Wages went up, but so did the cost of living. And it's still pretty hard to make ends meet out here for people, even with that increased paycheck.

Well, it appears that voters haven't tired yet of approving these increases. You note that while the Puget Sound region has the highest minimum wage in the nation. That hasn't necessarily translated to a living wage. Did Vigdor say how he sees this resolving?

The estimated cost of living for single adults in the area is above $30 an hour. Vigdor said wage increases come with tradeoffs. It's a value judgment you have to make. Also, there are a lot of ways outside of wage increases to improve things for workers that several people I talked to brought up. While wage increases are important, it's not a silver bullet to solve the affordability issue. You look at other states like California, which also has an incredibly high cost of living, but doesn't have minimum wages that are as high as Washington's. What California does have is a more robust social safety net. They have more housing programs and things like that.

One cook I talked to talked to, in addition to wage increases, wanted to see things like social housing and more late-night public transit for service industry workers and, possibly, a public pension plan that could stay with restaurant workers when they switch between jobs. Those are other ideas that can maybe make it easier to live in the Seattle area as a minimum wage worker.

Listen to the interview by clicking the play button above.