This page was last updated on
01.08.09

WSLC Online -- Home

Contact
What's New
Who We Are
Why Join a Union?

Legislative Update
'00 Legislative Report
Voting Records
Political Education
Site Map


MINIMUM WAGE & TIP PENALTIES

BACKGROUND -- The Fair Labor Standards Act, which set the first national minimum wage in 1938, aimed to assure "the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers." Many states have supported that principle by enacting minimum wage laws of their own which exceed the federal minimum.

Free-market advocates and certain business interests opposed establishing the minimum wage and have resisted every proposed increase since. In some states, the restaurant industry has succeeded in passing "tip penalty" laws, which allow employers to pay tipped workers less than the minimum wage. Washington has no such law.

Until 1998, our state legislature or, via initiative, the people of our state acted every few years to increase the state minimum wage. These sporadic increases failed to keep pace with inflation and the value of the minimum wage eroded over time.

In 1998, the citizens of our state took the matter into their own hands. Initiative 688, filed by WSLC President Rick Bender, raised the state minimum wage and made Washington the first state to require automatic annual adjustments for inflation. (Oregon and eight other states now also "index" their minimum wage.) Using only volunteers, some 288,000 signatures were collected and I-688 passed by a 66-34 margin.

Effective Jan. 1, 2009, the Washington state minimum wage is $8.55 an hour, or about $17,800 a year before taxes for a full-time worker. It is the highest in the nation. Oregon’s is $8.40 and California’s is $8.00. Connecticut, Illinois and Massachusetts also have minimum wages of at least $8 an hour.

The federal minimum wage has lagged significantly behind Washington’s and therefore eroded in value due to inflation. It remained frozen at $5.15 an hour from 1997 through 2006, but the Democratic Congress finally passed an increase. It is currently $6.55 an hour and will rise to $7.25 per hour effective July 24, 2009.

LABOR’S POSITION -- The Washington State Labor Council was proud to play a leading role in the coalition of church, community and labor groups who sponsored and supported the passage of Initiative 688. Its overwhelming approval by a 2-to-1 margin, despite the usual dire predictions of job loss and runaway inflation from some in the business community, was a clear mandate from the voters: If you work full time, you shouldn’t live in poverty.

Another mandate came as voters made Washington the first state to index its minimum wage. We took the politics out of this issue and put the fairness back by stopping the minimum wage’s value from eroding each year. It is important to remember that these annual "increases" merely maintain the existing buying power of the lowest legal wage in the face of higher prices for gasoline, food, housing and other basic necessities.

Attempts to politicize the minimum wage issue continue. The issue also rose during the 2008 Gregoire-Rossi gubernatorial campaign after Dino Rossi suggested he would consider lowering the state minimum wage. Gregoire strongly opposed such a change.

Since, I-688’s passage, business lobbying groups have continually sought to slow down or end the annual inflationary adjustments; some industries have sought exemptions for their workers; and the restaurant industry has fought for a tip penalty to deny annual increases to workers who earn tips.

Business lobbyists continue to claim Washington’s relatively high minimum wage makes the state less "competitive." But there is no evidence that minimum-wage paying industries have suffered demonstrable job loss as a result.

Supporters of repealing or amending I-688 want lawmakers to believe this issue is about the well-being of businesses. But the minimum wage was created to ensure the "health, efficiency, and general well-being of workers," not businesses.

The Washington State Labor Council opposes weakening or repealing our state’s popular minimum-wage law, or creating tip penalties or sub-minimum wages for certain workers.

RECENT LEGISLATIVE HISTORY

1937 -- Washington State sets a national precedent by instituting the first-ever minimum wage.

1998 -- Initiative 688 passes 66-34 raising the state minimum wage in two steps to $6.50 and then indexing it to adjust annually for inflation.

1999 -- HB 2104 would allow employers to pay tipped workers 85% of the minimum wage. It died in the House.

2001 -- HB 1973 would freeze the minimum wage for tipped workers, and then fix it at 75% of the minimum wage for everyone else. It died in the House.

2003-04 -- 13 bills introduced to freeze or lower the minimum wage, or establish a tip penalty. All failed with only one getting a vote. SB 5697 would freeze the minimum wage if the state unemployment rate is less than the federal rate. SB 5697 passed the Senate both years, but died in the House.

Had SB 5697 been law from 1992-2004, Washington’s minimum wage would have increased just 4% in 12 years, from $4.25 to $4.42. Had it been the law since 2003, Washington’s minimum wage would be nearly a dollar less per hour at $7.13 an hour, instead of $8.07, in 2008.

2005 -- SB 5774 and HB 1795 filed to establish tip penalty. Both die without a vote.

2006 -- SB 5551, sought by business interests that have traditionally opposed Washington’s minimum wage standard, would have studied the law’s effect on businesses and workers. Thre bill’s opponents argued that it asked the wrong questions in an attempt to reach a predetermined outcome. It passed the Senate, but died in the House.

2007 -- HB 1583 required businesses that provide food, beverage, entertainment, or porterage to disclose the percentage of automatic service charges that are paid directly to employees. (HB 2699-’08 authorized L&I to enforce HB 1583.)

MORE INFORMATION

Visit the Economic Opportunity Institute’s website -- www.econop.org/minimum_wage/minimum_wage.html -- which includes the policy brief "Still Working Well: Washington’s Minimum Wage."

Return to the WSLC Legislative Issues Index

Copyright © 2009 — Washington State Labor Council, AFL-CIO