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Bump in minimum wage has little effect
POULSBO — Ali Irby just received a 5 cent raise, but it hasn’t made much difference when it comes making ends meet.
The Poulsbo barista says the pay bump in state minimum wages from $8.07 to $8.55 — she was making $8.50 before the start of the year — still leaves expenses a tough bill to foot.
“I couldn’t live off minimum wage if I didn’t make tips,” the 23-year-old said. Irby doesn’t have kids, and splits rent costs with her boyfriend in Silverdale. “I think it’s a struggle, but right now this is the best I can do without education.”
According to a new study, Kitsap County minimum wage earners make $23,000 less than the basic family budget for a one-adult, one-child family. At $8.55 an hour, the annual $17,784 salary is a tough stretch when it comes to necessities, according to the Economic Opportunity Institute.
Numbers compiled by the Northwest Federation show a family of two minimum wage earners with two children will make roughly $35,500, which is almost $33,000 less than the projected budget necessary. Basic family budgets are calculated including income needed for housing, health care, transportation and childcare.
Still, Washington’s minimum wage is higher than most. It’s $2 per hour more than the federal minimum wage used in 27 other states.
In 1998 voters approved Initiative 688 to raise Washington’s minimum wage annually based on the cost of living index. According to the EOI, Washington was the first of now 10 states to annually adjust its minimum wage for inflation, and one of 23 states with a minimum wage higher than the federal rate of $6.55. The current federal minimum wage will increase to $7.25 an hour in July 2009.
The gap between minimum wages and basic necessities could point to why low wage earners proved a little hard to find. A stop at a local fast food restaurant didn’t turn up any minimum wage earners from the handful of employees on shift. A visit to an area grocery store came up with the same. But they certainly exist.
Tizley’s Europub owner Tammy Mattson said service industries commonly employ minimum wage earners, as do seasonal jobs and those who employ kids under the age of 18.
“In Washington state most of the employers that utilize minimum wage are going to be in hospitality, like a restaurant,” Mattson explained. That fits — Irby works in a local coffee shop. And like Irby, Mattson echoed the helpfulness of tips in keeping pocketbooks from drying out.
“Everyone gets tips” at Tizley’s, she said, “even though we have people at the minimum wage level.”
In fact, some of her employees had received merit raises before the state wage increase, meaning the new minimum will bolster their paychecks, but they’re once again at the bottom of the pay grade.
“It was a bummer that it had to take away the merit part,” said Mattson.
As for the business standpoint, she said the wage increase became that proverbial, backbreaking straw following the rising food costs and lack of consumer confidence in a poor economy that began in 2007 and worsened in 2008.
After taxes, she said, the boost in minimum wages will lead to a 15-18 percent increase in labor costs.
According to the EOC, the most recent update from the Washington Employment Security Department indicates 6.2 percent of jobs pay the minimum.
The U.S. Department of Labor reports half of all minimum wage workers nationwide are older than 25 years of age.
The EOC also states $8.55 per hour in 2009 represents the same buying power minimum wage workers had in 2000 when Washington’s minimum wage was $6.50. In comparable dollars, today’s minimum wage is actually lower than it was 40 years ago. In 1968, Washington’s minimum wage was $1.60 per hour; if it had kept pace with inflation, it would be $10.55 in 2009.
Fortunately for Irby, those all-important tips haven’t waned in economic recession. Despite tightening budgets, she said regular customers have continued to monetarily show their appreciation.
“It’s a struggle,” Irby said, “but you’ve got to make it through somehow.”