This article originally appeared in the December 2015 issue of 425 Business.
The state Employment Security Department estimates that 67,000 full-time equivalent jobs will be affected by the recent announcement that Washington’s minimum wage will remain at $9.47 per hour for 2016, but it is unclear how many of those jobs are on the Eastside.
This is the second time the state minimum wage has remained stagnant since the 1998 passage of Initiative 688, which requires the state minimum wage to be adjusted for inflation.
Determining how minimum wage stagnation affects the Eastside is tricky. Student poverty is one potential indicator. In that regard, Bellevue LifeSpring estimates there are more than 3,600 children in the Bellevue School District living in poverty. The Eastside nonprofit provided more than 118,000 meals to students who qualify for the federal free and reduced-price lunch program during the 2014-2015 school year and the following summer.
“Despite the belief about the affluence of Bellevue, there are still people living in poverty and in desperate need of our help. One in five children is living at or near the federal poverty line,” said Jennifer Fischer, Bellevue LifeSpring’s executive director. “Over 200 students attending Bellevue Schools are homeless. These numbers are shocking for any community, but especially for Bellevue, with its wealth of resources.”
Living wage is another potential indicator. The living wage for two adults with two children in the Seattle Tacoma Bellevue area is $23.92, according to the Living Wage Calculator created by MIT professor Amy Glasmeier. The living wage for a single adult is $10.98 — still $1.51 more than the state’s minimum wage.
The gap between cost of living and the minimum wage might not garner much attention on the Eastside, as the majority of jobs in the area are high-earning positions. The number of tech employees at Google, Facebook, Amazon, and Apple in the area has increased by 21 percent from 2013 to 2014, according to real estate company Redfin, though the number doesn’t take into account those who work at Microsoft or SpaceX, Twitter, and Groupon, all of which have opened growing engineering offices in the area.
According to Redfin, for every 1 percent increase in technology jobs, area home prices increase by about 1.5 percent.
Average wages in the area have increased just over 5 percent from 2012 to 2014, and median home prices have increased nearly 17 percent during the same time period, according to RealtyTrac, a California-based real estate research marketing firm. During that same time, Washington’s minimum wage increased by only 3.1 percent.
Washington’s minimum wage is based on the national Consumer Price Index for Urban Wage Earners and Clerical Workers. The CPI-W calculates the cost of groceries, gas, clothing, and other everyday living expenses.
It would seem logical that if the cost of everyday items, such as groceries and gas, did not increase, there would be no need to increase the rate of pay. But the CPI-W is a national number, and areas with less volatile housing markets than the Eastside dragged the CPI down. The Bureau of Labor Statistics reported the national cost of shelter increased by 3.2 percent, but energy costs decreased by 18.4 percent.
The Washington Technology Industry Association released a report earlier this year saying new tech jobs have a positive ripple effect on the area’s economy. Not only do these workers have discretionary income to spend, but for every new tech worker hired, 2.7 more jobs are created to support that worker in the wider economy. Think barista, grocery bagger, gas station attendant, etc.
According to the Economic Development Council of Seattle and King County, roughly 28 percent of King County residents hold jobs in business or managerial positions, resulting in the county’s median household income — about $72,000 — being well above the national median of $52,000.
Carrying the 2015 minimum wage into 2016 will end Washington’s status of having the highest minimum wage in the country. As of Jan. 1, both California and Massachusetts will have higher minimum wages: $10 per hour. The federal minimum wage has been $7.25 since 2009, and also will not change for 2016.