How Washington's Minimum Wage Compares

Beginning January 1, 2012, Washington’s minimum wage increased from $8.67 to $9.04 per hour - the best in the nation. The change is the result of legislation passed by voters in 1998, which directs the state’s minimum wage to keep pace with increases in the cost of living. In contrast, the federal minimum wage, currently $7.25 per hour, often remains unchanged for many years, and has fallen well below the poverty threshold for a family of three for decades.

Because Washington’s minimum wage is indexed to inflation, a full-time minimum wage worker in 2011 earns an annual income of $18,034, just above the federal poverty threshold of $17,374 for a family of three. The cost of living adjustment to Washington’s minimum wage may contribute to our state’s lower rate of poverty compared to the U.S.

Annual Earnings for a Full-Time Minimum Wage Worker vs.
Federal Poverty Threshold for a Family of 3

Source: U.S. Department of Labor, Washington State Department of Labor and Industries, and U.S. Census Bureau

Minimum Wage Workers: A Diverse Group

Nationally, the minimum wage workforce is made up of men and women from various age groups and multiple racial and ethnic backgrounds. However, those who work for minimum wage are disproportionately persons of color. Additionally, the majority of minimum wage workers are female, regardless of age group, race or number of hours worked.

Workers at or Below Minimum Wage, by Age: U.S., 2010

Source: U.S. Bureau of Labor Statistics, Characteristics of Minimum Wage Workers 2010

According to the Bureau of Labor Statistics, less than a quarter of minimum wage workers are teenagers, more than half are over age 25, and one-third are over age 35. About 70% have at least a high school diploma and 7.5% have a B.A. or graduate degree. An analysis by the Economic Policy Institute of Current Population Survey data found that one-fourth of workers who would be impacted by an increase in the federal minimum wage are parents with children at home.

Growth in Low-Wage Sectors

The three industries with the highest concentration of low-wage workers - accommodation and food services, retail, and health services and social assistance - have all begun to rebound along with the overall economy.

While recent job growth has been painfully slow, an analysis of national private sector employment shows many industries are beginning to regain jobs. The National Employment Law Project found that although low-wage, mid-wage and high-wage industries all showed some growth between February 2010 and January 2011, it is the lower-wage industries that demonstrated the greatest increases in employment numbers. Higher-wage industries not only had the least growth, they also suffered the greatest job losses in the previous two years.

Low-wage industries are anticipated to have even stronger growth in the coming years. The Washington State Employment Security Department recently projected the top twenty occupations expected to have the greatest increases in employment numbers between 2008 and 2018. Of those twenty occupations, more than half are low-wage positions paying at least five dollars less than $18.32, the 2010 state median hourly wage across industries.

Increased Employment for Top Twenty Occupations with Greatest Projected Growth

Washington, 2008-2018

Source: EOI analysis of WA State Employment Security Department/Labor Market and Economic Analysis data

Minimum Wage vs. Living Wage

While some of Washington’s largest industries rely on low-wage workers for growth, minimum wage employees must rely on near-poverty earnings to pay for living expenses. In Washington, a full-time minimum wage worker will earn just over $18,000 in 2011.

Although this is enough income to keep a family of three above the poverty threshold, it is not enough to cover the basic expenses of daily living.

In order to afford regular necessities such as transportation, child care and housing, one must earn a living wage. In some parts of the state the minimum wage meets the standard of a living wage for a household of one; however, this is not the case for urban areas. Furthermore, the minimum wage is far below the wage needed to reasonably support a household of two or more across the state.

Minimum Wage vs. Living Wages in 2011, Assuming Full-time Work

Source: Workforce Development Council, Self-Sufficiency Standard for Washington State 2011