Business groups may sue state over minimum wage increase

November 1st, 2010 by Ken

Washington State has the highest minimum wage in the United States.  Right now it stands at $8.55 per hour.   What’s even more significant about our minimum wage is that it goes up each year at the same rate as the cost of living.

But, what happens when the cost of living goes down?   Does the state’s minimum wage go down as well?

No one knows for sure but that’s the situation currently facing Governor Christine Gregoire who has to make the determination so that any change in the wage can be in place by January 1.

Currently, the governor has determined that the cost of living has gone up and that the state will raise the minimum wage to $8.67 an increase of 12 cents per hour.

However, State Attorney General Rob McKenna is challenging the governor’s decision stating that the cost of living has not increased during the current recession and that any increase in the state’s minimum wage is not warranted.

Voters in Washington State are very generous when they give away their money.   By a citizen’s initiative we established a high minimum wage and said that it had to go up each year based on the cost of living.   That’s the way it worked for many years until recently that is.

The cost of living index for Washington State has declined significantly since it reached its peak in 2008.  Since then, the cost of living has declined as well.

Should the state’s minimum wage go down?  No one is suggesting that.  But they are questioning if it should go up at all.   Business groups are questioning how the governor’s office can justify an increase in the minimum wage when the cost of living index is below its peak in 2008.

Here’s how the governor’s office justifies an increase.

While it’s true that the cost of living is lower now than at its peak in 2008, the cost of living rose rose in 2010 from its very low mark in 2009.  Thus the governor’s office says, an increase in the minimum wage is justified.

The peak in 2008 wasn’t used as the measuring stick,  Instead the low in 2009 was used.   A small increase over 2009 in 2010 gave the governor’s office the excuse to raise the minimum wage.

A coalition of business organizations is looking at suing the state over the increase.

Not because they can’t afford  it – – although some of them can’t – – but because some rules have to be established so government can’t just raise the rate whenever it wants and justify it by bad statistics.   Business needs predictability in the wage’s annual rate.

Government can’t just make up the rules as it goes along.  A court challenge is probably the only way to work out the formula.

Posted in Business, Government, History, Informational, The Real News

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