WASHINGTON -- Four states have announced that they will be raising their minimum wage rates for 2012, led by Washington state, which will become the first in the country with a minimum wage over $9 per hour.
The 37-cent bump in Washington will hike the wage to $9.04, or $1.79 per hour more than the federal minimum wage of $7.25. The raise will mean an additional $770 annually for a full-time minimum-wage worker in the state.
Workers will also see a modest hike of between 28 and 30 cents in Colorado, Ohio and Montana, as well as in Oregon, which announced a wage raise on Sept. 15. In those states as well as in Washington, the higher rates trump the federal rate. The new raises are all due to cost-of-living adjustments written into state wage laws. Similar hikes are expected to be announced next month in Arizona, Florida and Vermont.
Tsedeye Gebreselassie, staff attorney at the National Employment Law Project, an advocacy group for low-wage workers, said that the raise once again sets Washington state apart from others in its progressive approach to the minimum wage.
"This shows the value of indexing," Gebreselassie said. "The reason it's $9.04 is that it's been keeping up with the cost of living over the years."
Advocates for low-wage workers argue that in addition to helping the working poor make ends meet, higher minimum wages help pump money into local economies, since such workers often have no choice but to spend their entire paychecks.
Washington passed an initiative in 1998 that tied the minimum wage to the national consumer price index, assuring that the lowest wages would rise in tandem with inflation. Some states have since followed suit, although the federal minimum wage does not include a cost-of-living adjustment.
The Washington minimum wage initiative was written by Jeff Johnson, president of the Washington State Labor Council, an affiliation of unions and labor groups. Johnson told HuffPost that despite the Washington minimum wage being the highest rate of its kind in the nation, there are many areas of the state where it doesn't amount to a living wage. Even so, he called the impending bump "the one bright spot on our horizon" in a down economy and dismal job market.
"At least these low-wage earners will maintain their purchasing power and go purchase things," Johnson said. "The money will go right back into the economy."
A number of states passed laws with cost-of-living adjustments after Washington did in 1998, although not as many states as advocates like Johnson had hoped. Most states continue to set their rates at the federal minimum, which Gebreselassie said has been stagnant for years. The $7.25 federal rate works out to a salary of about $15,000 and is well below the living wage for many states. Gebreselassie said the federal rate would now be over $10 if it had kept pace with inflation over the years.
"A lot of people are shocked when they realize it's $7.25 an hour," she said. "There's a lot of catching up to do."
Several states, including Maryland and Illinois, have recently considered adding cost-of-living adjustments to their minimum wages, often prompting an outcry from the business community. Business owners argue that requiring them to pay higher wages will force them to cut their number of positions, pushing jobs into neighboring states.
Backed by the state Chamber of Commerce, Missouri Republicans even mounted an unsuccessful campaign to roll back their state's cost-of-living adjustment, arguing that it would lead to job growth.
Johnson said many businesses grumble when Washington hikes its minimum wage each year, but that so far the cost-of-living adjustment doesn’t seem to have sent many jobs over the border.
"Washington state has one of the highest rates of growth in small business and retail," he said. "It doesn’t seem to be stopping these people from creating new businesses."