The State With the Highest Minimum Wage Beats the Nation on Job Creation

Foreman and workers standing in factory
Getty Images/Vetta
By Victoria Stilwell, Peter Robison and William Selway

When Washington residents voted in 1998 to raise the state's minimum wage and link it to the cost of living, opponents warned the measure would be a job-killer. The prediction hasn't been borne out.
In the 15 years that followed, the state's minimum wage climbed to $9.32 -- the highest in the country. Meanwhile job growth continued at an average 0.8 percent annual pace, 0.3 percentage point above the national rate. Payrolls at Washington's restaurants and bars, portrayed as particularly vulnerable to higher wage costs, expanded by 21 percent. Poverty has trailed the U.S. level for at least seven years.

The debate is replaying on a national scale as Democrats led by President Barack Obama push for an increase in the $7.25-an-hour federal minimum, while opponents argue a raise would hurt those it's intended to help by axing jobs for the lowest-skilled. Even if that proves true, Washington's example shows that any such effects aren't big enough to throw its economy and labor market off the tracks.

"It's hard to see that the state of Washington has paid a heavy penalty for having a higher minimum wage than the rest of the country," said Gary Burtless, an economist at Brookings Institution who formerly was at the U.S. Labor Department.

Costs, Benefits

Raising the U.S. minimum wage to $10.10 in three steps, as Obama proposes, would reduce employment nationally by about 500,000 workers, or about 0.3 percent, according to a Congressional Budget Office report published Feb. 18. At the same time, the increase would lift 900,000 people out of poverty and add $31 billion to the earnings of low-wage Americans, the report found.

While debate persists on the employment effect, "CBO is as qualified as anyone to evaluate that literature, and I wouldn't argue with their assessment," Federal Reserve Chair Janet Yellen said Feb. 27 to the Senate Banking Committee.

Looking past the effect on jobs, increasing the minimum hourly wage to $10.10 would also reduce food stamp expenditures by about 6 percent, or nearly $4.6 billion a year, according to a report today from the Center for American Progress. The Washington-based research institute, which was founded by Obama adviser John Podesta, released its report as the president reiterated his call for a higher wage floor.

Washington voters in November 1998 approved increasing the state's minimum wage in two stages to $6.50 and tying future annual changes to inflation as measured by the consumer price index.

Groups representing retailers, restaurants and hotels opposed the measure, according to a voters pamphlet on the 1998 election published by Washington's Office of the Secretary of State. Employment in those industries has increased in the state of Washington since then, Labor Department data show.

Shock Absorbers

One possible explanation: Businesses have plenty of ways besides job cuts to absorb the costs of a minimum-wage increase, according to Arindrajit Dube, an economist at the University of Massachusetts at Amherst, whose research found no significant effects on employment. Price increases, reductions in profits and savings from lower turnover can help soak up the shock.

"When you put all of these together, then the finding that moderate increases in minimum wages do not appear to have much of an effect on employment is less surprising," Dube said in an interview.

Not everyone buys that argument. Minimum-wage laws not only reduce employment opportunities and earnings for low-wage workers, they also reduce demand for their labor as it's replaced by other forms of capital, according to research published in 2008 by David Neumark, an economist at the University of California at Irvine, and William Wascher, an economist at the Federal Reserve Board of Governors in Washington.

Boehner, Reid

The federal minimum-wage legislation is opposed by business groups such as the National Retail Federation, along with many Republicans, including House Speaker John Boehner of Ohio.

%VIRTUAL-article-sponsoredlinks%In the Democratic-controlled Senate, Majority Leader Harry Reid of Nevada on Feb. 25 postponed a vote on the legislation, a centerpiece of the party's election-year focus on income inequality. The delay until senators return March 24 from a week-long break gives labor unions more time to organize support for the proposal, said a Senate Democratic leadership aide who requested anonymity to discuss strategy.

Gridlock in Congress may mean the debate is waged more immediately by states and cities instead of at the federal level.

State Minimums

As of January, 21 states and the District of Columbia had a higher minimum wage than the federal floor. Cities including San Francisco and Santa Fe, New Mexico, require even higher hourly earnings than the proposed federal level, at $10.74 and $10.66 respectively.

New Jersey voters in November approved increasing the minimum wage by $1 an hour to $8.25, tying future increases to the consumer price index. In January, after the raise took effect, private employers added 8,320 jobs in New Jersey, according to ADP Research Institute. That was the fastest pace of job growth since December 2012.

Raising Prices

Joe Olivo, the chief executive officer of Perfect Printing, a Moorestown, New Jersey, company that makes materials such as marketing brochures for businesses, was among those who opposed the state's minimum-wage increase. Since it began, he hasn't cut his 48-person staff. Instead, he's looking to pass on the costs by raising prices, a step that he said could impede his business's ability to grow and hire in the future.

"If I am losing work and I have less money to grow, what good does it do for those employees that are looking for future work?" said Olivo, 47. "The people that are looking for jobs find it harder."

Those kinds of long-term costs leave economists including Charles Brown undecided in the debate. Brown is a professor of economics at the University of Michigan in Ann Arbor who reviewed the CBO's analytical approach.

"The report does a very careful job of trying to make the best use of the available literature," Brown said in an interview. "If I balance short-run gains against short-run losses, this looks like a reasonable thing to do. The problem is, we don't have a good handle on how large those long-run effects are likely to be."

$15 Minimum

Washington's relatively benign experience with a higher minimum has encouraged some communities in the state to push for even more.

SeaTac, Washington, a Seattle suburb where the major employer is the region's international airport, voted in November to raise the hourly minimum by more than 60 percent to $15 for 6,300 people who work at the airport, hotels and nearby businesses.

Companies including parking lot operator MasterPark LLC had said the higher pay might lead to job losses. Since it passed, 140 MasterPark employees have received raises and the company hasn't cut jobs because that might compromise service, managing partner Roger McCracken said.

"We're in the valet business -- that means employees," he said. Instead, the company responded by tacking on a 50-cent daily "living-wage surcharge" to prices.

Seattle's Mayor

Now, Seattle Mayor Ed Murray, a Democrat elected in November, is following SeaTac's lead as he also promotes raising the city's minimum to $15. A task force of business and labor representatives, advised by academics from the University of California at Berkeley and the University of Washington in Seattle, is meeting monthly and hopes to produce a proposal in April, Murray said in an interview.
The Seattle-Tacoma-Bellevue metropolitan area ranks 14th in a list compiled by Bloomberg of 50 cities where it's hard for fast-food workers to gain upward mobility, based on median pay compared with rent, tuition and health-care costs. Advocates such as Murray say a higher minimum would help change that.

"We can't rebuild this economy if it's just people who buy 94-foot yachts and play in the derivatives," Murray said. "You build an economy when a middle class is buying microwaves or flat-screen TVs or the next set of clothes for their kids."

To contact the reporters on this story: Victoria Stilwell in Washington at; Peter Robison in Seattle at; William Selway in Washington at To contact the editor responsible for this story: Carlos Torres at

The 10 Best-Paying Cities for Women
See Gallery
The State With the Highest Minimum Wage Beats the Nation on Job Creation
Women's pay as a pct. of men's: 84.8%
Median income for men: $42,420
Median income for women: $35,958

Although median earnings for women in the Tampa metropolitan area were lower than the U.S. median of $37,199, they were closer to men's compared to the country as a whole. In office and administrative support positions, where 16.6% of full-time workers in the area were employed, women made 93.4% of men's wages, compared to 87.7% across the country. In sales-related occupations, women made 80.9% of men's pay. Although this gap was wider than the wage gap as a whole, it was better than all but one other metropolitan area. Production occupations, which nationwide pay women less than 70% of men's salaries, are far less common in Tampa, accounting for just 3.8% of workers there, versus 6.8% nationwide.
Women's pay as a pct. of men's: 85.4%
Median income for men: $40,817
Median income for women: $34,852

The median annual earnings for both men and women were lower in the Miami area than in the United States as whole. However, while women across the nation earned just 78.8% of their male counterparts' pay, in the Miami metropolitan area this figure was over 85%. In the largest sector in Miami, office administration and support, women's median income was 97.4% of men's. Also, women in three professions - installation, construction and the life, physical and social sciences - actually had a higher median pay than men. Unfortunately, in sales positions, which made up nearly 13% of employment in the area, women earned just 58.8% as much as men, versus an already low 65% nationwide.
Women's pay as a pct. of men's: 85.5%
Median income for men: $40,633
Median income for women: $34,753

San Antonio-area women working in the business and financial industries were paid 87.6% of what their male counterparts earned. Although hardly equal, it was the ninth-smallest percentage difference among all metro areas for the field. Nationally, women in business and finance earned just 73.3% of male salaries. Both men and women earned less than the national median. The median pay for area men was more than $6,000 less than the national equivalent, while for women it was less than $2,500 less.

Women's pay as a pct. of men's: 85.6%
Median income for men: $33,821
Median income for women: $28,959

The median pay for El Paso women working in office and administrative support was 99% of that for similarly employed men, one of the smallest disparities in the nation. Additionally, area women who worked in a sales position had median pay 74.2% of the male median, better than in the majority of metropolitan areas and the country overall, where women made just 65% of male salaries. Also, some occupations that grossly underpaid women were not as common in the area. Legal workers accounted for just 0.6% of the area workforce, less than half the proportion for the United States overall. Across the nation, female legal workers earned under 52% of the male median pay.

Photo: Robin Kanouse,

Women's pay as a pct. of men's: 86.5%
Median income for men: $30,288
Median income for women: $26,191

Although the median pay for women working full time in McAllen was more than $11,000 less than the pay for women across the country, their pay relative to men was among the best in the United States. In community and social services occupations, which made up a disproportionate share of the jobs compared to the country as a whole, women were paid more than 125% of what men made, higher than all but four other metropolitan areas. In maintenance professions, which also made up a considerably higher proportion of the jobs compared to the rest of the country, women were paid 99.9% of male salaries. Yet the highest-paid female workers relative to men were those in personal care and service jobs, where women made a nation-high 143.8% more than men.
Women's pay as a pct. of men's: 87.0%
Median income for men: $45,201
Median income for women: $39,311

Women working in the life, physical and social sciences in Stockton were paid more than double the salaries of men, earning a median wage of $86,599 versus $41,514. Similarly, women employed in health care support also led the nation in relative pay for their occupations, earning a median salary equal to 146% of the median for men. The Stockton area also has a smaller proportion of workers in several of the industries, which tended to skew pay more towards men. Management positions, which nationally paid women less than three-quarters what they paid men, account for just 9.5% of jobs in Stockton, versus more than 12% nationwide. Similarly, the area had a low percentage of workers employed in business and financial operations, which across the United States paid women just 73.3% of men's salaries.
Women's pay as a pct. of men's: 87.0%
Median income for men: $40,510
Median income for women: $35,238

In Las Vegas, the median salary for women was 87% of the male equivalent. Although Las Vegas workers are often not well paid - with the area's median earnings of $37,203, well below the national median of just over $42,000 - disparities between national and local salaries are much greater for men than they are for women. Among the reasons, women employed in food preparation positions earn a median salary equal to 106.9% of the median for similarly employed men. Further, food preparation workers make up 10.5% of the workforce, more than in any other major city. Even in one of the more equitable occupations for women's pay, Las Vegas stands out: women working in community and social services fields earned a median of $54,745 versus just $41,422 for men - a 132% premium.
Women's pay as a pct. of men's: 87.5%
Median income for men: $40,417
Median income for women: $35,352

In the North Port metropolitan area, women made $7 for every $8 that men made. Women in the health care technology field, which comprised a nation-high 2.8% of jobs in the North Port area, made 124.3% of what men made, compared to 83.8% for the country as a whole. In production occupations, women made 114.3% of men's earnings, a higher percentage than any other metropolitan area. However, one area where North Port fared less well was health care support occupations, which comprised a nation-high 4.2% of all jobs in the metro area. In this field, women made less than two-thirds of their male counterparts, compared to more than 85% across the country as a whole.
Women's pay as a pct. of men's: 89.1%
Median income for men: $40,164
Median income for women: $35,786

Women employed in education, training and library occupations earned 113.7% of what men earned, more than in any other large metropolitan area. Other professions where women outearned men included construction and extraction professions (145.3%), health technology (119.3%) and food preparation and serving (108.9%). But while women's pay gap was lower than the country as a whole in many occupations, they still earned far below men in some. For instance, women in full-time legal occupations earned just 38.7% of what men in the same field earned.
Women's pay as a pct. of men's: 91.4%
Median income for men: $44,607
Median income for women: $40,777

Los Angeles was the only area out of the largest 100 metropolitan areas where women working full time were paid at least 90% of what men made. In office and administrative support positions, which comprised approximately 13.6% of the area workforce, women earned a median salary equal to 102.9% of that paid to men. Women in sales roles - which employed roughly 11.2% of full-time workers in the Los Angeles area and 10% of workers across the United States - received a median pay equal to 74% of that paid to similarly employed men. Across the nation, women in sales earned a median pay equal to just 65% of the median for men. Surprisingly, the entertainment sector appears to be hurting median salaries for women. While the median salary for entertainers is nearly $10,000 more than the national figure and twice as many area workers are employed in the field, women in entertainment make less in the L.A. area compared to men than they do nationally - 85% versus 87%.
Read Full Story
  • DJI25886.01306.611.20%
  • NIKKEI 22520563.16144.350.71%
    Hang Seng26291.84557.622.17%
  • USD (PER EUR)1.110.00120.11%
    USD (PER CHF)1.02-0.0024-0.24%
    JPY (PER USD)106.560.20000.19%
    GBP (PER USD)1.21-0.0025-0.21%