How Washington’s new minimum wage will affect the economy

On January 1st, Washington will have the highest minimum wage in the nation.

ANACORTES, Washington — On January 1, Washington’s minimum wage will rise to $15.74 an hour.

The $1.25 increase is the highest in the nation.

Waitress Kaisha Paul works at Anacortes’ Rockfish Grill to support her family of three. She’s grateful for her upcoming raise, but knows it won’t go too far.

“I feel like every time our salary goes up, the cost of living goes up,” she said.

Labor accounts for 50% of the costs at the popular brewpub. Now these costs and many more are rising, making business a difficult balancing act.

Allen Rhoades, owner of Rockfish Grill, said the pay rise and rising grocery costs are just two of the factors determining how he will run the business over the next year.

“We ask ourselves what we can change, what we can reduce,” he said. “We just got word from Washington state that L&I rates are rising, unemployment rates are rising and we don’t want to touch the benefits we provide to our employees.”

Voters approved the nationwide minimum wage increase in 2016. It has steadily increased every year since then, from $9.47 an hour to almost $16 now.

While the increase will hurt profits, it remains unclear how much of an impact it will have on the local economy.

Hart Hodges, co-director of the Center for Economic and Business Research at Western Washington University, doesn’t expect it to be serious. He says the tight labor market has already forced many small businesses to pay above minimum wage.

“We had the push to $15 an hour before COVID, so a lot of the adjustment has already happened,” Hodges said. “This particular minimum wage increase just isn’t going to have that much of an impact.”

As one of Washington’s estimated 100,000 minimum wage workers, Kaisha just keeps smiling.

She remains hopeful despite inflation, a possible recession and another uncertain new year.

“I’m trying to stay as optimistic as possible,” she said, “but I have a son who’s going to college soon and I can’t help but worry about it.”