The Washington state minimum wage coincidence

There has been a great deal of discussion lately about raising the minimum wage in the US from $7.25/hour to $10.10/hour. In Seatac, WA, the minimum wage is already at $15.00, and other places such as California have raised theirs well above the $7.25 base. Check out the infographic on our website’s front page for a state by state comparison of the minimum wage. Whatever your stance, its a somewhat contentious issue with Democrats pushing for and Republicans pushing against.

This article covering a recently conducted survey of small businesses explains that according to many small business owners raising the minimum wage is a good thing. Many business owners feel a hike in the minimum wage will keep the competition’s labor costs on equal footing with theirs thus preventing any one business with especially low labor costs from outpacing the others. It appears, then, on a micro-level that minimum wage increases are good for the income or at the very least aren’t running small businesses into the ground.

On a wider scale, as this article points, wage increases usually lead to an initial phase of increased unemployment: “Without an increase in the demand for labor—that is, an increase in labor productivity due to better technology, more capital per worker, or additional education—a higher minimum wage will simply price some workers (the least productive) out of the market, and their incomes will be zero.”

On the other hand, it does appear over time a correlation exists between a higher minimum wage and a lower unemployment rate. At least that seems to be the case in Washington state–the state with both the highest minimum wage and the lowest unemployment rate.

As more and more states discuss the issue of raising the minimum wage, it is a good idea to look at both sides and avoid the blustery partisanship that issues like this tend to generate.*

If you have an opinion on the minimum wage issue and found our post informative, feel free to leave a comment in the comment sections letting us know what you think.

*Note: On a totally biased and partisan note: Huddleston Tax CPAs offers great accounting and payroll services so give us a call at 425-483-6600 and hire us this tax season!

About the author

Seattle CPA+John Huddleston has written extensively on tax related subjects of interest to small business owners. Since 2002, he has owned his own small business, Huddleston Tax CPAs. He is a graduate of Washington State University and the University of Washington School of Law.

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