On January 1, 2011 Washington’s minimum wage will increase for the tenth time in 11 years (“Businesses balk at minimum wage increase,” October 21). At $8.67, it will remain the highest state minimum wage the country. With Washington teen unemployment already averaging 33.5 percent, it’s going to be even harder to find an entry-level job.

Washington’s minimum wage is indexed to inflation, which means the cost to hire and train entry-level employees like teens rises almost every year. For labor-intensive businesses with low profit margins, like restaurants and grocery stores, even a seemingly small increase in labor costs can trigger unintended consequences. As customers continue to demand low prices, employers respond by cutting staff hours or positions and-over time-are forced to turn to more cost-effective alternatives like automation and self-service.

The consequences for teens following the 40 percent increase in the federal minimum wage are a cautionary tale for Washington policymakers. New research from economists at Miami University and Trinity University holds that federal wage hike between July 2007 and July 2009 responsible for over 114,000 fewer teen jobs nationwide-even accounting for the effects of the recession.

Michael Saltsman
Employment Policies Institute
Washington, DC