High Minimum Wage Impacts Washington Economy

PULLMAN, Wash. – On Jan. 2, 2006 the minimum wage for Washington state workers increased 28 cents to $7.63 per hour, the highest in the U.S.

The increase of the minimum wage rate affects Washington employers and employees in different ways across economic sectors. David Holland, professor at Washington State University School of Economic Sciences, explains how the minimum wage shapes the state’s economy.

“Working in the state with the highest minimum wage can have different effects for workers. In the short run, they have an increase of wages, which is good. In the long run, employers may move out of the state or substitute workers with technology, which means there will be fewer employment opportunities in the future,” Holland said.

Holland said that the agricultural sector in Washington is affected by the minimum wage changes in a unique way. “The agricultural sector is special because it is not mobile like the manufacturing. Additionally, the agricultural sector has to take the prices marked by supply and demand, so they can not pass along the increase of wages to the product as easily as manufacturers can,” he said.

Holland, whose research interests are regional economics and agricultural development, can be reached at holland@wsu.edu, or 509-335-2570.