On January 1, 2021, minimum wage will increase to $13.69 in Washington State, putting additional financial pressure on Whatcom County businesses. Furthermore, there are changes to overtime pay rules, raising labor costs even more on top of the wage increase.
The planned minimum wage increase has been expected for some time. Still, with the ongoing pandemic, restrictions on business, and another shutdown implemented by Governor Inslee, an economic downturn makes the timing of the increasing labor costs potentially unsustainable for local businesses. Research has shown that minimum wage increases often result in the loss of minimum wage jobs.
Many of the minimum wage workers in retail, restaurants and the arts have already seen reduced hours and even job loss due to COVID-19 in Whatcom County. Washington Policy Center Small Business Center Director, Mark Harmsworth said increasing minimum wage mandates wipe out the small profit margins for service industry businesses, potentially putting a business into negative fiscal territory. “Business owners are often forced to cut their operational costs. In other words, they are obligated to lay off workers or reduce their hours.”
In addition, Washington Labor and Industries (L&I) changed the minimum salary threshold that requires employers to pay overtime, said Harmsworth. The threshold is now based on the overtime qualifying threshold amount on a multiplier of the minimum wage.
“For many non-profits and organizations that provide services to underserved communities, this means a significant number of their employees now qualify for both their salary and overtime. The result again will be reduced hours and layoffs as many non-profits won’t have the additional cash, particularly in a post-COVID world, to pay the extra wages,” said Harmsworth.
“We know these minimum wage increases are well intended, but they often have an inverse effect,” said Barbara Chase, Whatcom Business Alliance executive director. “Many county businesses that employ minimum wage workers are teetering on the brink of closure, if they aren’t already out of business. Across the state, renters asked for relief. Thankfully, they received it. Hospitals and healthcare asked for relief and support, and they’ve received both. Businesses need relief, too. Delaying the effective date of a new minimum wage until all state businesses are safe to operate at full capacity is the type of reasonable policymaking we should expect from the state government. Unfortunately, I am not sure we will get that.”
While the minimum wage increase will start on January 1, 2021, the WBA strongly encourages members and the local business community to contact their state representatives and the Governor’s office to voice their opinion on upcoming minimum wage increases.
To follow WBA’s advocacy efforts, please visit the WBA Policy Center and follow us on Facebook and LinkedIn to learn more about our vision to return Whatcom County’s business community to prosperity.