Washington’s Minimum Wage Increase: What You Need to Know

Washington’s Minimum Wage Increase: What You Need to Know

Washington's minimum wage increaseOn January 1st, Washington’s minimum wage will rise by $1.53 to $11.00 per hour, thanks to Initiative 1433, which was passed by voters in November.

According to the Puget Sound Business Journal:

  • 730,000+ people in Washington State make minimum wage.
  • That’s a lot of workers and a lot of businesses! This change will have a broad reach.

A minimum wage increase impacts your business in a variety of ways that reach far beyond a boost in your payroll expenses.

You need to know about the changes headed your way!

How Washington’s minimum wage increase works:

  • Minimum wage goes up to $11.00 per hour on January 1st, 2017 (an increase of $1.53/hour)
  • It will then go up 50 cents per hour every year until it reaches $13.50 in January 2020
  • After it reaches $13.50, it will rise annually with the cost of living

Before Initiative 1433 passed, the minimum wage was set to only increase to $9.55 per hour. If your 2017 compensation budget was based on that amount, you’ve got some revisions to do!

How will Washington’s minimum wage increase affect your business?

Don’t wait until January 1st to start figuring out how the minimum wage increase is going to impact your employees!

Not only will you need to raise the wages of workers who currently make less than $11.00 per hour, you must also consider the effects of wage compression.

For instance, employees who now make $12.00 hour — which is $2.53 over the current minimum wage — will suddenly find themselves much closer to the bottom of the compensation totem pole. They won’t be making much more than your entry level workers.

If some of your staff will automatically get a $1.53 pay bump on New Year’s Day, you may need to boost the wages of your other employees to retain and motivate them.

Can you offer other kinds of compensation?

Initiative 1433 did not prohibit what, if anything, can be treated as compensation beyond straight pay.

As part of the initiative’s implementation, it’s possible that factors such as tips, health care benefits, and other forms of compensation may be considered as part of workers’ wages… Or maybe not!

Negotiations and regulations are still to come. In the meantime, businesses will be raising pay, and workers will see more money in their paychecks.