Members of the Olympia City Council are considering a proposal to raise the local minimum wage to at least $20.29 per hour, or as high as $24.01 per hour. While the intent behind the proposal is admirable — to improve the quality of life for the lowest earners in our community — it will actually do the opposite, unintentionally causing significant collateral damage across the local economy.
As the leader of an organization committed to tackling the pipelines to poverty, it seems counter-intuitive to oppose such a measure. But hear me out.
The City Council looks to the United Way’s local ALICE (an acronym for Asset Limited, Income Constrained, Employed) data, and MIT’s living wage calculator to fortify this proposal. ALICE measures the number of households earning more than the federal poverty level, but not enough to meet their basic needs. The living wage calculator demonstrates how much one would have to earn to afford to live where they are.
In Thurston County, 31% of households exist below the ALICE threshold. In the city of Olympia, that number is 34%, or 26,334 households. There are a lot of people struggling to survive here.
The City Council is right to be concerned for the well-being of so many.
In Olympia, for the first time, the number of renters is significantly higher than the number of people who own their homes. About 20% of all residential units sold are going into investment portfolios. Housing costs rose 55% over seven years, while wages only rose 38% over the same period.
Nationally, inflation soared to nearly 9%, before leveling off to current rates between 2-2.5%. Interest rates have been high for several years. Government safety nets are largely unavailable for anyone but the poorest households and are insufficient even for those.
The question we must ask ourselves is this: Are so many people struggling because employers don’t pay enough, or are they struggling because there are other more complicated factors that, together, create economic instability and an exploding lack of affordability?
On its face, a proposal to increase the minimum wage seems like a no-brainer. People can’t afford to live here, so we should pay them more, right? It’s not that simple.
We can’t raise wages without increasing the cost of doing business. Small businesses make up the majority of our economy. Those small businesses contribute to the character and livability of our communities, and they’re owned by members of the community who also want their city to thrive.
Small businesses are notoriously undercapitalized, and many operate on razor thin margins. Increasing minimum wages in the manner proposed will ultimately increase what those businesses must charge for their goods and services to survive, driving the cost of living even higher.
If doing business in the city becomes too unaffordable, many will relocate to communities outside the city limits.
The proposed increase also would have a profound impact on local nonprofits, which already are struggling to serve the most vulnerable people in our community. Local nonprofit leaders delivering critical services in Olympia and our surrounding cities have calculated that their budgets would balloon by hundreds of thousands of dollars with this increase. They have no way to raise those additional funds and would have to reduce services and cut staff to keep their doors open.
Prior to the pandemic, many local nonprofits relied on a volunteer-driven staffing model. When the pandemic struck, those volunteers disappeared, and volunteer numbers have not recovered to pre-pandemic levels. Those organizations have had to drastically increase the number of paid staff to operate their organizations and run their programs. The minimum wage proposal would decimate their ability to deliver much-needed services that thousands of people rely on, including the people the city council is trying to help.
So, what can be done, if a minimum wage increase is not the answer? The two most significant expenses for families who can’t make ends meet are housing and child care.
Child care is infrastructure that is good for the economy, good for business, and essential to families. Right now in Thurston County, a parent of a 1-year-old and a 4-year-old, earning minimum wage, working 40 hours a week, 52 weeks a year, will work from January through September just to pay for child care.
Make affordable, accessible, high-quality year-round child care available to all working families. Reducing barriers for neighborhood home-based care providers while increasing and expanding access to state child-care subsidies are two things that would bring enormous relief to working families, while also allowing more people to fully engage in the workforce.
Meanwhile, focus on innovation and sound policy to reduce housing costs. The City Council could consider ways to address the costs of construction, permitting, and mitigation fees that inhibit faster development of new housing. According to the city’s Housing Action Plan, 46% of Olympians are housing cost-burdened, meaning they pay more than 30% of their income for housing.
Making homeownership affordable and accessible to ALICE households would reduce poverty, stabilize housing costs, and create generational wealth for thousands of struggling people in Olympia and Thurston County.
Other important factors to consider include the cost of groceries, utilities, insurance and health care, which add to the affordability problem in the city and which this proposal would only further exacerbate.
At United Way of Thurston County, our vision is for a community in which all people thrive. At the heart of this is a community where every person has access to quality health care, our young people see many opportunities to succeed and have the pathways to achieve their goals, and all people are financially secure.
By focusing on minimum wage to increase the financial security of Olympians, the City Council overlooks the real economic levers at its disposal that would vastly improve the lives and well-being of its constituents.
Chris Wells is Executive Director of the United Way of Thurston County . She is joined in signing this opinion column by Brian Windrope, the head of Senior Services for South Sound ; Kyle Cronk, leader of the South Sound YMCA ; Jay Kang, President and CEO of the Thurston County Food Bank ; and Michael Cade, head of the Thurston Economic Development Council .
Local News
