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Welcome to STop, the Seattle Times Opinion blog where our editorial writers and editors share their evolving thoughts on a variety of issues. STop is a place where opinion writers and readers can exchange views and readers can learn more about how editorial positions are formed.

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October 22, 2004

Minimum wage rates

A minimum wage law set higher than the market will produce unemployment, and the higher it is, the more the unemployment. So says economic theory, with the usual caveat, ďall other things being equal.Ē

How well does that work in real life?

A glimpse can be had by looking at the states here. Most of them, including big industrial states like New York, New Jersey and Pennsylvania, use the national rate of $5.15 per hour. So do all the southern and mountain states, including Idaho.

But 13 of the 51 jurisdictions have rates that are higher.

That includes Washington, which has the highest rate in the country: $7.16 per hour now and $7.35 as of Jan. 1, 2005.

Here is a table of unemployment rates, by state.

Itís notable that the three states with the highest unemployment rates are jurisdictions with high minimum wages: Alaska, $7.15 per hour; the District of Columbia, $6.15; and Oregon, $7.05 (going to $7.25 on Jan. 1). Washington is now 7th in unemployment, and Illinois, which has a $6.50 minimum, is eighth.

In all, 5 of the 10 states with the highest unemployment rates have special minimum wages higher than the national average. But so do three of the states with the lowest unemployment rates: Delaware ($6.15), Vermont ($6.75, going to $7.00) and the state with the lowest unemployment of all, Hawaii ($6.25).

Is there a correlation? Yes, but a weak one. Put the minimum wage up to $10 or $12, and I think it would be much stronger.

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Posted by Bruce Ramsey at October 22, 2004 06:23 PM



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