(The Center Square) – Minimum wage workers in Washington will be getting a raise – and employers will be paying more – in 2024.
The state’s mandatory minimum wage will go up to $16.28 an hour next year, an increase of 3.4% over 2023, the Washington Department of Labor & Industries announced Friday. At a 40-hour workweek, a minimum-wage job would pay more than $38,000 annually.
The revised rate takes effect Jan. 1.
According to L&I, Washington already has the nation’s highest minimum wage at $15.74, more than double the federal rate of $7.25 an hour and more than $6 higher than a decade ago.
Under state law, the department annually calculates the minimum wage each August for the coming year based on changes in the federal Bureau of Labor Statistics’ consumer price index for urban wage earners and clerical workers. The wage applies to workers age 16 and older. For younger workers ages 14-15, employers can pay 85% of the minimum rate. In 2024, that will be $13.84 per hour.
Cities within Washington can set minimum wages higher than the state rate, and Seattle, SeaTac, and Tukwila have done so.
The state increase also affects several classes of workers, including “overtime exempt” employees and drivers for transportation network companies such as Lyft and Uber.
While employees are likely appreciative of the pending pay raise, labor costs are often the largest expense incurred by businesses.
Employers will continue to assess the fiscal impacts and consider how – or if – such expenses can be absorbed, said Bob Battles, general counsel and director of government affairs for the Association of Washington Business, on Wednesday.
“Washington is a high-cost state to do business,” Battles said, noting such mandated expenses as unemployment insurance, workers compensation, paid family leave and other social programs.
“At some point, you lose the ability to pay people,” he said.
Among concerns cited by Battles is L&I’s updated rules for “overtime exempt employees” – executive, administrative, computing, and professional workers and outside salespeople who are not paid on an hourly basis, but still qualify for overtime pay until reaching a specified salary level.
For 2024, the state threshold is two times the minimum wage. That means a qualifying employee will have to earn at least $1,302 a week, or $67,725 a year, before being considered exempt from overtime.
Under an eight-year implementation schedule created by L&I in 2020, a multiplier incrementally increases the overtime exemption level until it reaches 2.5 times in 2028. The pace of the increase is based on the size of the employer.
Beginning in 2024, minimum pay in Washington is also going up for rideshare drivers with such companies such as Lyft and Uber under legislation passed in 2022. For trips within Seattle, drivers will earn 66 cents per passenger platform minute and $1.55 per passenger platform mile, or $5.81, whichever is greater. For trips outside of Seattle, drivers will earn 38 cents per passenger platform minute and $1.31 per passenger platform mile, or $3.37, whichever is greater.
Another potential expense facing employers is addressing wage “compression” – that is, the difference between the mandated pay increase to a minimum wage worker and an employee with more experience, talent, or responsibilities who may feel entitled to a corresponding pay increase.
Other considerations include impacts to border communities between Washington and Idaho, which still uses the federal minimum wage of $7.25 per hour. Washington residents will venture over the Gem State because goods and services may be cheaper. Conversely, Idaho residents may commute to Washington to work because wages are higher.
Nonprofit groups and government entities are not immune to minimum wage hikes, either. For example, municipalities which operate summer swimming pools and water parks that are typically staffed by teens and young adults may have to calculate wage increases into their facility rates and annual budgets.
Washington is among 30 states and Washington, D.C. with minimum wages above the federal rate. Five states have not adopted a state minimum wage — Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Two states, Georgia and Wyoming, have a minimum wage below $7.25 per hour.
The last time Washington state’s minimum wage matched the federal rate was in September 1997, when they were both $5.15 per hour.
In 1998, Washington voters approved Initiative 688, requiring Labor & Industries to make annual cost-of-living adjustments based on the federal consumer price index. In 2016, when the rate was $9.47, voters approved Initiative 1433 which required a state minimum wage of $11 by 2017 that incrementally increased to $13.50 by 2020.
L&I enforces the state’s wage-and-hour laws and investigates wage-payment complaints. Information is available at www.lni.wa.gov, along with details about overtime, rest breaks, and meal periods. Employers and workers can also call 1-866-219-7321 for information.
