State's business climate must be addressed quickly
June 12, 2008 · Updated 4:37 PM
Last year, the state Legislature took steps to improve Washingtons business climate and help our economy rebound by passing a new state operating budget that eliminated a $2.6 billion deficit without raising general taxes on businesses or consumers, and by approving a bill reforming Washingtons costly unemployment insurance system.
These measures were key in Washington landing the final assembly of Boeings 7E7 jetliner. Despite the 7E7s arrival, we need many more family-wage jobs. Our states unemployment rate still ranks near the top nationally. A key way to create more jobs is by further improving the business climate to help our existing companies grow and attract new businesses here.
The 2004 Legislature needs to address two issues related to our business climate workers compensation and the minimum wage.
The workers compensation system is designed to provide financial support for individuals who are injured on the job and cant work. This system, which traditionally has been affordable to employers and workers, has become too complex and too costly.
Last year, the Department of Labor and Industries adopted a 29 percent average rate increase in workers compensation premiums. Last month, it implemented a 9.8 percent rate hike for 2004. For Washington businesses, its a costly one-two punch that will stunt job growth since employers cant continue to absorb increases year after year.
Gov. Gary Locke will appoint a panel to examine long-term changes to the workers compensation system and propose administrative and legislative reforms which defer substantive changes to the next governor. L&I announced it will make major changes in how it manages claims and will target workers and employers who abuse the system.
Lets hope the next governor and L&I actually show this commitment to reform because meaningful reform especially stability and certainty is what the workers comp system needs most. While we will attempt again to pass a workers compensation reform bill through the Legislature this year (ESSB 5378 was passed last year by the Senate before stalling in the House), real reform wont occur unless the governor and L&I take action, too.
The other business climate issue to address is the minimum wage. In 1998, Washington voters passed an initiative that automatically increases our states minimum wage by tying it to the consumer price index for urban wage earners. Six years ago, Washingtons minimum wage was $4.90 per hour; as of Jan. 1, it is now $7.16, highest in the U.S. The federal minimum wage is $5.15.
Many employers say our minimum wage system hurts job growth. Many would-be jobs in the restaurant and other service industries havent materialized because employers cant afford the escalating minimum wage. Our minimum wage system also has hurt agriculture, especially our asparagus industry, in which up to 500 seasonal processing jobs and 1,500 crop-cutting jobs will be lost . One reason for the asparagus decline is Washingtons minimum wage index. Why? Labor costs for Washingtons asparagus industry continue to rise each year, regardless of the prices growers were paid for their product.
This issue comes down to jobs. You can pay fewer people more, or you can maintain and create more jobs for people who are out of work. In this economy, most people would prefer the latter.
Last year, the Senate passed a bill (ESSB 5697) linking minimum wage increases to unemployment rates. Washingtons minimum wage would never drop below our current level; it just wouldnt grow as quickly. This measure recognizes that when unemployment is high, the automatic minimum wage increase must be frozen until the jobless rate improves.
As long as our economy is weak and unemployment is high, the Legislature must approve these measures to help get more Washingtonians back to work.
Sound Off is a public forum. Articles are selected from letters to the editor or may be written specifically for this feature. Today's was written by State Sen. Jim Honeyford, R-Sunnyside.