Washington’s record-setting minimum wage will jump to $7.35 an hour on Jan. 1, 2005, bringing a warning from the state’s largest small-business group.
   According to Carolyn Logue, state director for the 15,000-member NFIB/Washington. “The passage of Initiative 688 six years ago still haunts us, and is creating havoc for small businesses who are trying to create new jobs, pay for health care for employees, and cover the increasing costs of workers’ compensation and liability insurance.”
   The initiative effectively took control over whether or not to raise the minimum wage away from the state Legislature and instead legally linked it to annual increases in the federal Consumer Price Index (CPI). Economists have long doubted the accuracy of the CPI, which rises almost every year, as a measurement of inflation. But its effect here in Washington has been anything but what voters though would happen.
   A study on Washington state’s minimum wage, conducted by Ohio University Professors Richard Vedder and Lowell Galloway, showed that the linkage, far from having the desired effect voters thought it would, is, instead, causing poverty through job and income loss, especially among lower-paid workers.
   “Every year now business owners spend a few extra hours calculating how many of their current employees they can afford to keep, not whether they can hire new ones,” said Logue. “Among the many others hurt by these annual boosts are employees looking for some overtime work, students seeking part-time work, and seniors wanting to supplement their Social Security. There is a reason that high minimum-wage states such as ours, Alaska’s, Oregon’s, and California’s also are the states with highest unemployment rates, and that reason is structural not coincidental.”
   Logue noted that a bill to raise California’s minimum-wage rate higher than Washington’s was vetoed because of concerns about job growth and businesses leaving the state. A measure suspending the automatic indexing of Washington’s minimum-wage rate to the CPI when the unemployment level is above the national average failed to pass the state Legislature.