Moms and dads in a Washington state are facing a tough economic lesson following the passage of a minimum wage increase.
A local daycare in Spokane, Washington delivered the news to families that they would pass the new minimum wage hike on to parents by increasing tuition by $140 per child each month, beginning in January. The day care, Advent Lutheran Child Center, is a non-profit Christian child center with nearly two dozen staff.
The school employs minimum wage workers and is responding to the passage of Initiative 1433 which raised the statewide minimum wage from $9.47 in 2016 to $13.50 by 2020. Starting next year employers will be forced to pay at least $11 an hour.
Despite warnings from the business community about higher prices and cuts in jobs and work hours, the electorate plowed ahead. It appears to their detriment.
A local station talked with management at the child care center:
Heidi Perry, director of Advent Child Care, explained that many parents were not happy with the idea of the cost increase. "I think there was a little bit of sticker shock. I had a lot of parents who walked into the office last night or this morning and say 'am I reading this right?' And I said yes you are."
The proponents of the minimum wage initiative included labor unions and shell groups like Raise Up Washington which claimed that raising the minimum wage would add nearly $2.5 billion into the local economy by putting an extra $600 more in the pockets of the state’s 730,000 minimum wage workers.
They wrongly assumed that all of those workers would keep their jobs or that their hours would remain the same, which was not guaranteed. Furthermore, they ignored the impact of higher prices on all consumers in the state.
For the parents with multiple kids at this school, the minimum wage increase will shrink their budgets and eat into their discretionary spending on things like movie nights or eating out at restaurants:
“It just adds to the tightness of general month to month expenditures," said mother Dawn Ellis, who has two children enrolled at Advent Lutheran.
Because Ellis takes both of her children to the childcare center, she will see nearly 300 more dollars come out of her wallet each month.
"I mean when you have your two children and the total is more than a mortgage payment, and then on top of it if you do have a mortgage payment and everything else, it adds up."
One worker who supported the minimum wage increase assumed that the money would come from government without making the connection that she and other hardworking families like the ones she serves are who fund government. For the families whose children go to Advent Lutheran, they may look for other schools, but they may find that other schools are forced to follow suit.
According to the Bureau of Labor Statistics, there are 1.2 million childcare worker jobs and it’s an industry that is expected to continue growing. For working families, child care is an expense that can’t be minimized or eliminated unless one parent stops working. Childcare is expensive enough and increasingly eating up more of a family’s budget. Minimum wage hikes only drive costs higher.
While we tend to focus on retail, food, and hospitality industries, there are many other workers affected by policies that are supposed to help them but unintentionally lead to negative short-term and long-term hardships such as fewer hours, job losses, and higher costs for services.