Voters Raise Wages for 730,000 Washingtonians; Federal Changes Could Threaten Washington’s Children and Families
In the November 8 election, voters in Washington state overwhelmingly approved a ballot initiative to help working families in our state and strengthen our state economy. The passage of Initiative 1433 means more than 730,000 Washingtonians will get a raise in the next four years. Minimum wage workers 18 and older will earn $11 an hour starting in 2017, $11.50 in 2018, $12 in 2019, and $13.50 in 2020. They will also receive paid sick leave beginning 2018.
Washington was part of a larger movement nationwide to raise the minimum wage. We joined three other states – Colorado, Maine, and Arizona – in approving statewide minimum wage increases. (This, of course, is the result of a movement kicked off in our own state when citywide minimum wage increases were approved in SeaTac and Seattle in 2013 and 2014, respectively.) The voter initiatives in Arizona and Washington also included paid sick and safe days. In addition, voters in South Dakota rejected a referendum that would have lowered the statewide minimum wage by a dollar. And voters in Flagstaff, Arizona approved a phased-in $15 per hour minimum wage.
Budget & Policy Center research on the projected impact of I-1433 was referenced in multiple op-eds, editorials, and endorsements and played a key role in shaping the statewide conversation about the economic benefits of raising the minimum wage. Our analysis estimates the initiative will infuse $2.5 billion more into local economies. It will also directly benefit more than 360,000 Washington kids who live in families where one or more parent makes less than $13.50 per hour.
After Tuesday's national election, our work together becomes much harder, and also even more important and urgent. Proposed federal policy changes to the Affordable Care Act, health care and safety net programs, tax policy, environmental policy, and other areas could significantly impact the state budget and threaten the well-being of Washington children and families.
At the Budget & Policy Center, we stand together against racism, sexism, Islamophobia, and anti-immigrant bias. We remain committed to advancing policies to expand opportunity for our state residents – to ensure we have great schools and to invest in programs that promote economic security, good jobs, and thriving communities.
Our state legislative agenda, which we are developing with our many community partners, will be released prior to the 2017 session. We will also work with partners across the country and at the Center on Budget and Policy Priorities to analyze proposed federal policy changes on Washingtonians and fight back against policy changes that would harm our economy, our communities, and our families.
In the meantime, the conversations at our Budget Matters conference next Wednesday, November 16, will focus on strengthening the movement to promote policies that advance racial equity, opportunity for all, and social and economic justice. It will be an opportunity for people who care about the future of Washington state to prepare for the next legislative session and strategize on how we can continue to build progressive wins in a new federal landscape. The registration deadline is tomorrow, Friday, November 11. We hope to see you there.
This version of the blog post has been modified slightly from the original version to better emphasize the Budget & Policy's role in responding to the national election.
Washington’s children have a chance at a better future thanks to the Supplemental Nutrition Assistance Program (SNAP). New research from a Center on Budget and Policy Priorities (CBPP) report shows that continued investments into this federally funded program set kids up to see better health and education outcomes throughout their lives. It also wards against the effects of hunger and poverty on children and families.
Indeed, SNAP helps prevent the negative effects that families can sometimes face when they’re struggling to make ends meet – such as abuse or neglect, mental health issues with parents, and related events that can take a toll on children’s well-being into adulthood.
The CBPP report, SNAP Works for America’s Children, finds that SNAP helps form a strong foundation of health and well-being for children with low incomes by lifting millions of families out of poverty and helping families have food on the table. It also, among other things, helps kids perform better academically and have fewer missed days of school.
With an investment of only $1.35 per person, per meal, SNAP helps lift children out of deep poverty better than any other government program for people who are trying to make ends meet. (Deep poverty is defined as below 50 percent of the federal poverty line, or an income of $10,080 for a family of three.)
In Washington state, there has been a modest improvement in the hunger rate over the past year. SNAP is helping to give over 423,000 Washington children the foundation they need to succeed.
Nevertheless, the data also show that the need for effective food assistance programs remains significant. Despite the effectiveness of SNAP and statewide networks of community-based food support services, hunger and food insecurity (skipping meals because of a lack of resources to buy food) are still higher than they were before the recession. A recent report by Washington’s Anti-Hunger & Nutrition Coalition highlights U.S. Department of Agriculture (USDA) data showing that while the food insecurity rate decreased to 13.4 percent from 15.4 percent over the past year in Washington, this is still higher than the 11.1 percent pre-recession rate.
There are also limitations to the information collected by the USDA, which may mean that hunger and food insecurity may be even higher than what the data show. USDA survey data does not include families who are homeless. Given that there has been a dramatic rise in homelessness in Washington state over the last year, many people who are hungry or food insecure are likely not being counted.
Further, as a result of continued inequities in federal and state policies, children of color are more likely to experience hunger. The national food insecurity rate for Black households (21.5 percent) and Hispanic households (19.1 percent) is nearly twice that for White/non-Hispanic households. (Unfortunately, no data is reported for Native American or Asian Pacific Islander households, pointing to the need for better data collection methods at both the state and federal levels.)
In order to ensure SNAP is actually serving the kids who need it most, any efforts policymakers make to reform SNAP should build on the program’s effectiveness. In Washington, policymakers recently restored SNAP benefits for legally residing immigrants and protected nearly 200,000 households from cuts in benefits that were proposed at the national level. These are excellent examples of how to strengthen an essential program that helps kids in our state.
Such protections and enhancements to SNAP are a smart policy decision. They will help more Washington children have a better foundation for success throughout their lives.
Voters in Washington state can impact the state’s future in a range of measures on the November 2016 ballot. Based on our extensive research and analysis into the economic costs and benefits of raising the minimum wage, the Washington State Budget & Policy Center endorses Initiative 1433 to raise the minimum wage and provide sick and safe leave.
Here, we provide analysis on Initiative 1433 as well as on specific components of other ballot measures. We do not have an organizational position on the other ballot measures. Our analysis is focused only on specific policy proposals within the measures that pertain to our research expertise.
Initiative 1433: Raising the minimum wage and providing sick and safe leave
I-1433 would raise the statewide minimum wage over the course of four years to $13.50 per hour and provide up to seven days of paid safe and sick leave per year for Washington workers. According to Budget & Policy Center analysis, this initiative would raise the wage for more than 730,000 Washingtonians and directly benefit more than 360,000 Washington kids who live in families where one or more parents makes less than $13.50 per hour.
Ultimately, this initiative would help Washingtonians better make ends meet. And because low-wage workers are likely to spend their increased wages on food, clothes, and other necessities, this initiative would infuse additional money into the economy.
It would also help alleviate gender and racial pay disparities, given that nearly 30 percent of women workers and more than 40 percent of Black and Latino workers currently make less than $13.50 per hour.
While the scope of our analysis focuses solely on the minimum wage component of Initiative 1433, we recognize that the sick and safe leave component of I-1433 also offers significant benefits to kids and families. For more information on how a sick and safe leave policy would strengthen the well-being of Washington’s families and communities, please see this analysis by Children’s Alliance and this analysis by the Economic Opportunity Institute.
By approving Initiative 1433, we can take an important step toward advancing the well-being of Washington’s parents, kids, workers, and communities.
Initiative 1464: Reforming statewide campaign finance rules and closing the nonresident sales tax exemption
While the Budget & Policy Center does not have a position on this initiative, our research (which is referenced in the Voter’s Guide) supports one aspect of the initiative: the closure of the nonresident retail sales tax exemption. This tax break allows visitors who come from Oregon or other states without a sales tax to avoid paying Washington sales tax on goods when they shop in our state. It costs the state approximately $30 million per year, and there is no evidence that the tax exemption creates jobs or stimulates business activity in Washington state.
This initiative would redirect that $30 million in annual revenue toward helping pay for the changes it proposes in Washington state’s campaign finance law.
Initiative 732: Taxing carbon emissions
The Budget & Policy Center has long supported policies aimed at equitably and effectively reducing carbon emissions and transitioning Washington state to a prosperous, low-carbon economy. Our expertise is primarily in fiscal policy and we have no organizational position on I-732. As such, our analysis focuses only on the revenue and budget implications of Initiative 732.
I-732 includes funding for the Working Families Tax Rebate (WFTR) to help directly offset the costs of transitioning to a low-carbon economy for people with lower incomes – a disproportionate share of whom are people of color or from rural communities. The WFTR was originally championed in this state by the Budget & Policy Center, and we think it’s a smart addition to any policy proposal aimed at reducing carbon emissions. (Of note, the tax rebate was enacted by the legislature in 2008, but the funding needed to get the program up and running has never been allocated.)
This initiative would reduce the state sales tax and business and occupation (B&O) tax to offset the new carbon tax. As such, it has been billed as revenue-neutral. However, we are concerned that by replacing revenue from known sources with less certain carbon tax revenue, this initiative could create a sizable short- and long-term budget shortfall that would put funding for schools, parks, safety net programs, and other state investments at risk. While the authors of I-732 sought to have no impact on the state budget, an analysis by the Office of Financial Management that appears in the state’s Voter’s Guide finds that I-732 will reduce general fund revenue by $797.2 million during the first six fiscal years.
The issue is that I-732 attempts to perfectly offset the costs of reducing the state sales and B&O taxes as well as the costs of funding the WFTR with revenues from a new carbon tax. Even if the authors of I-732 have been able to achieve a perfect balance in the first year or two (the Office of Financial Management’s analysis suggests they haven’t), that balance won’t likely hold. In the long run, sales tax revenues, the number of households eligible for the WFTR, and the B&O tax will grow at different rates. The carbon tax isn’t designed to adjust accordingly.
In addition, while a carbon tax could be a good tool for reducing air pollution and combatting climate change, many economists and public finance experts discourage using carbon taxes, cigarette taxes, and other “sin” taxes specifically for financing schools, health care, services for kids and seniors, and other ongoing investments. If new technologies or other unforeseen events lead to rapid transition to a low-carbon economy, revenues from a carbon tax could decline precipitously, threatening the funding for our schools and other important programs.
Our takeaway is not that I-732 is either good or bad carbon policy; our takeaway is that the concerns being expressed about its potential impact to the state budget and vital social services are valid.
Non-Binding Advisory Votes
This year’s ballot includes two non-binding advisory votes on fiscal issues. These advisory votes appear on the ballot because of Initiative 960, a 2007 Tim Eyman initiative that established cumbersome administrative requirements when the legislature takes action to close tax loopholes or raise revenue.
These non-binding advisory votes do not actually serve to inform voters. Instead they restrict the scope of the information provided to voters about the purpose and impacts of enacted tax changes. Nor do advisory notes promote a balanced discussion about tax policy changes enacted by lawmakers. Rather, the law includes a required template for writing ballot titles and descriptions that uses biased language specifically intended to skew the vote in favor of repealing any tax change. The Budget & Policy Center would support legislation to remove these advisory votes from the ballots or to provide a greater amount of information to enable voters to make reasoned fiscal policy decisions.
Nevertheless, both of the advisory votes on this year’s ballot reflect common sense fiscal policy changes that the legislature acted on in the 2016 session.
Advisory Vote #14: Clarifying taxation of stand-alone family dental plans
In the 2016 legislative session, the legislature overwhelmingly approved House Bill 2768, which clarified that some stand-alone family dental plans can be charged an insurance premium tax. This legislation is largely a technical change that allows the Washington Health Plan Finder to offer stand-alone adult dental insurance coverage through the state exchange.
Advisory Vote #15: Modifying tax exemption criteria for clean energy cars
Also in 2016, a broad majority of legislators voted to extend and narrow an existing tax break for customers who buy clean energy cars (House Bill 2778). This tax break is intended to encourage the use of clean alternative fuel vehicles in Washington. The public policy objective of this tax exemption is clearly stated, and a tax preference performance statement is included. While the exemption previously applied to all plug-in and alternative fuel cars, even niche, luxury cars like Teslas selling for $100,000 or more, the 2016 legislation limited the exemption to cars selling for $35,000 per year or less. This change will save the state money by more efficiently targeting the benefit toward consumers for whom a sales tax exemption would make a difference in their purchasing decisions.
While 2016 U.S. Census data shows an overall slight decline in Washington residents living below the poverty line, a closer look at the numbers demonstrates persistent economic challenges of households and families with low incomes. Kids, especially children of color, are most likely to grow up in households with low incomes.
Check out our new infographic, “A Look at the Economic Well-Being of Washingtonians with Low Incomes,” for additional Washington state data.
Click here or on graphic to see to full PDF.
A closer look at the data shows that in Washington state:
- One in 17 residents (nearly 6 percent) live in deep poverty, defined as 50 percent of the federal poverty line (a $10,080 annual income for a family of three).
- Nearly two in five kids (more than 37 percent) live in households with low incomes, defined as 200 percent of the federal poverty line ($40,320 for a family of three).
- Economic disparities persist for kids of color. Sixty-six percent of Latino children, 57 percent of American Indian and Alaska Native children, and 57 percent of Black children live in households with low incomes.
Poverty can impede kids’ success in school, their overall health, and the stability of their family. This data underscores the importance of investing in policies to ensure that all of Washington’s kids and families can thrive.
Raising incomes for low-wage home care workers would help strengthen our state economy, according to our new report, How Raising Incomes for Low-Wage Workers Boosts the Economy: A Study of Washington State’s Home Care Workforce. The report shows that if policymakers raise the base hourly wage of home care workers to $15, workers would be better able to meet the costs of basic needs for themselves and their families, leading to increased economic activity in the state.
Home care workers play an essential role in the lives of tens of thousands of Washington’s seniors and people with disabilities – providing assistance with activities of daily living such as dressing, eating, and getting to and from medical appointments. In Washington, state-paid home care workers are compensated through the Medicaid program and either contract directly with the state as individual providers or provide services through private agencies.
With an average hourly wage of $12.82 and a field of work that tends to be part-time because of fluctuating client needs, a typical individual provider home care worker makes $10,540 a year — below the federal poverty line for an individual, and less than half the poverty line for a family of four. This is far from sufficient for a person, let alone a family, to cover the cost of basic needs such as food, housing, and transportation.
Raising the base wage for home care workers to $15 per hour would provide an annual increase of $2,200 to the more than 81 percent of workers who currently make less than that per hour. (1) This would go a long way toward helping these workers better make ends meet.
Further, using REMI, a geographically-specific economic analysis tool, to model a wage increase for individual provider and agency-based workers, our analysis showed that:
- The additional spending that would result from these workers’ wage increases would generate $180 million in total economic stimulus annually in communities throughout Washington state – through both the projected spending by home care workers and the resulting money that businesses, individuals, and communities would acquire as a result of these workers’ increased spending.
- This economic stimulus would increase private-sector employment. As a result of this ripple effect of spending, private sector employment in Washington state would be projected to grow by more than 800 jobs annually through 2020.
- Every $1 the state invests into a $15 base wage for home care workers making less than that will lead to a $4 economic stimulus. Given half the cost of home care wages are covered by the federal government through Medicaid, this form of economic stimulus is a smart investment of state resources.
During the 2017 legislative session, legislators can help strengthen our state economy and the well-being of home care workers and their families by approving the proposed wage increases of individual provider home care workers (and a corresponding increase for agency-based home care workers as provided in the agency parity law), which were recently negotiated as part of a collective bargaining agreement. Further, this increase is not just good for the well-being of home care workers; it's also good for the economy. With this in mind, policymakers must continue to take steps to ensure that all hardworking Washingtonians make enough money to not just make ends meet, but to be able to get ahead.
1. This calculation is based on actual wage data for the state’s more than 34,000 individual provider home care workers. Given contract parity mandates that wage increases for individual providers must also be applied to agency-based workers, this calculation is also applied as an estimate to the state’s more than 15,000 agency-based workers.
This is the second in a series of schmudget blog posts about property taxes in Washington state and the role they play in funding basic K-12 education.
By Kelli Smith, policy analyst, and Andy Nicholas, associate director of fiscal policy
Complying with the state Supreme Court’s McCleary mandate to develop a dependable source of revenue to fund our K-12 schools should be lawmakers’ top priority when they gather in Olympia early next year. Lawmakers must not waste time promoting non-starter proposals like “revenue-neutral property tax levy swaps” that would generate none of the additional resources needed to build the education system our kids need to thrive.
Under its 2012 McCleary decision, the Washington State Supreme Court ruled that it is the state’s duty to fully fund basic K-12 education. Yet school districts in our state have for years been relying on local property tax levy dollars to provide students with the basics that the state is supposed to be providing – such as textbooks, school supplies, transportation, salaries for teachers and nurses, and other essentials. Because of this, the court ruled that the state is failing in its paramount duty to fund education for all of Washington’s schoolchildren.
To be clear, the court did not rule that local levies have to be reduced or eliminated. These levies can be kept in place to support the multiple services our schools provide beyond a basic education, such as after-school clubs and advanced placement programs.
But opponents of providing new forms of revenue to pay for schools have been promoting the idea that local levies must be reduced or eliminated in order to fulfill the requirements of McCleary. And instead of finding equitable and dependable new sources of revenue to fulfill their duty, these lawmakers are fixating on revenue-neutral levy swap proposals. As we wrote previously, these swaps are complex shell games involving increases to the state property tax levy and decreases to local school districts’ levies. They generate no new resources overall.
Funding the basics can and should be accomplished with additional state revenue. In fact, in his July 2016 brief to the court, the state attorney general, who represents the legislature and the state government in the McCleary case, points out the various ways the legislature could fully fund basic education. The brief references numerous revenue proposals including taxing high-end capital gains, modifying a damaging law that restricts property tax revenue growth to a maximum of 1 percent per year, eliminating wasteful corporate tax breaks, and increasing the state property tax levy.
The McCleary ruling is an enormous opportunity for policymakers to get to work on building a world-class education system for all of Washington’s children. The current levy swap proposals are intended to distract the legislature from making the most of this opportunity. Our kids will only get the education they deserve when lawmakers refocus on generating significant new tax revenues from equitable sources.
Although the newest state revenue projections anticipate a modest increase in available tax resources in the coming years, that uptick is minuscule compared to the billions of additional dollars needed to fund schools in Washington state.
In its September forecast, the Washington State Economic and Revenue Forecast Council projects that state tax revenues will increase, relative to the previous forecast, by $336 million (0.9 percent) for the remainder of the current two-year budget cycle ending in June 2017. In the next budget cycle, for 2017-2019, the council projects that state tax resources will increase by $134 million (0.3 percent). (1) These increases are largely attributable to higher-than-expected revenues from the sales tax and taxes on the sale of real estate.
Despite this boost in tax revenues, the council’s projections show that our state rainy day fund and other reserves will remain dangerously low at the end of the current budget cycle. They also show total budget reserves will be at about $1.8 billion by June 2017. That’s approximately 9.5 percent of annual state spending on public services, far below the 15 percent cushion that many economists and public finance experts recommend to ensure that schools, health care, and other important investments can be maintained when a recession or other state emergency strikes.
Lawmakers can’t depend on modest growth in existing tax resources to build the world-class education system that Washington’s kids will need to compete in this 21st century economy. To fulfill their obligation to our schoolchildren as mandated by the state Supreme Court, lawmakers must focus on raising additional new revenues from equitable sources.
1. The revenue numbers reflect total state-only Near General Fund + Education Legacy Trust Fund + Opportunity Pathways Account