State of the State: Washington

Governor Jay Inslee vowed to help Washington families get ahead in his State of the State address.  While Washington state should be commended for not levying a tax on personal income, other anti-growth policies, such as forced-unionism, have caused the state’s economic outlook to rank near the bottom in recent editions of the Rich States, Poor States ALEC-Laffer State Economic Competitiveness Index. Governor Inslee voiced his support for increasing salaries for educators, passing a minimum wage increase initiative and increasing the authority of the State Investment Board to address pay gaps between CEOs and employees.

The governor proposed increasing salaries for educators. He discussed increasing the beginning salary for educators from under $36,000 to $40,000 per year, which would impact about 8,800 new educators. He also discussed providing a minimum 1 percent increase for all other educators. Governor Inslee wants to pay for the proposal by eliminating a few tax credits, but he did not specify which credits he wants to eliminate.

The governor also voiced his support for passing a minimum wage initiative. This minimum wage initiative would increase the state’s minimum wage from $9.47 an hour to $13.50 an hour by 2020. As ALEC research has documented for years, despite good intentions, this type of policy provides unintended economic consequences for the very people the policy claims to help. Research shows that there is little to no relationship between an increased minimum wage and reductions in poverty. In fact, studies show that many families lose their jobs or see their hours significantly cut. Reducing barriers to job growth, like red tape and poor tax policy is the best way for all workers to get ahead and stay ahead.

Governor Inslee discussed increasing the authority of the Washington State Investment Board to address salary gaps between CEOs and their employees. The Washington State Investment Board oversees investments for all state retirement plans. As a shareholder in the companies that the state invests in, the board has the authority to vote against executive compensation packages. Governor Inslee is asking the investment board to exercise their voting authority to reduce the pay gap between CEOs and employees. He also encouraged the board to promote this policy to other states and other investors. Income mobility is a crucial issue; however, this proposal drags politics into important investment decisions for workers’ retirements. Workers trust the Washington State Investment Board to wisely steward their retirement and secure their livelihood. Retirement dollars should not be used to make political statements.

Governor Inslee is right that Washington citizens need more economic opportunities. However, increasing the minimum wage and making political statements with workers’ retirements will not help Washington’s economy grow. His proposals fail to address a key barrier to unleashing opportunity in Washington—forced unionism. As ALEC Center for State Fiscal Reform research has pointed out for years in Rich States, Poor States, right-to-work states have greater growth in jobs and personal income than their forced-union counterparts. Worker freedom, not minimum wage hikes or dragging politics into worker retirements, will increase economic opportunities for all Washington families.