Today's minimum wage increase comes with its own price

YAKIMA, Wash. — Cesar Covarrubias has been paying about $5 to $10 more for his groceries lately.

As a result, Covarrubias, 20, sees a lot less of the $10 he earns per hour working at A & S Gifts, a retail kiosk at the Valley Mall.

He's expecting a bit of a raise with an increase in the state minimum wage, which went up by 37 cents to $9.04 today.

The new wage reflects a 4.23 percent increase from August 2010 in the Consumer Price Index, which measures the average change in prices over time of goods and services.

But with day-to-day expenses rising faster than expected, workers like Covarrubias will still have a hard time keeping up.

"Whether we like it or not, prices are going to be increasing," Covarrubias said.

Washington has been adjusting the minimum wage for inflation since voters -- including those in Yakima County -- approved Initiative 688 in 1998. Today, 10 states have similar laws, including neighboring Oregon, where the minimum will go to $8.80.

Washington has had the highest minimum wage in the nation for many years, but the city of San Francisco now holds that rank with a wage of $10.24.

This state's minimum wage applies to workers in all industries, including agriculture, although 14 and 15 year olds may be paid 85 percent of the adult minimum wage, or $7.68 an hour.

While the concept of keeping wages in line with inflation looks good on paper, the increase doesn't always keep up with the rising cost of basic expenses.

"A lot of people see their household expenses going up far faster than headline inflation," said Greg McBride, senior financial analyst for Bankrate.com, a personal finance website.

For example:

* Monthly rent in Yakima County in September increased year-over-year by 7.2 percent, according to the Washington Center for Real Estate Research at Washington State University.

* Clothing, according to data from the U.S. Bureau of Labor Statistics, increased nationwide by 4.8 percent since November 2010.

* Prices for economy domestic flights are expected to increase by 5 percent in 2012, according to American Express.

* Unleaded regular gas in the Yakima area averaged at $3.37 a gallon, according to AAA. While lower than prices in the past month, it was still 16 cents, or 5.1 percent, more than the price a year ago.

Despite its shortcomings, the minimum-wage law is a big improvement over how the minimum wage was determined before the initiative was passed, said Marilyn Watkins, policy director at the Economic Opportunity Institute, a left-leaning Seattle-based policy center, which supports ongoing minimum wage increases.

At one time, the state minimum wage would be stagnant for years, making things unpredictable for workers and their employers. "With little predictable increases from year to year (now), it makes it easier to plan," Watkins said.

Still a struggle

Small business owners who operate on razor-thin margins say it's still a struggle to keep up with ongoing minimum wage increases.

"A business cannot continue to operate paying such inflationary costs and stay in business," said Jar Arcand, owner of Santiago's restaurant in downtown Yakima.

With the restaurant facing higher food costs, Arcand has reduced hours for his employees over the last year. He will likely reduce their hours again in 2012 to pay for this latest minimum wage increase.

Arcand believes that despite the higher pay, fewer hours reduce his employees' ability to stay within their tight budgets.

Chelsea Long, who has worked elsewhere in the restaurant business, would agree with that.

Last year, the 18-year-old student struggled to support her family -- she lives with her mom -- because she was not working many hours at McDonald's.

It was difficult for Long, who has worked since she was 14, to cover her expenses, which included books for classes at Yakima Valley Community College, groceries, a car payment and gas.

At her lowest level of income, she was making just $180 for two weeks and found half that check going to gasoline to commute to the job. She eventually found a job working 30 to 35 hours a week at Cruisin' Coffee in Yakima.

While she likes that minimum wage workers will earn more in 2012, she questions how much of a difference it will make. She points out much of the increase will be taken away in taxes and other rising expenses.

"I want more money," she said. "(But) you're still paying the same thing or more" for what you buy.

A few months ago, Long got a nice break -- she was named the "person-in-charge" at the espresso stand. The new position pays her $1 per hour above minimum wage.

That raise, along with tips, helps her better keep up with rising textbook and food prices, she said.

"It does make a huge difference," she said.

On the other hand, higher-wage workers expect an increase when they see the minimum wage go up. Arcand said that becomes difficult.

"It's an uneven distribution of payroll to try to equalize when no one is equal," he said.

* Mai Hoang can be reached at 577-7685, or at maihoang@yakimaherald.com.