Seattle took a big step toward closing the income gap between the rich and the poor.
The Seattle city council unanimously voted late Monday to increase the city’s minimum wage to $15 an hour, making it the nation’s highest minimum wage. That would make San Francisco's the second-highest at $10.74 an hour.
As far as state-level minimum wage, Washington state's $9.32 an hour is the highest of any state, and well above the Federal minimum of $7.25.
Yahoo Senior Columnist Michael Santoli said cities similiar to Seattle, which have booming economies and a high percentage of wealthy individuals, may consider raising the minimum wage. However, other cities also want to see how this plays out before they follow suit, he said.
Seattle’s wage increases will roll out over time with the first raise set to take effect next April. Workers will receive a raise of at least $1 an hour. The plan will continue to be phased in over the next three to seven years depending on the size of the business.
Businesses with more than 500 employees nationally will have at least three years to phase in the wage increase. Employers providing health care benefits will have four years, while smaller businessess will be given seven years.
Several cities are pursuing similar measures, including Chicago, San Diego and Oakland. Meanwhile, Connecticut, Delaware, Hawaii, Maryland, Minnesota, West Virginia and D.C. have enacted wage increases this year.
But not everyone is on board with the wage hikes, which will have a significant impact on businesses' bottom lines. Santoli says the plan may actually force some small businesses to move outside the city limits in order to avoid the increased labor costs.
The International Franchise Association said it plans to sue to overturn the ordinance. The trade group, which represents franchise owners, said it puts Seattle business owners at a disadvantage.
A study by the Congressional Budget Office in February found that raising the federal minimum wage to $10.10 an hour would increase earnings for some 16.5 million workers. But the report also said an estimated half a million would lose their jobs as a result of higher costs.
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