The highest inflation rate in 40 years will lead to additional costs for Washington employers, including likely increases in the minimum wage and state benefits like unemployment and workers’ compensation.

Increases in the minimum wage are tied to the federal Consumer Price Index for Urban Wage Earners and Clerical Workers. Inflation reached 8.6% in May, The Wall Street Journal reports.

Washington's average wage is also rising. The average annual wage grew by 7.5% in 2021 to $82,508, according to the state Employment Security Department.

"The strong demand for workers and hiring difficulties across different sectors drove average wage growth in 2021 to the second largest increase on record," the agency reports.

The average wage is used to calculate unemployment benefits, Paid Family and Medical Leave benefits and employers' taxable wage base, which is used to calculate UI taxes and workers compensation benefits.

"All of this will have a huge impact on employers," AWB Government Affairs Director Bob Battles says. "Employers already face supply chain disruptions and increased energy and other costs. This is another reason for Washington lawmakers to consider tax relief."

Contact Battles at BobB@awb.org to learn more.