As minimum wage rises in Washington, can small businesses keep up?

Washington State’s minimum wage is set to increase in 2026. The expected 2.8% increase will raise the minimum wage to $17.13, up from the current rate of $16.66 per hour.

Washington’s statewide minimum wage is adjusted annually to reflect inflation.

Several cities including Seattle, Bellingham, Burien, Everett, Renton, Seatac, and Tukwila have established local minimum wages that are higher than the statewide rate. Advocates in Lynwood are pushing for a ballot initiative to raise the city’s minimum wage to $20.24 per hour.

New labor standards and thresholds

Starting in 2026, businesses in Washington will have to pay salaried workers at least $80,168 per year to avoid paying them overtime. That’s a big increase from this year, which is about $69,000 for small businesses and $78,000 for larger ones.

Drivers for ride-share services such as Lyft and Uber will also experience changes. In Seattle, they’ll earn 70 cents per minute and $1.63 per mile or at least $6.12 per trip, whichever is higher.

Lawmakers also discussed raising the minimum wage to $25 per hour by 2031, which didn’t move forward this year but possibly will come back for debate in 2026.

With the minimum wage increasing, many small businesses, entry-level workers, and regional economies don’t know what the long-term effects could be for them. While the intent is to improve worker earnings, the rising thresholds may introduce new challenges for businesses and employers in their respective industries. Policymakers and voters will revisit these issues to balance between the increase in wages and economic resiliency.

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