Bills to significantly increase
Oregon’s minimum wage will be a main topic of
vigorous and divisive debated during
the upcoming 2016 legislative session.
Signatures are being gathered
for initiative petitions that would raise the
minimum wage from its current rate of $9.25 per hour
$15 per hour.
Governor Brown is also
floating a minimum wage proposal.
Her concept would raise the wage in all areas
outside of the Portland Metro Urban Growth Boundary
to $10.25 in 2017 and to $13.50 by 2022. Within the
Boundary the minimum wage would be increased to
$15.52 by 2022.
Another legislative proposal
by Sen. Michael Dembrow (D-Portland) would create
three separate minimum wages
throughout the state.
These are compromise proposals by Brown and Dembrow.
They are purportedly being advanced in hopes of
avoiding an expensive, multi-million dollar fight at
the ballot box in the months leading up to the
November general election. Several other bills have
House Bill 4054 has been
referred to the House Committee on Business and
Labor. It would increase the state’s minimum wage in
graduated steps to $13.50 per hour by 2019. It would
also repeal the state preemption of local minimum
wage requirements, thereby allowing cities and
counties to enact their own minimum wage laws.
A nearly identical proposal
has taken the form of
Senate Bill 1592.
It has been referred to the Senate Workforce and
General Government Committee.
1532 has also been
referred to the same Senate committee. It would
establish a tiered system for determining minimum
wage based on an employer’s size and geographic
location and suspend the annual inflation adjustment
for the state’s minimum wage rate until 2020. The
bill would also repeal the state preemption of local
minimum wage requirements.
What is obvious is the minimum wage issue will
either be decided by legislators next month or by
the vote of the people at the November election.
Much less obvious are the affects that the proposed
increases could have on the state’s overall economy.
A new report has been
compiled and released that details those affects.
The January 12 report, entitled “Impacts of
Increasing Oregon’s Minimum Wage,” was written by
Eric Fruits, Ph.D. He is the president and chief
economist for Economics International Corp. and an
adjunct professor at Portland State University.
For the sake of full disclosure, Fruits is also a
former chairman of the Multnomah County Republican
Party. His report was prepared on the behalf of the
Oregon Neighborhood Stores Association.
The report uses detailed analysis to describe the
potential aftermath of the proposed increases.
According to the study, increasing the minimum wage
to $13.50 would result in the loss of around 55,000
jobs, and raising it to $15 would cost 67,000 jobs.
Those losses would occur by 2020, when the measures
are fully implemented.
A minimum wage of $13.50 would reduce wages and
salary incomes in the state by an estimated $6.2
billion, and by $6.9 billion for $15 per hour by the
year 2020. The reduced average annual income per
worker would be $1,512 for $13.50 per hour and
$1,515 for a $15 per hour minimum wage.
Information in the report makes clear the minimum
wage proposals being advanced in the name of helping
the working poor will actually do them a huge
disservice over the long-term.
The report cites
this data provided by the
non-partisan Legislative Revenue Office (LRO) in
July 2014 regarding the impacts of an increase in
the minimum wage. LRO analyzed raising the wage only
from $9.10 to $11.50, beginning in 2015.
LRO’s findings of fact includes that an increase of
only $2.40 per hour would result in net employment
losses over the long-term. According to LRO, the
state would lose nearly 3,000 jobs in the first
year, and would continue to experience increased job
loss through 2025. At that point the job losses
would stabilize at around 20,000.
A positive, first-year impact of $900 million in
personal income would remain slightly positive until
the year 2020. At that point the LRO analysis shows
personal income trending negative into the future.
Although SB 1532 takes a unique tiered approach to
raising the minimum wage, it does not appear to take
some very important factors into consideration. A
salient point of Dr. Fruit’s report on the impacts
of raising the minimum wage is within the state and
within the City of Portland, employment, incomes,
poverty and cost of living are unevenly distributed.
“The assertion that Portland has a higher cost of
living than the rest of the state turns a blind eye
to the differences in the cost of living within the
City of Portland,” the report states.
It goes on to state that rents in the low-income,
high-poverty areas on Portland’s outer east side are
less than half of what they are in other parts of
the city. There are huge disparities, for example,
within North and Northeast Portland.
Given the logic of the solution presented in SB
1532, it would make just as much sense to establish
differing minimum wage levels on either side of the
Willamette River, where it divides Portland’s east
and west sides.
Another important point is a substantial increase in
the minimum wage could limit economic opportunities
for thousands of Oregonians.
The report states unemployment is a “major source of
rising inequality and stagnating incomes”. It adds
that a three-percentage point increase in
unemployment is associated with a two-percentage
point increase in family poverty.
The report makes quite clear, through thoroughly
documented research, that unemployment and
underemployment lie at the core of poverty. It
states that higher unemployment leads to greater
inequality and weakens the relative position of
low-income groups and vulnerable populations.
Poverty is best solved by providing job
opportunities for all adults. “Minimum wage increase
takes income from one group of Oregon workers in
order to benefit another group of Oregon workers,
without increasing—and likely decreasing—total
Oregon wage income,” the report states.
As it is, Oregon has the highest rate of poverty on
the West Coast. Raising the minimum wage would
actually do little to improve the situation, and
would arguably make it worse. The report states that
the working poor face a disproportionate share of
job losses, and that employed persons affected by an
increase in the minimum wage are less likely to be
employed a year later.
Youth unemployment in Oregon is higher than the
national average. That trend worsened in the early
1990s as the state’s minimum wage became higher in
relation to the federal minimum wage. According to
the report, raising the minimum wage even further
would reduce upward mobility and create less access
to the kinds of opportunities for young people to
acquire work experience. What this means is that
teens and low-skilled workers would be the most
adversely affected by an increase in minimum wage.
Oregon has consistently ranked
among the top five states with underemployment since
2003, the year after voters approved
Measure 25 in the November
2002 election, and has experienced the nation’s
highest rate of underemployment in seven of the last
13 years. Oregon also has experienced a
significantly lower labor force participation rate
than the national average.
Attempts to raise the minimum wage through
legislation or through the ballot box will
undoubtedly lead to unintended consequences for
businesses and workers alike. I strongly urge voters
to read the reports and consider their findings as
this issue makes its way through the legislative
process in the coming weeks.
I believe increasing Oregon minimum wage will cause
the same people who are currently struggling to make
ends meet to be significantly worse off than they
already are. Their ability to achieve the American
Dream and improve their standing in life will be
severely limited by public policies that actually
cause harm to their economic status in the
Please remember--if we do not stand
up for rural Oregon, no one will.
Senate District 28
I Phone: 503-986-1728
Address: 900 Court St NE, S-311, Salem, OR, 97301