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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 to $13.50
and $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 been introduced.
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.
SB
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 long-run.
Please remember--if we do not stand up for rural Oregon, no one will.
Best Regards,
Doug
Senate District 28
Email: Sen.DougWhitsett@state.or.us I Phone: 503-986-1728
Address: 900 Court St NE, S-311, Salem, OR, 97301
Website: http://www.oregonlegislature.gov/whitsett
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