Lawmakers in Oregon have put the state on the path to having the nation’s highest minimum wage. ABC News reports,
Oregon lawmakers have approved landmark legislation that propels the state’s minimum wage for all workers to the highest rank in the U.S., and does so through an unparalleled tiered system based on geography.
The state House of Representatives on Thursday passed Senate Bill 1532, which now heads to Democratic Gov. Kate Brown, who said in a statement she will sign it into law.
For e21 Manhattan Institute policy analyst Preston Cooper examines the tiered approach taken by Oregon and predicts job losses.
On July 1, 2017, the Portland area … will have a minimum wage of $11.25 per hour. The more urban, coastal counties … will have a wage floor of $10.25, while the more rural, interior counties … will have $10. The current minimum wage in Oregon is $9.25. Each year thereafter until 2022, minimum wages in each of the three regions will rise.
Cooper writes,
The real problem is not that Oregon’s minimum wages vary relative to each other, but that they vary relative to the rest of the United States. According to the purchasing power index, $1.00 in Oregon is worth about $1.01 in the rest of the country—in other words, roughly average. While higher minimum wages would be less unreasonable in a place such as San Francisco (where a dollar is worth just 83 cents), a sensible public policy would expect Oregon’s minimum wage to be right in line with the national average. Instead, it is one of the highest in the country.
A rule of thumb, proposed by Professor Arindrajit Dube of the University of Massachusetts-Amherst, is that the minimum wage should not exceed 50 percent of the median wage in a locality. (I would argue for a lower threshold, but let us say 50 percent for the sake of argument.) Generously assuming 2 percent annual wage growth, in 2017 every single locality in Oregon will be above that limit, with rural areas getting hit the hardest.
He concludes,
Many people, especially the young, will be shut out of job opportunities as employers find they can no longer afford to hire them. While some Beaver Staters may get a raise, for too many the Oregon Trail will end in disappointment.
Here in Washington, long home to the nation’s highest minimum wage, discussions continue as reported in The Lens, a recently-launched news service. Legislative proposals to address the minimum wage failed to clear session cutoff dates, but…
The inaction on a hot-button issue in a short-session year was expected. But the recent debate telegraphs what will become a louder conversation as November approaches, and as the legislature in its long session next year takes up minimum wage again, perhaps in reaction to the $13.50 per hour initiative’s success.
Business leaders have been engaged in the discussions and have thoughts on how changes should be approached. Read the Lens story for a more complete overview of concerns. Here’s one.
Bob Battles, Director of Government Affairs on workplace issues for the Association of Washington Business, told lawmakers that preemption of local minimum wage laws is necessary. AWB opposes new means of increasing the minimum wage statewide but, Battles added, the public differs and a phased approach makes sense. Statewide legislation would help, but should include a special wage to accommodate the hiring of teens, he said.
For more information on the minimum wage and how it affects employment opportunity, we recommend this Washington Research Council report.
