Oregon Minimum Wage Rise Is Welcome News for Lowest-Paid Workers

Chuck Sheketoff

Oregon’s minimum wage will rise from $8.40 to $8.50 on January 1, 2011. The adjustment prescribed by Measure 25 — approved by voters in 2002 — reflects the increased cost of living over the past year as defined by the August Consumer Price Index.

The automatic annual adjustment gives employers a predictable, modest change. For workers, it avoids long periods when the minimum wage loses purchasing power between corrections by the voters or the legislature.

The minimum wage increase will kick in just in time to help cushion the impact of a 6-cent per gallon (25 percent) rise in the gasoline tax.

See Oregon Minimum Wage Set to Rise by 10 Cents: As number of poor rises, wage increase will cushion impact of gas tax increase and discuss.

By Chuck Sheketoff
Sept. 20, 2010
Posted in open discussion.

  • 8:25 p.m.
    Sep 20, '10
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    The minimum wage hike is welcome news for ALL workers. A higher minimum wage pushes wages above it higher as well. We all benefit.

  •
    9:18 p.m.
    Sep 20, '10
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    Republicans hate the minimum wage and favor policies that keep wages down. This is bad news for Chris Dudley.

  •
    10:12 p.m.
    Sep 20, '10
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    I am curious what people here think of the many studies that show minimum wage laws reduce opportunities for the poor, the ones that need the jobs the most.

    Here is a quick sampling of studies (and one opinion), there are a lot of them out there.

    http://www.cato.org/pubs/pas/pa106.html

    http://epionline.org/oped_detail.cfm?oid=142

    http://www.takeonit.com/expert/532.aspx

    I don't know of any studies that say establishing a minimum wage actually helps the poor. Common sense tells you that it would not help, but based on the wide support of minimum wage laws I assume there must be numerous studies to support it.

  •
    10:20 p.m.
    Sep 20, '10
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    Here's another study:

    http://www.clevelandfed.org/research/commentary/1999/0201.pdf

  •
    8:19 a.m.
    Sep 21, '10
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    Here is another paper on the subject, focused on Oregon and Washington:

    http://pdx.academia.edu/documents/0046/7173/2009_Employment_Policies_Institute_-_Impact_of_Minimum_Wage_Indexing.pdf

  •
    10:06 a.m.
    Sep 21, '10
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    Ed, it is very rude of you to post economic studies on BlueOregon. That just isn't how folks here think.

    After all, when John Kitzhaber took office in 1995, Oregon's unemployment rate was actually below the national average. Then in 1996, Oregonians passed a ballot measure giving us one of the highest minimum wages in the country and in 2002 voted to index that minimum wage to inflation to ensure we remained one of the highest year after year.

    Consequently, Oregon's unemployment rate has been higher than the rest of the country every year since 1996 and our average income has dropped compared to the rest of the country throughout that period.

    So obviously the high minimum wage has been great for Oregon workers. It's given them more free time and less money to worry about how to spend.

    •
      10:13 a.m.
      Sep 21, '10
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      They'll just dismiss all the studies as Republican think tank hocus pocus.

    •
      3:32 p.m.
      Sep 21, '10
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      Jack, while I enjoy your sarcasm, you know better than to confuse correlation with causation.

      And as you served as Commissioner of Labor and Industries from 1995 to 2003, one could argue your actions - or lack thereof - could be just as easily blamed as the actions of Kitzhaber or the voters for everything that's happened since.

      As you know, the unemployment rate is in part a sign of some people who don't have jobs choosing where to live while they don't have a job (North Dakota has a very low unemployment rate). Oregon's a good place to live.

      As far as economic studies, there are a huge number of poor, and a vastly smaller number of credible, studies on both sides of the minimum wage argument - it's the sort of study that's an economist's wet dream so it's done a lot, and you worry about things like omitted variable bias.

      One might think that the current oversupply of labor (vs. demand) would drive the costs of hiring and employing non-minimum wage workers down significantly, hence businesses can afford the 10 cents to the poorest of the poor. I'd be interested in seeing a study on whether that's happened.

      •
        9:17 p.m.
        Sep 21, '10
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        Guess I should've read all the posts before responding to Jack...yes Evan Jack don't know jack about correlation or causation.....actually, I think he does, but its an election year and so out go his principles.

    •
      3:44 p.m.
      Sep 21, '10
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      Jack, I apologize for my rude behavior! :)

    •
      9:15 p.m.
      Sep 21, '10
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      Jack, talk about rude -- you ignore the fact that our unemployment rate has been below the national average only 5 times in the last 37 years - you know damn well you can't blame Oregon's unemployment rate on the minimum wage, so you rudely cherry pick statistics. Heck, you took office as LABOR commissioner in 1995 - under your logic you are also to blame for the high minimum wage. Shame on you. I thought you were above that.

      •
        9:44 p.m.
        Sep 21, '10
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        Here's numbers Jack conveniently ignores: In 1990 and 1991 Oregon's minimum wage went up, and those two years, and again in 1992, 1994 and 1995 our unemployment rate was BELOW the national average. There's no correlation nor causation between the state's minimum wage and our unemployment rate relative to the national average.

    •
      11:04 p.m.
      Sep 21, '10
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      Jack, as you know, when the stork population in Europe shoots up, the birth rates in Europe shoot up.

      That is because - as everyone knows - storks deliver babies.

      ....

      I'm sure that Oregon losing 90% of its timber production in the 1990s had nothing to do with those job numbers you cite.

  •
    10:07 a.m.
    Sep 21, '10
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    According to the BLS, min wage workers are about 1.7% of workers nationwide. 50% of them are under the age of 25. Raising the min wage just makes it harder for young, inexperienced workers to find entry level work experience.

  •
    10:42 a.m.
    Sep 21, '10
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    Two things jump out to me:

    1. can't we just get rid of the archaic practice of tipping in the first place,and pay a wage/salary that does not assume that additional money will be given to workers; or at least remove the tipping from the equation all together. Why do we assume waiters/waitresses get tips, and assume that it is a certain amount in the first place? IN these trying times, I assume tip income might actually be less than what is assumed by standard practice

    2. so many more people are unemployed than working at the minimum wage.

    I always have viewed minimum wage as a starting point; never the plateau one receives for a job over the long term.

    Finally, what Dudley said was rather stupid. I also recall that ALL politicians say stupid things eventually. And you don't have to look very far to prove that point. Heck, look at what Biden said a few days ago about his place in line for the presidency.

  •
    4:19 p.m.
    Sep 21, '10
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    Teddy Roosevelt, GOP, advocated a "living wage" (which would be defined as well above minimum).

    Abe Lincoln, GOP, said that labor is preeminent to capital.

    Anyway, EVERYONE who is advocating for sub-minimum or lower minimum does not have to try and live on that pittance. Or, does not have to face the prospect of working multiple jobs.

  •
    6:04 p.m.
    Sep 21, '10
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    Stephen, everyone wants higher wage jobs. There are a number of studies, however, that show a minimum wage has a negative effect by reducing the number of jobs, and taking jobs away from the lowest skilled people.

    This seems to make common sense. An employer is making an economic decision to hire a person. Increasing the cost of labor makes other means of production that require less labor (automation for example) more attractive, reducing the number of available low skill jobs.

    The minimum wage, specifically, would seem to hit the lowest skilled people the hardest. If the minimum cost of labor is set above the value of a low skilled person, then that person can't get a job. That person loses the opportunity to 'learn on the job' and increase their skill set. That doesn't seem very fair.

    I'm sure people that still have jobs like the minimum wage; it's the people that can't get a job because of it that bothers me.

  •
    9:57 p.m.
    Sep 21, '10
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    To Chuck and Evan, the correlation between minimum wage and unemployment is actually pretty clear if you look at absolute magnitudes. The increase in Oregon's minimum wage passed in 1989 had no negative impact on unemployment because the federal minimum wage had dropped well below market wages. The market easily adapted to our minimum wage increase, as it did the later federal minimum wage increases.

    The increase in Oregon's minimum wage passed in 1996 pushed us toward the top of the minimum wage rates in the country, joined by our neighbors Washington, California and nearby Alaska. When the recession came in 2001, these four states took turns leading the nation in unemployment.

    You do make a good point about my tenure as labor commissioner. So can we agree that neither Kitzhaber nor I should be returned to office?

    •
      10:36 a.m.
      Sep 22, '10
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      Jack, I'm not saying the data aren't there. I'm saying your conclusion is false. That is, correlation is NOT causation, and the policy question relies on causation.

      If you're saying no one who's messed with the minimum wage or other labor issues since the 1990s should have legislative power, you're asking most Oregon voters to stop voting.

      Right now, we're choosing between an experienced veteran with a history of accomplishments and a rookie. I'll go with the veteran.

      And heck, I'd certainly support you before Dudley.

    •
      12:32 p.m.
      Sep 22, '10
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      Jack, as noted in a 2004 Economic Policy Institute paper on the minimum wage and employment, you're analysis is so simplistic it is silly, regardless of where you are on the divisive issue of the Yankees:

      In particular, opponents of state-level minimum wage increases claim that these increases are the cause of weak labor markets, especially in the form of high unemployment rates. That argument, however, rests on the simplistic observation that some of the states with high minimum wages also have high unemployment rates. Without more examination, this observation is as useful in understanding state job markets as noting that joblessness has been on the rise in New York since the last time the Yankees won the World Series. It might be true, but it doesn't mean one is causing the other.

    • 3:15 p.m.
      Sep 22, '10
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      Okay, Chuck and Evan, if we're going to get all serious about this, of course my analysis is simplistic. This is a blog, not an academic journal.

      But the weight of evidence is in support of the notion that high minimum wages will price workers out of the market if (1) the minimum wage exceeds the economic value of the work being performed or (2) it exceeds the economic value of that worker's individual skills and efforts.

      There is an academic argument for not having a minimum wage at all, but I personally support a minimum wage that essentially protects vulnerable workers from being exploited. But I don't believe minimum wages are a good way to try to raise the standard of living of workers generally; if it were, we'd just set the minimum wage at, say, $35 an hour and eliminate poverty altogether.

      I think there is a reason we don't see ushers in movie theaters anymore and why fast food restaurants have a window where drivers get in line for their food rather than park their cars and wait for workers to come out to take and deliver their orders. That may be progress to some, but it is unemployment for others.

      Ultimately, the market does work. While a 10 cent per hour increase starting in January won't significantly distort the workings of the market, I still think an automatic CPI escalator regardless of employment conditions is a bad idea. I also think the very high minimum wages on the West Coast hurt our employment opportunities for low skill workers.

      And, no, Glen, I don't want to go back to the $1.25 minimum wage I got paid on my first job.


      • 4:05 p.m.
        Sep 22, '10
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        Jack continues to invent correlations and causation out of thin air.

        If he's correct that the high minimum wage is the reason movie theaters don't have ushers and people don't get served at their cars at fast food restaurants, then why do states that don't have a minimum wage like Alabama and Louisiana do not have ushers in theaters and don't serve you in your car at fast food joints?

        It is simple - the minimum wage is not the reason. Just as it isn't the reason popcorn, candy and drinks are overpriced at theaters, whether in Oregon or Alabama and other no minimum wage states.

        Jack should be celebrating that now the minimum wage increases are fairly predictable and incremental, versus the surprising big jumps after very expensive campaigns that occurred before Measure 25. But alas, that would mean he'd have to have "reserved the right to be wiser tomorrow" and apparently he didn't do that. I'd love him to prove me wrong.

  •
    10:35 a.m.
    Sep 22, '10
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    Ed Diehl posted, "IF the minimum value of labor is set above the value of a low-skilled person..."

    This is incredible but also predictable.

    Okay, Ed, just what is the value of a low-skilled person? We who advocate a fair minimum, at least, would say that a person who works 40 hours per week ought to be able to pay for some kind of shelter and food and afford public transportation. $8.50 per just barely gets that in Oregon.

    And, yes, I've heard all the Libertarian abstractions about how the labor force is hurt by having the minimum. Pure abstractions that have nothing to do with the real world.

    •
      5:53 p.m.
      Sep 22, '10
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      I understand what you are saying. And as long as you understand that your policy is taking opportunities away from other people, and are OK with that, then I guess a minimum wage is fine.

      •
        4:03 p.m.
        Sep 23, '10
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        Yeah Stephen, how dare you deny the masses their chance to work for sweatshop wages, and instead insist that they be paid wages above the poverty line.

        •
          8:17 p.m.
          Sep 23, '10
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          And a high school kid with a summer job needs a wage above the poverty line because . . . . ?

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            3:55 p.m.
            Sep 24, '10
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            A high school kid needs a decent minimum wage because a high school kid needs to start out in life knowing that his or her labor has value. This teaches a good work ethic.

            Kids think they're already disrespected by adult society, so why confirm it by paying them near-slavery wages?

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              10:24 p.m.
              Sep 24, '10
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              You are missing the point. Kids are missing out on jobs because of the minimum wage.

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                8:04 p.m.
                Sep 25, '10
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                I'm not missing the point, Ed- what I think is going on is that you are using the current state of high unemployment in order to make this argument that kids just can't get jobs.

                Hey- a whole lot of adults (with families, even) can't get jobs at this juncture, either.

                And, that being the case, why shouldn't we take up the Libertarian cudgel and do away with the minimum for everyone- that everyone could get jobs (very theoretically)?

  •
    10:49 a.m.
    Sep 22, '10
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    President Luis Ignacio da Silva of Brazil has had in place a policy for a few years whereby the increase's in Brazil's minimum wage are computed according to inflation AND increases in GDP.

    Lula regards a strong minimum as a means of redistribution of wealth, and will come right out and say so.

    This and Lula's program of welfare payments to single mothers who keep their kids in school and get them to doctors' appointments has resulted in Brazil cutting its poverty in half in Lula's terms.

    Lula is so popular in Brazil that his hand-picked successor, a political novice, will breeze to victory this fall.

    And, goddamn, if the U.S. hadn't sided with the generals in 1964 because the Brazilian president had the temerity to give a medal to Che Guevara, they might've gotten there decades before.

    Oh yeah, and Brazil completely paid off the shyster, blood-sucking IMF and is running its government in the black.

  •
    11:16 a.m.
    Sep 22, '10
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    I just looked at the US Dept of Labor website and saw a history of State's minimum wage rates. In 1968 Oregon's min wage was $1.25. Too bad we ever raised it since then, just think how many people would be employed if companies only had to pay them $1.25 an hour. Jack wouldn't you agree that a buck and a quarter an hour would mean a paradise for everyone? No, wait, we still couldn't compete with that economic titan Kentucky at $0.65 per hour. http://www.dol.gov/whd/state/stateMinWageHis.htm

  •
    3:22 p.m.
    Sep 22, '10
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    Don't we benefit when we payworkers enough to buy goods/services they produce?

    Henry Ford had that idea.

    Damn socialist..... :)

  •
    5:57 p.m.
    Sep 22, '10
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    Do you think a $30/hr minimum wage would be a good idea? With the kind of reasoning I am seeing in many of these posts, I don't know why we stop at $8.40.

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