5 Hidden Questions Behind Oregon’s New Subminimum Wage

By Matt Witt of Talent, Oregon. Matt Witt is a freelance writer and photographer. He publishes a free bulletin, World Wide Work. His nature photography may be seen at MattWittPhotography.com.

Quite a few hidden questions have not been answered about Oregon’s new subminimum wage law that the Democratic majority in the legislature just passed under Gov. Kate Brown’s leadership without any support from Republicans or corporate lobbyists.

In case you missed it, corporations will no longer have to pay workers a standard minimum wage that applies across the state. One subminimum wage (Tier 2) will now be established for so-called “non-rural counties” outside Portland’s urban growth boundary, and an even lower sub-subminimum wage (Tier 3) will be allowed in the “rural counties.”

When the new three-tiered system is fully phased in, a company will be able to pay a worker in Eugene, Bend, or Medford $10 a day less for exactly the same work as a worker in Portland, and $18 a day less for a worker in places like Coos Bay, La Grande, or Klamath Falls. Agricultural workers are covered by the law, but since nearly all of them are in the subminimum areas they will make substantially less than their non-agricultural counterparts.

By 2023, seven years from now, a minimum wage worker in Tier 3 will still make only $12.50 an hour. In Tier 2, $13.50, and in the Portland area, $14.75. All will still find it hard, if not impossible, to afford housing, food, health care, transportation, education, and other necessities. In Jackson County where I live, for example, a living wage for a family of four in which both adults are working is already $14.96 each – NOW!

1. Who gets to keep the windfall profits? The extra money taken from subminimum workers around the state will flow to corporate executives and, in the case of many out-of-state companies, to Wall Street speculators.

2. Why did the Democrats adopt the subminimum concept corporate special interests have sought for decades? Corporations and Republican politicians have long sought to undermine the minimum wage by arguing unsuccessfully for a subminimum concept, usually by calling for a “training wage” or a lower wage for younger workers. When the legislature raised the minimum wage in 1999, corporate lobbyists tried unsuccessfully to carve out a subminimum wage for restaurant workers.

Despite strong grassroots campaigns by Fight for $15 and the Fair Shot coalition, and despite strong political energy exemplified by the turnout of 28,000 people to hear Fight for $15 supporter Bernie Sanders, the Democrats chose this moment to validate the subminimum concept for most of the state. That, along with the small size of the increases and the long time period in which they take effect, may account for the fact that there has been little grassroots celebration of the Democrats’ “achievement.”

3. Why did Gov. Brown and the Dems fail to point out how a standardized, higher minimum wage HELPS business? The Democratic leadership defended the new subminimums as being necessary to stop grassroots ballot measures from placing a “burden” on corporate interests, without pointing out that businesses in Oregon desperately need customers who have increased buying power. A standardized increase in the minimum wage is basically a transfer of wealth from those at the top to working people who will then spend the extra money to support local businesses and jobs. That’s why minimum wage increases have a proven track record of bolstering economic prosperity, not undermining it.

4. How will executives use this subminimum precedent to play working people against each other? In the 1980s, many big corporations – both union and nonunion – and public sector employers like the Postal Service began to introduce lower tiers of pay and benefits for new employees. Some unions agreed to this, thinking that they were preserving what their more senior members already had. Once the substandard tiers were established, corporate executives used the gap to ratchet down pay for everyone. Many unions found that their new members had little loyalty to the organization that had negotiated lower pay for them.

What larger effects will result from this new official state policy that workers outside Portland should be paid less? For example, will we see more efforts by corporate executives to hold down pay and benefits in Portland by threatening to move to subminimum areas? Will public sector employers like the university system now use this precedent to argue for paying less at places like Southern Oregon University than they pay in the north? Will even more people flee rural areas for Portland where they would be paid more for the same job, adding to pressures the metro area is already feeling?

5. Will Oregon’s subminimum precedent now undermine the Fight for $15 in other states? "Oregon has always been at the forefront of new ideas in the country,” said Rep. Paul Holvey (D-Eugene) in praising the subminimum concept. He may be right – but not in a good way.

Feb. 23, 2016 Posted in guest column.