Oregon seems to have straightened out the mess the Legislature made of raising the state’s minimum wage. Maybe.
But what is clear is the fact that raising the minimum wage is going to hurt the state’s economy, and Democrats who control the Legislature would have known it if only they had waited for the annual Oregon Economic and Revenue Forecast.
In another example of minimum wage mania on the West coast, San Diego is close to trumping the minimum wage increase already approved by the California Legislature.
Too bad they can’t see across the nation to Washington, D.C., to look at what could happen to their communities once wages begin spiraling upwards.
Oregon employers were not only faced with the prospect of being forced to pay their minimum wage workers more money, but they also had to struggle to figure out just what they should be paying their employees.
The Oregon Legislature approved a minimum wage increase package that included three geographically based tiers.
The minimum wages goes up from $9.25 to $9.75 July 1 in metropolitan Portland and mid-sized counties, but only increases 25 cents an hour in rural areas of Oregon.
However, after that, the wage scale for each of the three tiers would be different.
By 2022, the minimum wage will be $14.75 an hour in the Portland metro area. It will be $13.50 in mid-sized counties and $12.50 in the countryside.
As if that wasn’t complicated enough, there is the question of how to pay workers who might start their day in downtown Portland, but drive outside the city to work later in the day. Or what about the delivery driver who loads up his truck on a vegetable farm to bring produce into the city?
Oregon employers were forced to wait for the state Bureau of Labor and Industries to figure those questions out. New policy guidelines were issued, but only two weeks before the new wage payment scale went into effect.
State officials said June 15 it all depends on how much time workers spend in each of the three zones. If they spent at least half their day in Portland, for instance, the highest minimum wage would be in effect.
Not only did the Legislature complicate the relatively simple act of raising the minimum wage by instituting the convoluted three-tier wage system, but they didn’t bother to wait for an annual report that would have told them raising the wage was not a good idea.
Oregon’s economy couldn’t be much better. The Oregon Economic and Revenue Forecast described “full-throttle rates of growth” and job gains racing toward full employment, “a milestone which has not been seen since 2000.”
The only way the forecast could have been better, the report said, was if the Legislature hadn’t decided to mess with the Oregon minimum wage.
“While the impact is relatively small when compared to the size of the Oregon economy, it does result in approximately 40,000 fewer jobs in 2025 than would have been the case absent the legislation,” the report stated. “Our office is not predicting outright job losses. However, we are expecting somewhat slower growth.”
Why would Democrats who control the Legislature jump the gun and approve the minimum wage increase before that annual report came out from the Oregon Office of Economic Analysis?
Economist Eric Fruits said the Legislature wanted to pass something, anything, to head off a labor union drive to put a $15-an-hour minimum wage ballot proposal before voters in November.
“And I think they got so snakebit they would have passed anything that was called a minimum wage increase,” he told Fox News.
San Diego voters did their California Legislature one better in the June 7 election by approving a measure to increase the minimum wage paid in the city to $10.50 an hour immediately.
The wage will go up to $11.50 an hour on Jan. 1, and then continue to increase by being tied to the federal consumer price index on Jan. 1, 2019, and every year after that.
Gov. Jerry Brown (D) signed legislation in April that raises the state minimum wage to a relatively stingy $11 an hour on Jan. 1. It would then increase to $15 an hour by 2022, but whoever is the governor of California could always suspend future increases if the state’s economy tanks.
San Diego’s measure does not include a $15 ceiling, nor does it have any provision for a weak economy.
While the debate continues in San Diego, and the states of California and Oregon wrestle over the wisdom of raising the minimum wage, both sides are issuing diametrically opposed predictions of the future.
Washington, D.C.’s, experience might serve as a useful crystal ball.
The minimum wage in the District of Columbia increased from $8.25 an hour in 2014 to the current rate of $11.50. Now, Mayor Muriel Bowser is pushing for a bump up to $15 an hour by 2020.
A report from the Employment Policies Institute shows minimum wage hikes are coming at the expense of jobs in the nation’s capitol.
Just over half of the employers surveyed had raised prices to compensate for the increase in wages, but that wasn’t enough. When prices went up, customers stopped buying.
As a result, nearly half of the D.C. employers surveyed by the Institute said they had either fired employees and/or reduced hours for the people still on their payrolls because of the higher minimum wage.
With the specter of a $15 minimum wage hanging over their heads, 35 percent of the business owners told the Employment Policies Institute they would probably cut staff levels even more if Mayor Bowser gets her way.
Twenty percent of the business owners surveyed said they would just pack their bags, pick up stakes, and move into Arlington, Va.
However, with a plan to just keep running to a new locale as wages go up, trying to find the lowest-cost city in which to do business might not work for long.
The Baltimore City Council was pressured June 15 to approve a $15-an-hour minimum wage proposal. That would push up wages for 98,000 people in Baltimore, more than a quarter of the city’s workforce.
Jim Mitich, the president and COO of Ruth’s Chris Steak House, told the Baltimore Sun he could guarantee that one of the restaurant chain’s two locations in the city would close if the minimum wage went that high.
But Ricarra Jones, a political organizer for a Baltimore healthcare union, told the Sun he and his allies were inspired to push for the higher minimum wage by what has happened in Washington, D.C.
“I definitely think [D.C.] will have a positive impact,” Jones said. “They did the right thing. I’m just hoping our city does the right thing.