|| Print ||
|Thursday, January 23, 2014|
BY ERIC FRUITS | OB BLOGGER
Oregon’s minimum wage workers rang in the New Year with a raise. At $9.10 an hour, the state now has the second highest minimum wage in the country. Add in payroll taxes and benefits, such as paid time off, and the typical minimum wage worker in Oregon costs an employer about $12.75 an hour.
People pushing a higher minimum wage say that it would lift Oregon families out of poverty. A breathless press release from the state’s labor bureau claims that the latest bump in minimum wage will boost Oregon’s economy with $20 million of additional consumer spending out of thin air. Opponents argue that Oregon’s ever increasing minimum wage leads to layoffs of low-wage employees and may lead some firms to close-up shop.
In fact, both sides are right about the direction of the impact, but a bit hyperbolic about the size. So the question is really one of trade-offs: Do the additional benefits exceed the additional costs?
First, let’s look at who earns the minimum wage. The figure below shows a recent employment snapshot:
Very few workers rely on the minimum wage as their sole source of income. The Employment Policies Institute calculates that less than 1.4 percent of Oregon employees work full time—35 hours or more—in a minimum wage job. The minimum wage work force is a part-time workforce. The share of the population that relies entirely on minimum wage work to support a family is a tiny sliver of the state. In fact, in the U.S., in 8 out of 10 households with children and in which someone earns minimum wage, the minimum wage job accounts for less than 20 percent of total household income. That is, in most cases, the minimum wage job provides a small supplement to income earned from higher paying jobs.
There is some evidence that raising the minimum wage could improve incomes for the working poor. New research suggests that an increased minimum wage could increase family incomes for those at the lower end of the income distribution (in the bottom 15 percent). On the other hand, the impacts are tiny. Using the numbers provided in the paper, it looks like Oregon’s recent minimum wage increase would boost the average family income for this group by less than $3 a week.
On the employer side, its not clear that raising the minimum wage has a huge impact on hiring, firing, and layoff decisions. Especially when the increase is as small as Oregon’s 1.7 percent bump this year. That’s because employers often have many options in the face of higher wage costs. They can raise prices, cut benefits, reduce profits, and invest in technology that boosts labor productivity. While automated fast food ordering may take away a job, it also increases the productivity of the workers that remain.
Indexing the minimum wage to allow for annual increases is perfect politics. When else can a politician take credit for giving someone a pay raise? They can trot out a sympathetic single parent who is better off from the slightly bigger paycheck (if they don’t lose it all in taxes or reduced public assistance).
Even better, an ever increasing minimum wage is a policy where you don’t see the victims. You don’t see the employer who can’t justify paying $12.75 an hour for someone with no experience. You don’t see the teenager who can’t get a job because no one’s willing to pay that kind of money for someone who has no experience or track record.
Oregon unemployment for 16–19 year olds is 26.6 percent. That’s about 3–4 percentage points above the U.S. average. And, it’s not that our teens are lazy. Labor force participation for that age group in Oregon is about the same as the U.S. average. Our kids want to work, but they can’t get the work.
The take away:
Raising the minimum wage makes people who get the raise, and their families, better off. But, just a little. In fact, the weekly amount of the raise amounts to less than the price of a frozen pizza. Employers are slightly worse off, but they have many ways to adjust so that the impact of any annual increase in the minimum wage would be imperceptible. At the same time, Oregon’s high and ever increasing minimum wage puts our younger workers in a Catch-22: They need experience to justify their compensation costs, but they can’t get experience because they cost too much to employ.
Eric Fruits blogs on economics and finance for Oregon Business.
Friday, August 21, 2015
Renee Spears, founder and owner of Portland-based Rose City Mortgage, is hot to trot to sell pot.
Monday, September 28, 2015
BY JACOB PALMER
“There wasn’t a reason shaving with a straight razor should have been taken over by shaving with disposable razors.”
Wednesday, September 30, 2015
BY KIM MOORE
Oregon Business magazine’s seventh annual 100 Best Nonprofits to Work For project attracted more than 150 nonprofits from around the state from a variety of sectors, including social services and environmental advocacy. More than 5,000 employees and volunteers filled out the survey, rating their satisfaction with work environment, mission and goals, career development and learning, benefits and compensation, and management and communications.
Monday, September 28, 2015
BY AMY MILSHTEIN
To attract technology companies, the U.S. Bancorp Tower repositions itself as open, light and playful.
Thursday, August 20, 2015
BY DAN COOK
The state’s angel investing fund gets hammered in Salem.
Monday, September 28, 2015
BY LINDA BAKER
Bill Levy of Pacific Ag talked to Oregon Business about new residue markets, the company’s growth strategy and why a biofuel plant is like a large cow.
Wednesday, September 16, 2015
BY GREGG LEWIS | OP-ED
The issue of green-washing remains a significant challenge to those of us who would like to see the building sector in this country do more than make unverifiable claims of sustainability. Transparency about the impacts of a given material is the only way to allow designers to make intelligent choices when selecting building products.
|The List: 100 Best Nonprofits to Work For in Oregon|
|Run, Nick, Run|
|100 Best Nonprofits: Working for equality inside and out|
|One Tough Mayor|
|Cream of the Crop|
|Fare Thee Well, Company Town|
Wage gaps and workforce shortages are threatening the quality of care and supports to Oregonians with intellectual and developmental disabilities. Who’s caring for those who care for our most vulnerable residents?
Engaging employees and customers along the way.
After first visiting as tourists, entrepreneurs relocate to Oregon and spur economic growth.
Over 300 attendees will gather to learn from 50+ regional leaders pushing the sustainability needle forward. GoGreen Portland offers a distinct platform of bringing people together across industries and sectors to build viable networks and cross-pollinate best practices throughout the regional business community.
Are you planning a meeting, party, gala, fundraiser, holiday party, golf tournament, retirement party, team building or birthday? You won’t want to miss this show to get hundreds of great ideas!
Promoting from within its own ranks, PacificSource Health Plans has tapped Tony Kopki to head its commercial lines of business in Oregon, Idaho and Montana. In his new role as Vice President of Commercial Programs, Kopki will provide strategic, product and market leadership for PacificSource’s commercial programs.