Minimum Wage Hike Takes Effect in Oregon

Oregon's lowest-paid workers are getting some help in making ends meet since a 45-cent hike in the state's minimum wage took effect.

Oregon's minimum wage rose $7.95 to $8.40 per hour on Jan. 1, 2009, the Oregon Bureau of Labor and Industries announced. That translates into an extra $936 a year for a family with one full-time minimum wage worker, according to Michael Leachman, policy analyst with the Oregon Center for Public Policy.

"It's an economic stimulus for working families and Oregon," said Leachman. "It puts money into the hands of the people who are most likely to spend it, spend it quickly and spend it here in Oregon."

The adjustment reflects the rise in the cost of living as defined by the Consumer Price Index and is mandated by ballot Measure 25. Oregon voters approved that measure in 2002, when the state was also reeling from the effects of a recession.

"Tying the minimum wage to inflation has been good for Oregon, preventing the lowest-paid workers from falling too far behind," Leachman said, adding that the industries that complained the most about Measure 25 have done well since the measure's passage.

He cited data on the restaurant industry with its relatively large share of minimum wage workers. Of all industries, it was Oregon's biggest job creator -- producing nearly 21,000 jobs - during the economic cycle that lasted from November 2000 to February 2008, according to Leachman.

Those numbers, said Leachman, refute the claims of critics of Measure 25, including the Oregon Restaurant Association. That group opposed Measure 25, stating in the 2002 Voters' Guide that the measure would lead to substantial job losses.

Recently, the ORA said that it will push the 2009 Legislature "to remove the annual indexing from the minimum wage," claiming that the change is needed to create jobs.

"The restaurant industry was wrong in 2002 and is wrong today," Leachman said. "The cause of rising unemployment is the recession, not the minimum wage. Undermining the floor that prevents workers from falling deeper into poverty would only worsen our economic woes."

With the New Year's cost-of-living adjustment, an Oregon full-time minimum wage worker will earn $17,472 next year. That's below the federal poverty line for a family of three.

"We're still a long way from having an Oregon economy that works for all working families, but a minimum wage tied to the cost of living is a step in that direction," Leachman said.

The Oregon Center for Public Policy is a non-partisan research institute that does in-depth research and analysis on budget, tax and economic issues. The center's goal is to improve decision making and generate more opportunities for all Oregonians.