Diane Rosenbaum: The minimum wage is good for Oregon

Two weeks ago, the Oregonian published an editorial by Dave Lister - in which he slammed Oregon's minimum wage.

Minimum-wage jobs in the past were available for students who were interested in making some money to help with their expenses, or for stay-at-home moms who wanted to supplement the family budget by working a few hours a day while the kids were at school. Minimum-wage jobs were the conduit for young people just entering the work force. Through such jobs, they could gain experience and expand their resume. And the employer offering the jobs wasn't subjected to great risk in the case of an employee who didn't work out.

Is it really realistic to pay a high-schooler scooping ice cream or a sign twirler outside of the local mattress emporium $8.40 per hour?

On Monday, Senator-elect Diane Rosenbaum (D-Portland) responded with an editorial published on the Oregonian's blog. Rosenbaum was the chief petitioner on Measure 25 in 2002, which established the inflation-adjusted minimum wage in Oregon.

Lister's piece is filled with factual errors and anecdotal myths as he tries to prove the case that Oregon's minimum wage -- approved by voters in 2002 to adjust annually for increases in the cost of living -- has been a drain on Oregon's economy. Nothing could be further from the truth. ...

Perhaps Lister's most egregious error is his stereotype of minimum-wage workers. It must have been in the 1960s when Lister last entered a fast food restaurant if he thinks minimum-wage jobs are filled by "stay-at-home moms" or "a high-schooler scooping ice cream."

Stay-at-home moms and teenagers? There are 143,000 Oregonians working at minimum wage jobs who are struggling to support themselves and their families. It's true that 59 percent of these workers are women, 79 percent are adults, and that many have children. Today's mom is an equal partner in paying the bills, often working multiple minimum-wage jobs to make ends meet. Those wages are going right into the family coffers to pay for food, medicine, rent and utilities.

Especially in these tough times, minimum-wage jobs are the backbone of our economy. These workers represent 7.5 percent of Oregon's workforce, and they perform some of the most difficult and important jobs in Oregon. In addition to growing and serving our food, they also care for our kids in child care centers and our elderly parents in nursing homes.

As Rosenbaum notes, Oregon's minimum wage is hardly generous:

Lister is right about one thing, though. The minimum wage is not a living wage. Even with the increase in January, a full-time worker at minimum wage will earn only $336 a week -- that's barely $1,400 a month before taxes. That's hardly a living wage and barely a subsistence wage in today's economy. Yet 143,000 hard-working Oregonians are trying to support themselves and their families on this amount.

Oregon voters were right when they adopted this sensible economic strategy. Nine other states have followed our example and passed laws that provide annual cost-of-living adjustments, including Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Vermont and Washington. We should take pride in our minimum-wage law that stands for the principle that no one who works full time should be forced to live in poverty.

Discuss.

Comments

  • Dave Lister (unverified)
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    Wow, I am pleased that my essay has prompted such great discussion. I think it makes sense to re-examine public policy decisions a ways down the road to see if they are accomplishing what was intended.

    There was a letter writer in last Sunday's paper (or maybe the week before) who made a point that made sense to me and that I missed in my piece.

    Let's take the hypothetical of a super market chain. Their new hires and their part time workers are paid the minimum wage. Their other hourly employees, checkers, stock clerks and customer service folks are paid more.

    When the minimum wage ticks up on January first, the other employees will expect a similar, or better, increase. If the least skilled employees earning the minimum wage get an increase, surely the better skilled employees should get one as well. The company has to cover the increased labor cost and normally would increase prices to do so. Prices going up commensurate with the wage increases make the increases a net zero.

    But let's assume that this supermarket is operating in a highly competitive environment and cannot increase prices. They have another option. They can reduce labor costs through automation.

    This is not anecdotal and we're seeing it happening. The first example was the installation of the bottle return machines. The job of the person in the bottle room who counted your bottles and wrote your chit went away. Then we have the U Check It systems. One worker can effectively monitor four or six check out stations, thereby eliminating the other jobs. I was actually in a Home Depot store the other day and the U Check was the only check out station open. McDonalds has begun beta testing automated kiosks for taking the order, accepting the payment and dispensing the order.

    The inescapable fact is, rightly or wrongly, companies will not accept reduced profits to cover increased labor costs. They will raise prices or they will eliminate jobs.

  • Admiral Naismith (unverified)
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    When will those wooly liberals understand that employees are a drain on the bottom line at ANY wage?

    If only the legislature had any sense, they would allow us to get rid of ALL of our employees and let the work be done by convicted prisoners for no wages. Then our profits would be high enough to make the economy boom.

    And if you're worried about the unemployed, don't bother. Once they become desperate enough to turn to crime, the ones who get caught at it will get their old jobs back.

  • Dave Lister (unverified)
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    I should probably say "most companies", particularly large ones that pay stockholder dividends. Small ones, like ours, have more flexibility.

  • William Neuhauser (unverified)
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    The economic problem in America is not that the lowest paid workers are paid too much, it is that the average worker is paid too little. Cutting low-wage workers wages more won't raise them fort the average worker.

    The solution is not something we need to speculate and argue about because we have run the conservative economic experiment and have the unfortunate results. During the last 30 years of conservative dogma-driven economics, such as Listers notions, that exalts things like low wages and prices, deregulation and tax cuts for the rich, we've learned what happens when you abandon economic policies that grow the middle class and when you starve public investments: long-term decline in real average wages, a collapse of real assets and 40% decline the stock market, a year-long recession expected to continue at least another year, and bailouts and guarantees approaching 50% of the US annual GDP. In other words, the first economic depression since the Great Depression of the 1930s.

    Conservative economics doesn't work because it is founded on false ideas based on simplistic assumptions. To do more of the same and expect a different result would be insane.

  • Joshuawelch (unverified)
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    Mr. Lister:

    I think the days of the selfish Bush/Reagan trickle down economic philosophy of denying working people a livable wage in order to give the wealthy and the well-connected more money are over. We are seeing the results of this faith-based way of thinking with Bush and the Republicans in the drivers seat and it isn't pretty. Sure, you can still get a significant portion of the wealthy and uneducated to buy your lie, but most Americans think that if you work 40 hrs a week and play by the rules that you should be able to have food, shelter, and healthcare in the richest nation in the world. Call me crazy.

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    Lister completely ignores the research that suggests increasing the minimum wage CREATES MORE JOBS such as the seminal Card and Kruegar study. Furthermore, Lister fails to see that the cost of minimum wage increases are indiscriminate as to firm. Therefore, the grocery store market that Lister cites as an example when an employer will cut jobs is problematic as industry wide firms face the same identical cost increases, therefore it is likely that the retailers would be able to pass the cost through. Finally, the increase in the minimum wage is not a real but rather a nominal increase, the increase merely readjusts the minimum wage to where it was at the start of last year. If it was financially profitable to implement automation last year on the first of January then it will be now, otherwise a nominal but not a real increase does not create an economic incentive to automate.

  • Rick Hickey (unverified)
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    "that's barely $1,400 a month before taxes. That's hardly a living wage and barely a subsistence wage in today's economy. We should take pride in our minimum-wage law that stands for the principle that no one who works full time should be forced to live in poverty." Democrat Rosenbaum

    Typical Democrat Hypocrite, Soooo...is Or. min. "hardly a living wage" OR "no one who works full time should be forced to live in poverty"

    Yep that Teen or Senior supplementing their S.S. check (cause W was dumb to try fix that great S.S. system)should get $8.40/hr. to flip hamburgers then?

    William, Yes Factory/Adult/Farm workers should be paid more BUT Americans in these jobs are competing with workers that were making if lucky $1.00/hr back home(and no s.s./comp/liabilty/unemployment taken from their paychecks as well) and you Dem's have done what to help American workers not compete with employers that are violating laws and exploiting?

    Min. wage should only be for Teens BUT, with a non stop flow of 6,000 desperate 3rd world peoples a day coming in for years, and with Obama's new chief of homeland security, it won't stop and so Wages will continue to go no where.

    Economics = Decrease Labor supply = Wages go up

    Positive side for Socialists? More "needy" people to use your Government programs and keep 'em growing.

  • RichW (unverified)
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    Increases in the minimum wage and taxes have been dwarfed recently by the increases in energy costs - 30% increase or more.

  • LT (unverified)
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    A little history here:

    http://www.americanheritage.com/events/articles/web/20060105-henry-ford-five-dollar-day-model-t-ford-motor-company-assembly-line-james-couzens-highland-park-detroit-automobiles.shtml

    Henry Ford, way back when, had a min. wage.

    Something forgotten in the min. wage debates is the number of adults forced into min. wage jobs if that is all that is available. Furthermore, if those adults are to be consumers, rather than just barely having to barely eke out an existence, they need to be able to buy things.

    There have been chains which put most of their workers on part time so that they don't have to pay full time workers. I was a product demonstrator for 10 years at just above min. wage. When I was in some stores, a staffer would say "looks great--too bad I can't afford to buy it".

    Our local grocery store said they went from hand counting returnables to machines because that was what the companies dealing with the returns wanted.

    I refuse to use those machines in the Post Office which use credit or debit cards to mail things--I prefer to use cash. I would refuse to buy from a U Check. I'd complain to the management if that was the only line open, then leave the store.

    This sounds like theory trying to overcome the reality of how people operate.

    Rick Hickey, what do you do for a living? Do you believe that no one between the age of 20 and 65 has ever been forced to take a min. wage job because there was nothing else available at the time? I worked in a McDonalds when I was 31. I have been registered in both major parties and NAV. Quit being such a partisan----your attitude didn't win many elections this year, did it?

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    "Wow, I am pleased that my essay has prompted such great discussion. "

    Dave, I see no evidence of discussion. We are telling you--with the facts to back us up--that you are full of shit. For someone who touts his status as a business owner as evidence of his superior economic intellect, you seem to have very little grasp of the way things actually work.

    Here's a question: when a CEO accepts a multi-million dollar raise in their salary and benefits, does THAT cause the company to cut their labor costs elsewhere, too? Based on the principle that raising the wage a dollar an hour means you have to fire a couple of employees you now supposedly can't afford, I assume that a $2m raise for a CEO could necessarily eradicate the entire rest of the workforce, right? I look forward to your next op-ed on the evils of CEO pay.

    (And do I have it right that Lister's senselessness made the print version, but Rosenbaum's reply--the one with actual knowledge and experience of the situation--is relegated to the online only? Nice...)

  • joel dan walls (unverified)
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    This looks like a great thread for Kershner to jump in with another attack on Republicrats, or Obamacans, or whatever his term of abuse du jour happens to be.

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    And do I have it right that Lister's senselessness made the print version, but Rosenbaum's reply--the one with actual knowledge and experience of the situation--is relegated to the online only? Nice...

    Yes, you are absolutely correct. The O chose to publish an ill-informed and evidence-free rant, but refused to publish the thoughtful and data-rich response.

  • Holly Zarathustra, aka Queeg (unverified)
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    It also shows the positive power of Gonzo journalism. Great pseudonym, BTW.

    If you're on to salaries, what about the old stand-bys, executive compensation, middle management headcount, and blank check IT?

    Ultimately, I think this is the sad outcome of policy decisions from 30 years back that could only have this outcome. In the current job game, the minimum wage is definitely needed to be where it is, and keep up from now on with the middle class cost of living, not the durable goods biased index that business uses. But Lister is right. A sign twirler getting $9/hour is not competitive.

    This is what you get in a society where jobs are filled based on litmus testing rather than competency testing. The EEOC under Jimmy Carter was moving towards a position where you couldn't give a typing test to a secretary without having empirical data that the skill discriminates between success and failure on the job, and that your measure of it is valid. CEO compensation would have been empirically defined. Personally, I majored in psych stat and industrial psychology with a minor in pre-law, and was set to boogie when I graduated.

    That's when "Mouring in America" arrived and Ronald Reagan began the 30 year litmus crusade, drug testing being the test of choice. I won't go into all the conservative reasons for doing it, like tying the feet of a growingly mobile workforce, but the trend accelerated under the Bushes. Dick Thornburg went to every Rotary Club and Elks meeting he could get invited to and gave the Justice Depts stump speech about "remember, private employers aren't bound by the constitution; you can be our field operatives" and "people have to accept that urine testing is just a part of the job routine". That now accepted, they've moved to using credit data. The latest perversion of the trend, even if you grant that argument, is to continue to collect and use litmus data to discriminate after the person is on the job. A little reality here, puleez. Stats are not some divine truth. They're used to build "as if" models for predicting behavior. You don't use a behavioral predictor when you have actual behavior!. It shows that all the pseudo validating variables used to defend the regime have nothing to do with any measurable result. I will make an exception for the military's use of the ASVAB to select combat officers, even though it's just a glorified IQ test, by their logic that you never know what will happen in battle and the brightest one is best left in charge. But that could no doubt be demonstrated empirically, so it's the exception that proves the rule.

    It doesn't help that you have the PC-correct litigation happy culture trying to have any evaluation regarded as unfair evaluation and actionable. The current balance sheet crisis is a good opportunity to get back a more competency based regime, starting with the heads of enterprises. Legislation can support this by restricting the conditions under which litmus testing can be used as a pre-employment discriminator, it can require more, measurable fiduciary responsibility by boards over the CEOs, reduce liability for employers that discriminate based on valid data, and they can give tax breaks for hiring-related research.

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    If there are indeed factual errors, I hope someone writes a letter to the PRINT edition of the Oregonian pointing them out. An online response does not reach the same audience.

  • gl (unverified)
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    "Dave, I see no evidence of discussion. We are telling you--with the facts to back us up--that you are full of shit"

    really? getting a little personal in here...

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    OK, echoing that last comment, and with a desire to push back a little on the pile-on...

    First, when Dave talks about the discussion, he just might be referring to the commentary on the Oregonlive web site (tough to believe, I know) dating back to Nov. 20 or so.

    And second, when he says "Is it really realistic to pay a high-schooler scooping ice cream or a sign twirler outside of the local mattress emporium $8.40 per hour?"

    That does not imply that those are the typical minimum wage job is comparable to those. It's perfectly legitimate for a small business owner to ask whether certain specific wage requirements are fair.

    I am a strong supporter of Oregon's minimum wage, but I don't like seeing this kind of dismissive blowback on what strikes me as a perfectly reasonable starting point for discussion.

  • Dave Lister (unverified)
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    Thanks Pete. As I pointed out on the Oregonian's blog, the people who work for me make an average of $21.60 an hour. We have no minimum wage workers because we have no minimum wage jobs.

    People who choose to stoop to profane comments on this thread do so because of personal reasons, not because of the discussion.

  • Dave Lister (unverified)
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    As far as my grasp of "how things actually work"... I dunno. I've managed a business for 23 years that has provided living wage jobs for anywhere from three to seven families, depending on the economy.

    I guess maybe I don't know how things work.

  • Brian C. (unverified)
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    I happen to like basic minimum wage laws, even though I'm a small l-type Libertarian type rather than a Che Guevara loving progressive. Last I checked, Oregon's minimum wage was around 8 bucks an hour. Adjusted for inflation, who can possibly bitch about that being too high for entry-level, unskilled labor? My latest hire for an entry-level position earns $2.00 more with generous benefits.

  • Steve (unverified)
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    "Dave, I see no evidence of discussion"

    I also see no evidence of work at CoP either - Mr Torridjoe. Mr Lister has spent time in the trenches and actually created jobs and paid taxes so you can blog away on taxpayer time here and on your own blog? Then you have the nerve to cry BS with zero experience as an employer?

    However, once someone confuses amplitude with logic I think we are lost.

  • Logan Gilles (unverified)
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    Automation, and a general reduction in labor costs, is not something that is driven by the minimum wage. Companies have always and will always seek ways to reduce their operating costs, including eliminating jobs when it's possible to automate certain functions. This is nothing new, and doing away with the minimum wage (or reducing it) will not stop the push to things like U-Check or bottle machines.

  • LT (unverified)
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    It would be nice to believe that min. wage is only paid to unskilled labor. I've interviewed at day care centers that paid min. wage.

    I've earned well above min. wage in a department store. Which job requires more skills, which is more important? Why?

    Let's have a different discussion. Some have suggested there are successful companies here and in other countries where executive compensation is a small multiple of front line worker compensation.

    To use Dave's example, "people who work for me make an average of $21.60 an hour. "

    Multiply that by 20 times, and you get $432 per hour or $829,440 per year.

    Then factor in which is more profitable--Toyota or GM? GM's CEO makes more than 15 times what the head of Toyota makes.

    When we have THAT discussion, then I will listen to the idea that there should not be a floor on wages for front line workers.

  • Gil Johnson (unverified)
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    Several years ago, I lived in the apartment building next to the Baskin-Robbins store in Hollywood. This was a precarious situation for someone like me who is addicted to the many varieties of cholcolate ice cream.

    One day I went into the store to get my daily scoop and the price had gone up 20 cents. The owner happened to be there at the time and he explained that the minimum wage had gone up and he had to charge more.

    So after I got home, I did some calculating. The minimum wage had gone up around 20 cents, too, if I recall. The store had at most two employees at a time and sold anywhere from 20 to 50 scoops of ice cream, along with other items whose prices had also increased. It took two scoops at the new price to cover the hourly wage of the employees, so the extra two dimes on all those other scoops were going straight to the bottom line--about an extra $100 a day.

    Of course, owning a Baskin-Robbins is the next best thing to printing money.

  • Gil Johnson (unverified)
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    In the paragraph with all the numbers, I meant to write that the store sold 2o to 50 scoops of ice cream PER HOUR.

  • mp97303 (unverified)
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    Stay-at-home moms and teenagers? There are 143,000 Oregonians working at minimum wage jobs who are struggling to support themselves and their families

    And every time Oregon raises the min. wage, a greater percentage of Oregonians will be min. wage earners. A better question would be what percentage of Oregonians earn the Federal Min. Wage?

  • mp97303 (unverified)
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    @bdunn: The study you cite is 15 years old and relates to a raise from $4.25 to $5.05/hr.

    Is it possible that as the wage increases progress there is a diminishing return on job growth? Did the study factor in other elements that could have affected job growth at those particular stores? Do you have any study of a similar nature that is more current?

  • LT (unverified)
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    Posted by: mp97303 | Dec 4, 2008 1:01:35 PM

    Do you have a study which says frontline workers never given any increase in hourly pay while executives get large salaries whether the company is successful or not will lead to company prosperity?

  • mp97303 (unverified)
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    @Gill:It took two scoops at the new price to cover the hourly wage of the employees, so the extra two dimes on all those other scoops were going straight to the bottom line--about an extra $100 a day.

    Bull Sh*t. Food related businesses don't pass on every single cost increase as they happen. If they did, I would have had to raise the price of the pizzas I sold daily to compensate for the 119% increase in the price of cheese that happened over a 6 month period earlier this year.

    Restaurants use min. wage increase as an opportunity to pass on ALL costs. Most customers understand that cost go up when min. wage does, so the discussions are short and sweet with customers just like it was with you.

  • mp97303 (unverified)
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    @LT: Why are you deflecting my questions. A 15 year old study was cited against the original premise of the article and I asked legitimate questions about the study. Of course, if I could have accessed the study w/o having to pay for it, I might have been able to answer those questions myself.

  • Zarathustra (unverified)
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    Food related businesses don't pass on every single cost increase as they happen

    Banks and lenders sure do. If you want to have a bottom line effect on take-home, how about reigning in all those fees?

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    mp97303, the only people making federal minimum wage in Oregon are those being paid illegally low wages by unscrupulous employers, I think. Presumably a small number by comparison to those Diane Rosenbaum cites.

  • mp97303 (unverified)
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    @Chris Lowe: you are right. That was a "brain fart" question that I can't even figure out now.

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