2012 Minimum Wage Hike Good for Oregonians and Good for Economy

Chuck Sheketoff

Oregon’s minimum wage will rise from $8.50 to $8.80 on January 1, 2012, the Oregon Bureau of Labor and Industries (BOLI) announced today. The adjustment, mandated by a ballot measure approved by voters in 2002, reflects the rise in the cost of living as defined by the August Consumer Price Index (CPI), which jumped 3.8 percent from a year ago. The increase means an extra $624 a year for a family with one full-time minimum wage worker.

The minimum wage increase will be good for workers and Oregon’s economy. It will help the lowest-paid workers make ends meet, and it will help the economy when the workers spend those extra dollars in local businesses.

Oregon’s current minimum wage is the nation’s second highest statewide minimum wage, trailing only Washington state’s $8.67 minimum hourly wage. Washington most probably will retain the top spot next year, because it also pegs its minimum wage to inflation. Washington will announce its 2012 minimum wage later this year.

Oregon is one of 18 states plus the District of Columbia that have a minimum wage above the federal minimum wage of $7.25 per hour, which is not scheduled to increase.

In 2012, when the 30-cent Oregon minimum wage increase takes effect, full-time minimum wage workers in Oregon will earn $3,224 more than that their counterparts in those states where the federal minimum wage sets the floor.

But even though Oregon’s minimum wage is second-highest in the nation, it is not enough to prevent poverty among some working families. At $8.80 an hour, an Oregon full-time minimum wage worker will earn $18,304, still below the 2011 federal poverty guideline for a family of three ($18,530). These families could fall further behind in early in 2012, when the federal government likely will raise the poverty guideline.

The Oregon minimum wage, however, does lift one- and two-person families out of poverty.

Oregonians were smart to raise the minimum wage and keep it from being eroded by inflation. Oregon’s minimum wage system helps fight poverty and income inequality and is a model for the nation.

Oregon Center for Public PolicyChuck Sheketoff is the executive director of the Oregon Center for Public Policy. You can sign up to receive email notification of OCPP materials at www.ocpp.org.

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    If an $8.80 minimum wage is good for the economy, would a $15.00 minimum be even better for the economy? How about $25.00?

    I'd be interested in your economic analysis on this question.

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      Rob, the key is maintaining the purchasing power and thus the spending of the minimum wage earners. Maybe you'd like your patrons to give less each year as inflation occurs, but smart business people (especially those who know the value of consumer spending in an economic recovery) don't want to see the spending eroded by inflation.

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      Uh gee, Rob.

      If lower taxes raise tax revenues (via the wizardry of supply-side economics), then would even lower taxes raise even more money? How about a 10% federal rate? Or a 5% rate?

      Oh, I know! How much in tax revenues would a zero percent rate raise?

      It's gotta be a lot.

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    I am less concerned about the exact amount of the minimum wage than I am about the fact that it seems to me that more and more people are being forced to work at jobs which pay only the minimum wage. I would be interested to see statistics on the median hourly wage as compared to the minimum wage over the past 10 years. Are they converging? In a "recovery" based largely on the service economy, there seem to be more and more jobs involving french fries or lattes.

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