Executive Summary...

OCPP Home

March 12, 2001

Getting the Raise They Deserved:
The Success of Oregon's Minimum Wage and the Need for Reform

by Jeff Thompson and Charles Sheketoff

The successful 1996 initiative to increase Oregon's minimum wage to $6.50 brought much-needed raises to thousands of low-wage workers across the state, without harming their employment opportunities. The beneficiaries of the increase were primarily from low-income households, and were disproportionately female and minority with low levels of education.

Following the implementation of the final phase of the minimum wage increase in January 1999, the positive wage impacts began to fade. As the value of Oregon's minimum wage began to be eroded by inflation, real wages for low-paid workers also started falling again.

Data analyzed for this study reveal that:

• Workers at the 10th and 15th percentile of the wage distribution experienced real wage gains, after adjusting for inflation, with each of the three phases of the minimum wage increase. These workers' wages began falling again following the final phase of the increase in 1999.

• Reversing previous trends, the starting wages of former welfare recipients rose with each phase of the minimum wage increase. After three years of increases, the average starting wage of those leaving welfare hit $7.56 in the first quarter of 1999, but fell by nearly two percent in 2000.

• Minimum wage increases have boosted the wages of as many as 16 percent of all Oregon workers. Between the first quarters of 1998 and 1999 alone, 177,000 workers received raises taking them up to or above $6.50.

• The employment rate for young workers with low education, generally thought to be affected by the minimum wage, grew faster than the rate of the workforce as a whole subsequent to the minimum wage increase.

Legislation has been introduced in the Oregon Legislative Assembly that would prevent the value of the minimum wage from declining. House Bill 2786 follows the lead of Washington State and indexes the minimum wage to inflation. The bill restores purchasing power lost since January 1999, and would annually adjust the minimum wage to keep pace with rising prices. If enacted, HB 2786 is estimated to raise Oregon's minimum wage to $7.03 on January 1, 2002.

###