Click here to download a PDF of this document.

New 2007 Poverty Guidelines Highlight Value of Minimum Wage Adjustment

The 2007 Federal Poverty Guidelines released yesterday highlight the importance to low-wage workers of adjusting the minimum wage for inflation each year, according to analysts at the Oregon Center for Public Policy (OCPP). New poverty guidelines for 2007 were published in the Federal Register yesterday.

“Each year as the cost of living increases, the poverty line is adjusted to reflect the increased costs faced by families struggling to pay for basic necessities,” said Michael Leachman, policy analyst at the OCPP. “Voters were right in 2002 when they recognized that the minimum wage should also be adjusted each year to reflect increases in the cost of living.”

Following the 2002 ballot measure, the value of Oregon’s minimum wage was increased in 2003 and each year since has been adjusted for inflation. On January 1, 2007, Oregon’s minimum wage rose from $7.50 to $7.80 an hour.

Despite the annual adjustment, a minimum wage worker in Oregon supporting a three-person family by working full-time, year-round in 2007 will not escape poverty. Such a worker will earn $16,224 in 2007, $946 less than the poverty line for a family of three.

The poverty guidelines, sometimes referred to as the "federal poverty level," define who is officially considered "poor." State and federal agencies use the guidelines to determine eligibility for a range of programs, such as National School Lunch Program, Legal Services, Food Stamps, and the Oregon Health Plan. The guidelines are not used for the state's cash assistance welfare program, called Temporary Assistance to Needy Families (TANF), or for determining eligibility for the federal or state earned income tax credits.

The Federal Poverty Guidelines are based on the size of the family and are applicable to the 48 contiguous states and the District of Columbia; the federal government sets different guidelines for Alaska and Hawaii. "The poor" are families with incomes at or below the poverty guidelines. While the term is not officially defined, "low income" often means families with incomes at or below 200 percent (twice) the poverty guidelines.

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.