Real Wages Rise in 1998 for Most Workers

Commentary
February 1, 1998

Minimum Wage Increase "Proved Successful"

New data released today by the Oregon Center for Public Policy, a Silverton-based public policy research organization, shows that the real wages (wages adjusted for inflation) of the typical worker increased by 3.8 percent since 1996, while low wage workers saw their wages increase by 6.2 percent. These across the board increases reversed a trend of declining wages since 1979.

"The minimum wage increase has proved successful at lifting the wages of more than just low wage workers," said Charles Sheketoff, executive director of the Oregon Center for Public Policy (OCPP). "The data help show that the rising tide does raise all ships."

The data is based on Wages Gain Ground, a new report by the Washington-D.C.-based Economic Policy Institute (EPI). The report analyses data from the Census Bureau's Current Population Survey. The report shows that wage growth for both middle and low wage workers was strong in 1998, reversing a trend of declining wages among those income groups across the nation.

In the 1980s and the 1990s, real wages for Oregon workers steadily declined until Oregon raised the state minimum wage. From 1979 to 1989, real wages of low income Oregonians declined by 12.6 percent. From 1989 to 1996, the real wages of low wage workers declined by 3.6 percent. As a result of a tight labor market and the minimum wage increase, wages of Oregon's lowest wage workers increased by 6.2 percent from 1996 to 1998.

"The wages of low wage workers are still more than 10 percent below their level in 1979," said Sheketoff. "The minimum wage, coupled with a tight labor market, has helped reverse the trend, giving low wage workers a long overdue, and big boost in wages, " he added.

The typical worker - the worker with wages at the median level - saw wages decline by 7 percent from 1979 to 1989, and 7.1 percent from 1989 to 1998. In the last two years, however, the typical Oregon worker saw wages increase 3.8 percent.

"An increase in real wages means more spending power and more saving power," said Sheketoff.

Sheketoff noted that the minimum wage is Oregon policy makers' main tool for continuing the wage progress. "There is little Oregon policy makers can do to maintain the tight labor market and low inflation that has helped so many hard working Oregonians. State policy makers can, however, use the minimum wage to continue the positive trend and help bring Oregon workers back up to wage levels of the late 1970s," he said.

In 1996, Oregon voters raised Oregon's minimum wage from $4.75 per hour to $5.50 per hour on January 1, 1997, $6.00 per hour on January 1, 1998, and $6.50 per hour on January 1, 1999. "This data shows the positive impacts from the voters' decision to increase Oregon's minimum wage," Sheketoff added.

Changes in Wage Over Time

1979-1989

1979-1998

1989-1996

1989-1998

1996-1998

Typical Worker (Median - 50th percentile)

-7.0%

-13.6%

-10.5%

-7.1%

3.8%

Low Income Worker (20th percentile)

-12.6%

-10.5%

-3.6%

2.4%

6.2%

The Oregon Center for Public Policy is a Silverton-based, nonpartisan research group that analyzes budget and tax issues and government programs, and their impacts on low to moderate income Oregonians.

The Economic Policy Institute is a nonprofit, non-partisan economic think tank based in Washington, D.C. Founded in 1986, EPI seeks to widen the debate about policies to achieve healthy economic growth, prosperity and opportunity in the United States. EPI's report, Wages Gain Ground, is available on EPI's world wide web site at http://www.epinet.org.

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