Clear Conscience on the Minimum Wage

InsideCapitolDome

Clear Conscience on the Minimum Wage

InsideCapitolDome

Clear Conscience on the Minimum Wage

If the polling is accurate, on November 5th Oregonians will vote by a sizeable majority to increase the minimum wage to $6.90 and index it to inflation thereafter.

Voters should rest easy, knowing that their vote to raise the minimum wage will not, contrary to claims made by the opposition, harm Oregon’s anemic economic recovery.

As the Oregonian recently noted, voters “don’t seem swayed” by the opposition’s story of job loss and economic ruin. Why is that? The opposition case is unpersuasive because Oregonians have seen first hand that minimum wage increases do not cause job losses, whether the economy is good or bad, and voters are intelligent enough to know that the states’ current high unemployment rate has nothing to do with the minimum wage.

Economic research on minimum wage increases repeatedly finds that their impact on jobs ranges between slightly negative to slightly positive, but centers on “zero,” as recently summarized by labor economist Jared Bernstein. Oregonians will recall the “sky is falling” claims of the opponents of the last minimum wage increase, and know that they did not come true. Repeated examination has failed to yield evidence of jobs losses from the last time Oregonians voted to increase the minimum wage.

Why would it be different this time? “It’s the recession,” opponents scream. Those with longer memories will recall that the Oregon and the Federal minimum wages were raised during the recession of the early 1990s, doing little to impede the long economic expansion that followed. Between 1989 and 1999, Oregon’s minimum wage rose five times, and the state added 385,000 jobs, growing 3.2 percent annually.

Research by two of the country’s top minimum wage experts, economists David Card and Alan Krueger, showed that raising the federal minimum wage in the early 1990s did not result in adverse effects on employment. The idea that we shouldn’t raise the wages of very low paid workers because of a slow economy is not supported.

Still weaker is the notion that Oregon’s relatively high unemployment rate is related to the current minimum wage. Anybody making even a meager attempt to track Oregon’s economy knows that the workers who have lost their jobs are concentrated in durable manufacturing, high-tech, construction, and related service industries – not exactly folks getting paid the minimum wage or even close to it.

The chief industry affected by a minimum wage increase, restaurants, is currently one of the fastest-growing, adding more jobs than any other industry in Oregon, up 3,200 from a year ago.

Restaurant owners oppose the minimum wage because they don’t want to have to pay their workers higher wages. This, however, is the crux of the issue. Owners want the freedom to be able to pay as little as they can get away with. Oregon voters, however, have said that there should be minimally acceptable pay standards for workers. And now, as the value of the minimum wage has been eroded by inflation, it is time to raise it again.

The opponents of the minimum wage oppose it in good economic times and bad. They oppose it despite the lack of evidence of job loss. Support or opposition to increasing the minimum wage is not about economics, but rather basic values. And, on this issue, Oregon voters have repeatedly made it clear where they stand.

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OCPP

Written by staff at the Oregon Center for Public Policy.

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