Lowest Wage to Rise

The Portland Observer
September 14, 2011

Inflation boosts minimum; wary small businesses prepare

by Mindy Cooper

Inflation will push up Oregon’s minimum wage by 30 cents to $8.80 per hour in January.

“Safeguarding the wages of low-income workers is especially critical in a tough economy,” said State Labor Commissioner Brad Avakian, announcing the new minimum wage rate last week. “Oregon’s economy will not rebound if we allow 144,538 minimum wage earners to fall behind inflation.”

The increase mirrors a 3.77 percent increase in the Consumer Price Index since August 2010.

Ballot Measure 25, enacted by Oregon voters in 2002, requires a minimum wage adjustment annually based on changes in inflation as measured by the Consumer Price Index.

Avakian said thousands of Oregon families are fighting to keep food on the table and a roof over their heads by working full-time at minimum wage jobs. He said the Oregon Bureau of Labor and Industries is committed to defending their wages.

The non-partisan Oregon Center for Public Policy also called the increase “good for workers and Oregon’s economy.”

The group calculated that the increase means an extra $624 a year for a family with one full-time minimum wage worker.

“It helps the lowest-paid workers make ends meet, and it helps the economy when the workers spend those extra dollars in local businesses,” said Chuck Sheketoff, OCPP executive director.

But lingering anticipation has emerged for what the affects the increase will have on small and local businesses.

Gloria McMurtry, the owner of the 16-year-old local Talking Drum Bookstore in northeast Portland, said an immediate increase in expenditures for small businesses is never easy.

“Times are hard enough,” McMurtry said.

“I believe everyone should get paid for the work they do,” she said. “But if minimum wage were not quite as high, then the employer would have more latitude to reward good workers.”

Oregon’s current minimum wage is the nation’s second highest, trailing only Washington $8.67 minimum hourly wage. The state is also 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.

Even though Oregon has a higher minimum wage than other states, it is not enough to prevent poverty among some working families.

Sheketoff said at $8.80 an hour, a full-time minimum wage worker will earn $18,304, still below the 2011 federal poverty guideline for a family of three ($18,530). He said 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,” he said. “Oregon’s minimum wage system helps fight poverty and income inequality and is a model for the nation.” According to Avakian, minimum wage laws are essential to ensure workers and families can maintain their purchasing power, which keeps the local economy afloat.

Although, he said, five out of six employers within Oregon don’t offer minimum wage jobs, future dialogue is necessary with businesses, and many small businesses, that do. “Understanding their challenges,” he said, “will benefit our entire economy.”

Bob Estabrook, the communications director for the state bureau, said the impact of the minimum wage increase on entrepreneurs is not as simple as saying small businesses could be hurt and large businesses will be in the clear.

“You have to look at a particular workforce a business has; this is especially true for the food and beverage industry, which has a larger proportion of individuals working in or at minimum wage,” he said.

Estabrook explained, in any industry where you are working on thin margins and depend more on volume, planning ahead is essential to deal with the increasing minimum wage, and some businesses may be better able to adjust than others.

He said, however, they understand these businesses are feeling the pinch in terms of other costs, including the increase of the Consumer Price Index in one year, which not only affects working families, but also business entrepreneurs. “Obviously it is not as simple as raising prices,” he said.

Tuan Huynh Ba, the owner of Tuan’s 76 Auto Service at 33rd Avenue and Northeast Killingsworth, said the rise in wages will definitely affect his business. “I don’t know if I can afford it. I can’t raise the price of gas,” he said.

While increased wages is a positive for those who have jobs, he asked, what about those who don’t? “My garage, business has slowed down because people can’t afford to fix their car because they don’t have jobs,” he said. “The rise in prices has affected everybody.”

According to Estabrook, inflation and a rise in prices does not come as a surprise to the general population.

“I think most folks generally recognize the cost has been going up and inflation is happening,” he said. “The annual adjustment of our state minimum wage is designed to account for inflation and prices, so someone making minimum wage is not progressively losing the value in their wages based on inflation.”

Like Avakian, Estabrook emphasized the importance is maintaining dialogue with businesses, especially small businesses, and he said entrepreneurs, through BOLI’s Technical Assistance for Employers Program, are invited to call with questions, concerns and challenges they are facing.

Revised minimum wage posters reflecting the new rate will also be available for free download from BOLI’s website in December. That site, which includes additional information about all of BOLI’s activities, is oregon.gov/BOLhttp://www.ocpp.org/fair-use/I.

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