Lowest Pay Rises

The Register-Guard
December 30, 2011

Oregon's minimum wage goes up 30 cents to $8.80 an hour

BY SAUL HUBBARD The Register-Guard Published: (Friday, Dec 30, 2011 05:00AM) Midnight, Dec 30, 2011

More than 140,000 Oregon workers will get an automatic pay raise on Sunday, as the state's minimum wage jumps from $8.50 to $8.80 an hour to keep up with inflation.

Full-time minimum-wage workers will bring home an additional $624 a year thanks to the increase.

Chuck Sheketoff, executive director of the Oregon Center for Public Policy, a liberal think-tank, praised the increase this week.

"A strong minimum wage is good for workers and good for Oregon's economy,” he said in a prepared statement. "It helps the lowest-paid workers make ends meet, and it helps the economy when the workers spend those extra dollars in local businesses."

And one minimum-wage worker described the increase as "freaking sweet."

But not everyone thinks it's good news.

Several area business owners said Thursday that they are concerned about having to increase their prices and cut employee hours due to the higher labor costs of employing minimum-wage workers.

George Rogers, general manager of the Valley River Inn in Eugene, said that ultimately those costs would be passed on to the consumer.

"The impact will be that we raise our prices," he said. "Our (restaurant) menu prices have hit their maximum threshold, but everything else will be on the table."

Rogers said that approximately 35 percent of his staff currently works for minimum wage, making the cost of the change significant.

"It hits us at the hardest part of the year, too, (after the holidays) when business is the slowest," he added.

Jason Boyer, a co-owner of Wild Duck Cafe in Eugene, said that a higher minimum wage means that there's less work available for minimum wage earners.

"In my mind, it's just less hours for those employees and more tasks for salaried employees," he said.

The effects of minimum wage increases are often felt more sharply by "smaller mom and pop" businesses than larger corporations, said Michael Kiriazis, vice-president of marketing for the Shari's restaurant chain, which is based in Oregon and also operates in five other states.

"Bigger operations are usually able to absorb it a little more," he said. "At the same time, it is difficult for everyone in this economy. Our store managers will have to gain efficiency in their operations without compromising service or food quality and without raising prices."

The increase was triggered by a 4 percent cost of living increase during the 2011 fiscal year, as measured by the Consumer Price Index; a ballot measure Oregon voters passed in 2002 inexorably tied the state’s minimum wage to the national CPI. Similar laws will result in minimum wage increases in seven other states, including Washington, in 2012.

A minimum wage worker at a Springfield game arcade, who wished to remain anonymous, said Thursday afternoon that he was unaware of Oregon's increase.

"But that’s freaking sweet," he said.

Erin Giegoldt, a manager at a local Famous Footwear store, said that because she makes just over minimum wage now, the increase actually hurts her as it will spur inflation and negate any raises she receives next year.

Bryce Ward, a senior economist at ECONorthwest, a Eugene-based consulting firm, said that the debate about whether increasing the minimum wage spurs economic growth or impedes it has been raging for years.

"My reading of the most recent literature on the topic shows that the positive income effect (for workers) is really noticeable and the (negative) employment effect is negligible."

However, Ward said, because of the uniqueness of the current economic climate, the impact of the increase on the state's economy holds more uncertainty.

Usually, though, a higher minimum wage has little effect on states' unemployment rates, he said, and the extra funds workers receive are pumped back into the economy, not saved.

Increasing the minimum wage also generally "has a ripple effect" for employees just above them on the pay scale, he said, although that ripple is unlikely to occur in the short-term due to continuing nationwide economic uncertainty.

Starting Jan. 1, Washington’s minimum wage will jump to $9.04 — the highest for a state — while San Francisco’s will reach $10.24, the highest metropolitan rate in the nation. The federal minimum wage will remain unchanged at $7.25 next year.

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