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Affordable housing a challenge for low-income workers

The Bulletin
April 9, 2014By Andrew Clevenger

WASHINGTON — On Jan. 1, Oregon’s minimum wage rose to $9.10 an hour, almost $2 higher than the federal minimum wage of $7.25.

It has risen every year since 2002, when it stood at $6.50 per hour, thanks to a provision in state law that requires annual adjustments due to inflation. Currently, only Washington state, which also adjusts each year for inflation, at $9.32 and Connecticut, which raised its minimum wage to $10.10 last month, are higher.

Despite the regular increases, making ends meet may be getting harder for Oregon’s low-wage earners. According to a report published last month by the National Low Income Housing Coalition, to afford the fair-market rent for a two-bedroom apartment a worker in Oregon would have to earn $16.28 an hour.

Put another way, a worker earning Oregon’s minimum wage would have to work 72 hours a week, 52 weeks a year, to afford the fair-market rent of $846 per month.

To reach these figures, the report uses housing prices calculated by the U.S. Department of Housing and Urban Development and assumes that a household can afford to pay 30 percent of its income on rent.

In 2014, Oregon’s “housing wage” of $16.28 makes it the 24th most expensive state in the union, according to the National Low Income Housing Coalition. In last year’s report, Oregon ranked 25th. The 2013 housing wage was $16, meaning the rise in the cost of housing (28 cents) outpaced the increase to the minimum wage (15 cents).

“The rental market is one in which low-wage workers don’t necessarily have much of a choice other than to participate and pay the going rate,” said Jason Gettel, a policy analyst with the left-leaning Oregon Center for Public Policy. “The other option would generally be to buy a home, but that’s not often a feasible option for people who are working these jobs.”

The federal minimum wage has been $7.25 since 2010.

Minimum wage shouldn’t be viewed as a living wage, Gettel said.

“Right now, even with Oregon’s current minimum wage, a full-time worker is not able to lift a family of three above the poverty line,” he said. “No one who works full time should be living in poverty, but with our current minimum wage in place, many families are doing just that.”

John Charles, president of the Portland-based libertarian group Cascade Policy Institute, maintained that Oregon shouldn’t have a minimum wage at all.

“There is no policy rationale, no moral underpinning, for any minimum wage requirement whatsoever,” he said. “People should be free to contract with whomever they want for whatever wage they want.”

Minimum wage actually hurts lower wage earners, who are often trying to learn skills to make themselves more marketable and more valuable, he said. If employers are forced to pay an employee more than the market determines his or her labor is worth, they won’t fill those positions at all and employment opportunities for bottom earners decrease, he said.

“If you force an employer at the outset to pay more for that person than that person is worth, then they won’t do it,” said Charles.

People working minimum wage jobs are often learning skills and gaining experience that makes them more attractive to employers, he said.

“All we should do in this country is promote free and voluntary association,” he said. “Coercion is not going to make things better, it will only make things worse.”

Gettel maintained that raising the minimum wage can be good for both workers and employers.

“More people with more money in their pockets does increase demand for products, and it does help businesses. In addition to that, paying workers more tends to increase the odds that they’ll stay in their jobs longer, and reduces turnover in low-wage industries,” he said.

Last year, the Washington, D.C.-based Center for Economic and Policy Research concluded that raising minimum wage “has little or no discernible effect on the employment prospects of low-wage workers.” More recently, the Center examined employment in the 13 states that raised their minimum wage in January.

Comparing November and December to January and February, “Not only do we fail to find any evidence that minimum wage increases hurt state employment, we actually find the opposite. This exercise is far from definitive, but there is no obvious sign that a higher minimum wage is a ‘job killer,’” wrote intern Jeffrey Gianattasio and director of domestic policy Nicole Woo.

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