Minimum wage plan needs to better address regional differences
Sometimes when a public policy initiative gets trashed from opposite ends of the political spectrum, it means the author has found a sensible middle ground.
Other times, it means he or she needs to go back to the keyboard.
In the case of Gov. Kate Browns minimum wage proposal, unveiled last Thursday to more heckling than applause, its a little of both.
Brown proposed a two-tier minimum wage $15.52 in the Portland area and $13.50 elsewhere in the state phased in over six years. (The current statewide minimum wage is $9.25.)
Members of a group pushing a statewide $15 wage toward the November ballot complained that Browns timetable is too slow. Some business groups and rural lawmakers declared the rates are too high.
We support a slow phase-in of higher minimum wages, to give businesses time to plan and adapt. The specific wages proposed by the governor provide a starting point for upcoming deliberations in Salem.
However, we are deeply concerned that the governors plan is seriously flawed in how it addresses regional differences. Brown's plan assumes it is cheaper to live and do business in places such as Bend, Ashland and Corvallis than it is in metro cities such as Gresham, Forest Grove and Oregon City. That assumption is demonstrably untrue and should not be the basis for statewide wage policies.
The federal minimum wage was established in 1928 based on the noble notion that a full-time worker should earn enough money to purchase the basic necessities of life, such as food and shelter.
One challenge with the federal minimum wage is that the cost of those necessities varies depending on where you live. Full-time employees earning the federal minimum wage of $7.25 an hour may have enough for groceries and rent in Mobile, Alabama, but not in Manhattan or San Francisco, Seattle or Portland.
Price disparities are one reason that 29 states, including Oregon, have enacted minimum wages higher than the federal government.
Whats more, the growing awareness of income inequality has led to a corresponding trend of cities setting minimum wages within their boundaries that are higher than the rest of their state.
The logic is that basic needs, including rent, usually cost more in urban areas, making a higher minimum wage more justifiable. Similarly, jobs usually pay better in cities, making a higher minimum wage less onerous on urban employers than their rural counterparts.
We understand why Gov. Brown wanted to treat urban and rural areas differently in her wage proposal. But her decision to use the Metro Urban Growth Boundary as a blunt dividing line would exacerbate the very problem she is trying to address. Instead of relying solely on geography to achieve her goal, wed like to see the governor use math instead.
A comparison between just two measures tracked by the U.S. Census median gross rent (including utilities) and median per-capita income shows stark differences within the metro areas Urban Growth Boundary. As the accompanying chart illustrates, a $15 minimum wage in high-income/high rent suburbs such as Lake Oswego and Sherwood makes a lot more sense than in places such as Cornelius and Gresham, where wages and rents are similar to downstate cities like Albany and Medford.
On the flip side, there are cities outside the metro area, such as Ashland and Bend, where costs and compensation are comparable to Portland. Yet under Browns plan they would not be subjected to the higher minimum wage, while Cornelius and Gresham would.
Despite our concerns over the specifics of her plan, at least Brown is trying to reach a compromise ahead of potential minimum wage ballot measures. She also is correct in recognizing there are regional differences. Her plan is now expected to be the starting point for legislative deliberations aimed at producing a new minimum wage law that will head off the rush to the ballot.
As those talks get underway, we urge lawmakers to give businesses ample time to phase in higher minimum wages while also addressing geographic differences in a factually supported manner.