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Employers prepare for minimum wage hike

About half of Deschutes Brewery’s 500 employees received a raise when Oregon’s new three-tier minimum wage law kicked in Friday. Customers will likely notice a change as well: Menu items climbed by about 50 cents each to cover the cost of the wage increase, said company founder Gary Fish.

“There is a direct correlation,” Fish said. “We don’t cut staff because we don’t schedule people when we’re not busy. If, because we raise prices, volume drops, then we don’t need to schedule as many people. We will deal with that at that time.”

At least 203,000 Oregonians received a raise from the new law, according to the Oregon Employment Department. Wages climb from $9.25 to $9.75 in most parts of the state and to $9.50 in rural counties.

“I think it’s a great thing,” said Sen. Michael Dembrow (D-Portland), chairman of the Senate Workforce Committee, which first proposed the law. “It starts small, but that is the beauty of the way we have crafted this. It is spread out over a number of years. Workers are still going to get immediate relief from the financial pressure they’re under because of housing and other costs they face.”

The first-of-its-kind law customizes wages by cost of living and income level in three different regions of the state and sets a five-year schedule for increases. The law stemmed from concerns about the state’s housing shortage and rising expenses in a state with relatively low wages. The Oregon Office of Economic Analysis has ranked Portland’s affordability below Seattle’s because of a disparity between wages and living expenses.

The actual number of employees who benefit from the pay bump is unknown, said Nick Beleiciks, state economist with the Employment Department. Minimum wage workers who receive tips may not on paper appear to be minimum wage workers because of that extra income, Beleiciks said.

But those costs still materialize for employers. Tips in Oregon don’t count toward the wages owed to an employee, but employees are required to report any money they receive on the job as income for tax purposes.

Most of the 250 Deschutes employees who received a raise from the minimum wage law also make tips at the company’s pubs in Portland and Bend.

“The people who receive minimum wage in our company receive tips, and that’s the lion’s share of their earnings, plus we provide health care, even for food and beverage staff,” Fish said. “We know these are our highest paid employees getting a raise because those are our tipped employees.”

The additional cost comes at a time when employers also are adjusting to new paid sick leave requirements and facing the potential of a corporate tax increase under Initiative Petition 28, which voters will consider in the November general election.

Junki Yoshida of Portland-based Yoshida Food International said he would be cutting many temporary positions in his company to offset the cost of the wage increases. He said he also is looking at ways to pare down benefits.

“It is hurting those people,” Yoshida said of the people who would lose jobs. In lieu of the temporary workers, he is asking his better-paid staff to up production.

Fish said despite the burden of having to pay higher wages, he doesn’t view the law as a bad thing.

“There are some employers who are not treating their employees as well that are making it harder on those of us who are,” Fish said. “With that being said, the Legislature doesn’t seem to value business and risk and all of those kinds of things as much as maybe they could. We have terrific people we get to work with and this is not about them.”

The new law has some complications for employers who have itinerant employees working in multiple regions. Generally, employers have to pay employees the regional rate in which an employee works more than 50 percent of the time, but if an employee works in more than two regions, the employer has to track that employee’s time spent in each region and pay different wages according to the amount of time spent in each region.

The Bureau of Labor and Industries has schedule a series of seminars to help employers comply with the new law.

Enforcement of the law will be mostly complaint based, said Charlie Burr, a spokesman for Labor Commissioner Brad Avakian.

The minimum gradually climbs to $14.75 in 2022 in the Portland urban growth boundary, which includes parts of Multnomah, Washington and Clackamas counties. It will rise to $13.50 in Benton, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Wasco and Yamhill counties, and parts of Multnomah, Clackamas and Washington counties outside Portland’s urban growth boundary.

In rural areas, the wage increases to $12.50. Those areas include Malheur, Lake, Harney, Wheeler, Sherman, Gilliam, Wallowa, Grant, Jefferson, Baker, Union, Crook, Klamath, Douglas, Coos, Curry, Umatilla and Morrow counties.