Businesses brace for minimum wage increase
Some say higher wages will drive up prices, compromise those on fixed incomes
A statewide minimum wage increase awaiting Gov. Kate Brown's signature is slated to go into effect this July.
Senate Bill 1532 would increase the state's minimum wage from $9.25 to $9.75 an hour, as of July 1.
The wage will increase incrementally until 2023, with annual adjustments for inflation. The proposed wage increase schedule is tied to geography.
In Columbia County, which is outside the Portland metropolitan area's urban growth boundary, the minimum wage will increase by 50 cents this July, then increase another 50 cents each year until July 2020, when the minimum hourly wage goes to $12.
A prescribed wage hike schedule will take the county's wage to $12.75 in 2021 and $13.50 by 2023.
The House of Representatives approved the bill 32 to 26 Thursday, Feb. 18, in response to a strong push for a $15 minimum wage within Portland, and similar increases in outlying areas from unions and groups like 15 Now PDX. Cities like Seattle and San Francisco both successfully adopted $15 an hour minimums, phased in by 2018 in San Francisco and by 2018, 2019 or 2021 in Seattle, depending on the size of the employer.
Brown said raising the state's minimum wage was a priority for her, but not everyone has applauded the move.
Marty Liesegang owns Jackpot Market and gas station in Scappoose. He's been a business owner in Scappoose for nearly 15 years, but said he wasn't prepared for the slew of legislative changes affecting his operations.
A new law that went into effect this year requires Oregon employers to provide paid sick leave for employees.
Liesegang said the changes make for big impacts to small business owners. He'll likely increase his retail prices to recoup the higher costs.
Not only do I have to pay my employees more, coupled with the addition of mandatory sick leave for everyone, but my federal payroll tax is going to skyrocket also, Liesegang said. That has to be passed on to the consumer. I think in a lot of industries you're gonna see a price increase in goods. Everything from a burrito to a gallon of gas is gonna have to go up.
Tiffany Smith, who owns Dockside Steak and Pasta in St. Helens with her husband, said her restaurant will have to raise prices, too.
Both Liesegang and Smith say they employ high school students who work part-time.
The restaurant industry tends to be a starting point for high school kids, so when we're getting into $12.25 an hour, is that good territory? Smith said. I'm gonna stop and think about hiring someone with more experience at that wage, so I think we're going to do our youth a disservice because it's gonna make it harder for them to find jobs.
Columbia County's minimum wage earners will get automatic increases every year, but that doesn't guarantee the same for workers making more than their county's minimum wage.
You're not required to raise them as well but it devalues their time if you were to keep them at [the same wage], Smith said. Now you need to raise them the $2 or $3 that all the minimum wage employees got, so they still have that same worth. Can businesses afford to do that? Not many of us can.
The proposed wage contains three tiers. Areas within an metropolitan urban growth boundary, like Portland, will implement a wage increase schedule $1 to $1.25 higher than counties like Columbia, Clatsop, Tillamook and Washington. Nonurban counties, like Baker, Douglas, Crook and Harney counties, among others, will see annual increases 25 cents to $1 lower than Columbia County's.
Liesegang and Smith both say they expect the costs of goods and services to go up, diminishing the buying power of their employees and customers.
Advocates of the minimum wage increase say consumers' buying and earning power is already down, offering less value today than 30 years ago.
The Oregon Center for Public Policy indicates workers who earn low and median wages have seen their compensation stagnate or decline. Oregon's median wage in 2014 was $17.02, according to OCPP. The median wage 35 years earlier would have been $17.56 when adjusted for inflation, OCPP indicates.
"Similarly, low-wage workers earned just $10.36 per hour in 2014, less than the $11.22 they made in 1980 in inflation-adjusted dollars," an OCPP fact sheet on Oregon's income inequality states.
Even with a wage increase, not everyone will see their incomes adjusted, says Cheryl Young, mayor of Columbia City and director of the St. Helens Senior Center. Young said seniors and others who receive Social Security or disability benefits from the government did not see any cost of living adjustments this year, and often don't.
If prices go up, then, yes, the ones that are on fixed incomes will have it worse, especially out in the general public, especially out in the grocery stores," Young said. "It could be devastating for some of them.