Tuesday, September 20, 2011

Minimum Wage Increase In 2012

State Labor Commissioner Brad Avakian announced today that Oregon’s minimum wage will be raised to $8.80 per hour next year. The 30-cent increase mirrors a 3.77 percent increase in the Consumer Price Index since August 2010. Oregon’s minimum wage rate remains $8.50 per hour for all hours worked in 2011. Washington state, where the minimum wage is currently $8.67 per hour, will announce its 2012 minimum wage on September 30th. Oregon’s minimum wage is the second highest in the country behind Washington.

Ballot Measure 25, enacted by Oregon voters in 2002, requires a minimum wage adjustment annually based on changes in inflation as measured by the Consumer Price Index (CPI). The Commissioner of the Bureau of Labor and Industries (BOLI) is directed to adjust the minimum wage for inflation every September, rounded to the nearest five cents. Washington does not round its wage up.

Oregon’s unemployment rate is still one of the highest in the country, and this wage increase is not expected to help reduce the unemployment rate. The fact that the increase goes up automatically does not take into account some of the factors that most state and federal minimum wages do; for example, youth employment and other income sources like tips.

Most states have a youth or “opportunity wage” that allows employers to reduce the minimum wage for the first 60-90 days on minors, essentially during their training period. The youth unemployment rate is twice what Oregon’s unemployment rate is, and the minority youth rate is even higher at more than 30 percent. Oregon’s minimum wage law ignores this fact completely and will likely increase the disparity that these young workers are facing in Oregon.

Oregon is also one of only a few states that don’t allow an employer to take into account declared tips as part of the wage. Tipped employees average over $20 an hour and are the highest hourly wage earners in restaurants. The state and federal government tax the tips, so they take their share, but do not allow the employer to account for the tips. Restaurant hourly wage workers that do not receive tips average between $11-15 an hour, and the law ignores the struggles these workers are often facing.

Given the economy in Oregon, it seems like more people are worried about “having” a paycheck or job now more than ever before. Oregon should consider ways to address the problems with the failed policies that continue to put us at the bottom of job growth and get more people working and receiving a paycheck. | Bill Perry

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