Legislation Mandates Higher Pay in Cities than in Rural Areas
Oregon Gov. Kate Brown has signed a bill enacting a double-digit increase in the state’s minimum wage, a boost that could give the state the highest minimum wage in the U.S. by 2022.
In addition, this landmark minimum-wage law makes Oregon the first state in the nation to mandate higher pay in cities than in rural areas.
The law will enact a series of minimum-wage increases through 2022 with the pay hike set to reach $14.75 an hour in Portland – one of the highest minimum-wage rates in the U.S. The minimum wage will increase to $12.50 in sparsely populated rural areas, and $13.50 in other rural parts of the state. Oregon’s current minimum wage is $9.25 an hour – and the first hike kicks in July 1.
About 100,000 workers earn minimum wage in Oregon, which supporters of the bill say can make it difficult to afford housing, food, childcare and other goods and services. Critics of the law say increased payroll costs will result in layoffs, ultimately hurting the state’s economy.
According to a Wall Street Journal report, Gov. Brown called the law her “top priority of the 2016 legislative session”and “a path forward – so working families can catch up, and businesses have time to plan for the increase.”
Business groups had opposed the law, saying the approach will produce new headaches and uncertainties.
Of course, the debate in Oregon mirrors a national debate about the $7.25 federal minimum wage.
While the major Republican candidates for President favor leaving the federal minimum unchanged, Democratic candidate Sen. Bernie Sanders has called for more than doubling the pay floor nationally, to $15 an hour. Hillary Clinton has said she supports a $12 federal minimum wage and supports raising that floor higher through local and state efforts. The Obama administration has called for raising the minimum wage and has supported efforts by local jurisdictions and states to pass regional increases.
U.S. Labor Secretary Thomas Perez called the Oregon law a “bold step.”
“Today’s action vindicates the basic principle that no one who works full-time in America should have to live in poverty,” he said. “I am continually encouraged by states like Oregon that push our country forward on this critical issue.”
Paul Sonn, general counsel at the National Employment Law Project, an advocacy group that supports minimum-wage increases, said Oregon’s tiered approach raises some concerns.
“It is a very significant raise for lots of families, but, that said, we are concerned about the tiered approach because it is creating these different classes of wages,” he said. “It could open up huge enforcement loopholes.”
Last month, Alabama Gov. Robert Bentley signed a bill prohibiting individual cities from establishing their own minimum wages. Michigan and Oklahoma have done the same.
Gov. Brown likely hasn’t heard the last from business owners, who complain the law creates uncertainty and handicaps the state’s ability to compete in some industries.
Sandra McDonough, chief executive of the Portland Business Alliance, said the legislation creates too much of a difference between the Portland area and rural parts of the state. The agricultural industry will be particularly hard hit, she said, competing with neighboring Idaho that has a lower minimum wage.
Anthony K. Smith, Oregon director of the National Federation of Independent Business, said the group fought hard to defeat the legislation.
“From our perspective, it is not a compromise,” he said. “This is going to be bad for business across the board.”
