When the minimum wage was first established, and every time a raise has been proposed in the eight decades since, some people have made dire predictions about effects on small businesses and the economy. Again and again, these predictions have failed to come true, and raises have helped working families get ahead. Here are some brief answers to common questions and concerns.
How much is Oregon’s minimum wage now?
Oregon’s minimum wage is $9.25 as of 2015. At that rate, a person working full-time takes home less than $20,000 a year. That’s not enough to live on. More than half a million hardworking Oregonians make less than $15 an hour, including nearly half of workers who are single parents as well as a disproportionate number of women and people of color. As low-wage jobs become the new normal, working families are falling further and further behind even as the economy continues to grow.
Why $15 rather than $12 or some other number?
Because any less would not be enough to pay for basic needs such as food, housing, transportation, and health care, and to have a little money left over for incidentals and emergencies. For this, a family with two children in Oregon needs $64,000 annually — that’s two full-time jobs at $15 an hour — and a single adult needs $33,000 on average across the state. Over half a million hardworking Oregonians are paid less, and a majority work for large businesses. A raise would give them the opportunity to get ahead and enjoy a brighter future made possible by the dignity and economic security of a living wage.
Isn’t $15 an awfully big increase?
The minimum wage has been falling behind the cost of living for more than 35 years. If it had kept up with productivity, it would be more than $15 by now. Oregon’s economy is thriving, but most of us aren’t feeling it because 95 percent of income gains since the Great Recession have gone to the wealthiest one percent. As the service industry continues to expand, nearly half of new jobs in Oregon pay less than $15. It’s time for working families to collect the living wage they have earned.
How would this affect small businesses?
Small businesses need customers. The Oregon Center for Public Policy says that a $15 minimum wage would put an additional $3.2 billion in the pockets of the people most likely to spend in their communities, and that higher wages mean more productive employees and lower turnover for small businesses. Oregon’s experience with raising the minimum wage by 42 percent between 1989 and 1991 shows that higher wages can go hand in hand with strong small business growth.
Would people lose their jobs?
Despite conventional wisdom to the contrary, studies have shown that raising the minimum wage does not increase unemployment rates. That’s because for every business that depends on paying poverty wages, there are others that grow and thrive when working people have more money to spend. Businesses that pay poverty wages are passing their costs onto Oregon taxpayers who pay $1.7 billion annually for public assistance for low-wage workers. We think our state can do better.
Would prices go up?
Price increases are a built-in part of our economic system because businesses are under pressure to increase profits, and as a result prices go up even when wages don’t. Economist Robert Reich says that a $15 minimum wage is unlikely to result in significantly higher prices because the businesses most affected are in intense competition for customers and would sooner reduce profits than increase prices more than a few cents. That’s well worth lifting hardworking Oregonians out of poverty.
Low-wage workers should try harder and/or get an education if they want to move up.
Hard work and education aren’t enough to get ahead when there’s a lack of opportunity. Nearly half of new jobs in Oregon pay less than a living wage, and there are nine job-seekers for every available living-wage job. In any case, our communities need people to serve our food, clean our classrooms, and care for our grandparents in their homes. These jobs are necessary, and the people who do them shouldn’t have to live in poverty or rely on government help to meet basic needs.
I worked hard to make more than $15. What about me?
Many people believe that low-wage workers are lazy, but nothing could be further from the truth: many work more than full-time hours to pay their bills. The labor market is competitive, and a higher minimum wage drives all wages higher in the same way a low minimum wage drives all wages lower. $15 would give workers in the skilled trades more leverage to demand fair wages and fight back against the anti-worker policies that have made the rich richer and everyone else poorer. It would also reduce the need for public assistance, which for low-wage workers costs Oregon taxpayers $1.7 billion annually.
$15 might be fine for Portland or Eugene, but what about the rest of Oregon?
$15 an hour is the baseline for a living wage in all of Oregon, not just the urban areas. In rural communities, many working families can only afford to shop at Walmart or McDonalds. Living wages that allow these families to take their businesses elsewhere would help these communities grow and thrive. No one deserves to live in poverty, regardless of where they call home. Besides, Oregon’s “pre-emption” law prevents cities from raising their minimum wages, so we have to do it statewide.
Would families lose their government benefits?
Benefits programs are designed to promote work and self-sufficiency, so they phase out gradually as income rises. Research from the Oregon Center for Public Policy shows that for the overwhelming majority of families, income gains more than make up for losses in benefits. Legislators can and should fix rare instances of poor program design regardless of what the minimum wage is. The “benefits cliff” argument is overblown and should not be used to justify inaction on the minimum wage.
I heard that $15 cost Seattle small businesses and jobs.
Many people have heard and repeated rumors that Seattle’s phased-in minimum wage increase is costing the city small businesses and jobs, but the claims have been discredited by local news organizations. In an article titled “Local facts no match for national fiction on $15 minimum wage issue,” the Seattle Times called the story “bogus” and quoted the owners of the businesses in question, who denied that the minimum wage caused or was at all associated with the closures.
What about all the problems that a $15 minimum wage won’t solve?
There are many serious problems in our world, and we can’t solve them all at once. A $15 minimum wage is a winnable reform that will give more than half a million hardworking Oregonians a much-needed raise and empower them to participate in a larger movement for economic justice. $15 is one step across the bridge to the better world we know is possible.
We hope we’ve addressed your concerns about a $15 minimum wage for Oregon. Still have questions? Please contact us.
- Alliance for a Just Society. (2014). Families out of balance: how a living wage helps working families move from debt to stability.
- Alliance for a Just Society. (2015). Low wage nation: nearly half of new jobs don’t pay enough to make ends meet.
- Brookings Institution. (2014 January 10). The “ripple effect” of a minimum wage increase on American workers.
- Center for American Progress. (2006). Good for business: small business growth and state minimum wages.
- Center for Economic and Policy Research. (2013). Why does the minimum wage have no discernable effect on employment?
- Economic Policy Institute. (2014 February 19). The increasingly unequal states of America.
- Oregon Center for Public Policy. (2015 January 12). Oregon economy continues to be a top performer.
- Oregon Center for Public Policy. (2015 February 16). Great progress for Oregon workers.
- Oregon Center for Public Policy. (2015 April 8). A higher minimum wage works for small businesses.
- Oregon Center for Public Policy. (2015 April 10). A pathway, not a cliff.
- Reich, R. B. (2014 April 08). Why the minimum wage should really be raised to $15 an hour. The Huffington Post.
- University of Oregon Labor Education and Research Center. (2014). The high cost of low wages in Oregon.
- Wolff, R. D. (2013). Capitalism hits the fan: The global economic meltdown and what to do about it (2nd ed.).