In expressing their hesitance or unwillingness to increase the minimum wage to $15 in Oregon, the concern most commonly cited by legislators is that it will hurt small businesses. Since there are so many small businesses it will hurt our economy. Their concern is certainly laudable. Indeed, we advocate for a $15 minimum wage for the same reason, out of concern for small businesses that need more customers to succeed and thrive, and for the workers that make those businesses and our economy run.
There is an important set of facts, however, that have been mostly overlooked when discussing the issue of small businesses and the minimum wage. It is a set of facts that needs to be considered before lest we allow big corporate lobbyists and their supporting legislators to use small business interests as a front for opposition to raising the minimum wage.
The first thing we need to do is define the parameters of a small business. This is important because where Oregonians work matters when asking who is going to bare the burden of a large minimum wage increase.
The recently enacted statewide sick leave law here in Oregon uses 25 employees as the line between small and large businesses. If we are more generous than that, according to the Oregon Employment Department (OED) 95.7% of businesses in Oregon have fewer than 50 employees. Even if we define small business more strictly, as those with less than 20 employees, 89% of all registered businesses with employees still fall into the category of small business.
At first glance then, small businesses seem to dominate Oregon’s economy. But rather than simply stopping here and concluding that small businesses will be most affected by a raise to $15, this is where we need to have a critical eye.
While it is true that 9 out of every 10 businesses in Oregon are small businesses with fewer than 20 employees, it is also true that all of those businesses combined only employ one quarter of the state’s workers. Only 7.7% of Oregon workers are employed at businesses with 1-4 employees even though businesses of that size account for nearly two-thirds of all Oregon businesses. Only 8% of Oregon workers work at businesses with 5-9 employees, and only 10% of Oregon workers are employed at businesses with 11-19 employees.
So while it is true that small businesses dominate Oregon’s economy in term of the sheer number of them, in reality these businesses only employ a small fraction of people in Oregon. When you also take into account the fact that most small businesses already pay their employees more than state mandated minimum wage, we can see that the real impact and burden of raising the state’s minimum wage to $15 will fall onto the shoulders of Oregon’s large businesses and corporations, the very ones that pay poverty wages and employ the vast majority of people in our state.
According to the OED, businesses with 20 or more employees only account for about 10% of businesses in Oregon even though they employ approximately 75% of all working people. In typically low-wage sectors like retail, healthcare, and social assistance, large companies with more than 20 employees account for 80% of the state’s employees.
To further illustrate just how starkly lopsided our state’s economy is in terms of large versus small business employment, consider the fact that businesses with 500 or more employees account for only .3% of businesses in Oregon—you read that right, only three tenths of 1% of businesses in Oregon—yet they employ more than 26% of the state’s workforce. Big businesses with 100 or more workers employ more than half of our state’s workforce.
When we talk about raising the minimum wage then, it is clear that the vast majority of the burden of increased labor cost will fall on large businesses. While these large businesses are relatively few, they employ the vast majority of the state’s workforce. In fact, it is large out of state corporations like Walmart, Safeway, McDonald’s, Taco Bell, and Target that are at the top of the list of companies with the most workers on food stamps here in Oregon.
What we learn from looking more deeply than just the number of small businesses in Oregon is that it is Big Business that is really going to feel the impact of a raise to $15. While we should certainly be concerned for and consider small businesses, we need to understand that small businesses are not where the vast majority of Oregonians work. Working people in our state work for large businesses and corporations, the very businesses that can afford to pay higher wages, that should be paying higher wages, but won’t. These are the very same businesses whose poverty wages Oregon taxpayers subsidize in the form of public assistance programs for their underpaid and under-appreciated employees.
It is time for Big Business to stop getting a free ride in Oregon. It is time for them to stop living off of corporate welfare here in our state. It is time for them to start being responsible and paying a living wage. No one who works should live in poverty. Oregon needs a raise and $15 is the right number for working families in our state.
This February is the last legislative session, the last chance that our representatives will have to do the right thing and pass a $15 minimum wage before the 2016 election. Tens of thousands of signatures have already been collected to put $15 on the ballot. If legislators fail working families again like they did last session, then that effort will continue.