A Look at What’s Up with July 1, 2018

by Christopher Rich

June 13, 2018

On July 1, the minimum wage for Oregon’s nonurban counties will step up to $10.50 per hour. The minimum wage is set to increase by $0.50 per hour each July until 2022 when it hits $12.50. Other parts of the state will see the wage rise to a higher amount. Urban counties will see a minimum hourly rate of $13.50 in 2022 and the Portland Metro area will reach $14.75. Starting in 2023, the wage will be tied to the Consumer Price Index (CPI).

Data from third quarter 2017 reveals that nearly half (47%) of all jobs in Eastern Oregon (Baker, Grant, Harney, Malheur, Morrow, Umatilla, Union, and Wallowa) paid below $15.00 per hour and 8.4 percent of all jobs paid the minimum wage ($10.00 per hour). In comparison, 34.7 percent of jobs in Oregon overall paid below $15.00 per hour in 2017 and 2.0 percent of jobs paid $10.00 per hour. Morrow County most resembled the state among the eight counties with 37.7 percent of jobs below $15.00 per hour and 4.0 percent of jobs at $10.00 per hour. Malheur County was furthest from the state with 53.5 percent below $15.00 per hour and 13.3 percent of jobs at $10.00 per hour.
Minimum Wage Jobs Found Mainly in Three Sectors

More than half of Eastern Oregon jobs that paid less than $15.00 per hour and roughly two-thirds of those that paid the minimum wage were in three broad sectors: leisure and hospitality, retail trade, and natural resources and mining. Seasonal hiring patterns as well as education and skill requirements heavily influence wages in these sectors. Leisure and hospitality jobs along with those in retail trade are dependent on seasonal spending that drives labor demand. Seasonal harvesting generally drives labor demand for natural resources and mining in Eastern Oregon due to the sector’s significant agriculture component. Many of these seasonal jobs, such as retail salespersons, food and beverage servers, and farmworkers and laborers for crops, call for workers to perform repetitive tasks with little or no education and skill requirements. In general, this leads to a large supply of qualified job applicants, which in turn stifles wage growth.

Restaurants and other eating places supplied just over half of all leisure and hospitality jobs in Eastern Oregon in third quarter 2017. For many of these positions, the expectation of tips likely boosts total expected compensation while putting downward pressure on employer paid wages. This is one reason that 34.3 percent of all jobs that paid the minimum wage in Eastern Oregon were found in leisure and hospitality. For Eastern Oregon’s leisure and hospitality sector, 83.2 percent of jobs paid below $15.00 per hour and 30.3 percent of jobs paid $10.00 per hour. In comparison, 67.0 percent of leisure and hospitality jobs in Oregon overall paid below $15.00 per hour and just 4.8 percent paid $10.00 per hour.  

Retail trade paid higher wages than leisure and hospitality in 2017. This is likely due to the absence of tips as expected compensation as well as a larger availability of low and mid-level management jobs that help boost employer paid wages. Retail trade accounted for 15.4 percent of all jobs in Eastern Oregon that paid the minimum wage. For the retail trade sector in Eastern Oregon, slightly less than 70.0 percent of jobs paid below $15.00 per hour and 12.5 percent paid $10.00 per hour. In comparison, 58.6 percent of retail trade jobs in Oregon overall paid below $15.00 per hour and just 3.1 percent paid $10.00 per hour.   

The natural resources and mining sector accounted for 15.1 percent of all jobs in Eastern Oregon that paid the minimum wage in 2017. Roughly 70.0 percent of Eastern Oregon jobs in this sector paid less than $15.00 per hour and 8.1 percent paid $10.00 per hour. In comparison, 52.1 percent of natural resources and mining jobs in Oregon overall paid below $15.00 per hour and just 2.3 percent paid $10.00 per hour. The bulk of minimum wage jobs in Eastern Oregon’s natural resources and mining sector were found in two counties. Malheur County accounted for 59.2 percent of all minimum wage jobs in the sector, while Umatilla accounted for 20.7 percent.
Idaho and Washington Likely Influence Wages

While a variety of factors can influence wages, the share of jobs that paid $10.00 per hour in Malheur, Morrow, and Umatilla counties may be correlated to the minimum wages of Idaho and Washington. Evidence for this can be seen in the natural resources and mining sector. Agricultural production often lends itself to many short-term seasonal jobs. When firms compete for workers in a tight labor market with few available job seekers, wages should be pushed up.

Morrow and Umatilla are in close proximity to communities in Washington State. This offers these counties and the nearby Washington communities an expanded labor pool from which to draw workers. Whereas Morrow and Umatilla have a $10.00 per hour minimum wage, Washington’s minimum wage is $11.50 per hour and is set to reach $13.50 in 2020. This likely puts upward pressure on competitive wages for nonskilled agricultural labor in Morrow and Umatilla counties. In turn, the natural resources and mining sector appears to compete for employees by paying a wage premium: an elevated wage in order to attract workers. For Morrow, 66.4 percent of natural resources and mining jobs paid less than $15.00 per hour in 2017 and just 2.9 percent paid $10.00 per hour. For Umatilla County, 75.8 percent of natural resources and mining jobs paid less than $15.00 per hour and just 3.2 percent paid $10.00 per hour. The wage in both counties should be pushed up, which appears to be the case.

Malheur County’s close proximity to Idaho communities offers an expanded labor pool as well. For Malheur County however, the situation is reversed. Malheur’s minimum wage is $10.00 per hour while Idaho’s minimum is $7.25. This likely helps keep Malheur’s minimum wage competitive for nonskilled agricultural labor, thus putting downward pressure on the sector’s wages. In turn, the county’s natural resources and mining sector can compete for employees without paying a premium because the minimum wage is already a relative premium. For Malheur County, 80.6 percent of natural resources and mining jobs paid less than $15.00 per hour and 29.1 percent paid $10.00 per hour.

In Eastern Oregon’s natural resources and mining sector, 85.7 percent of jobs were in Malheur, Morrow, and Umatilla in 2017. Morrow and Umatilla counties had the lowest and second lowest share of jobs in this sector in Eastern Oregon that paid the minimum wage. Morrow and Umatilla also had the lowest and second lowest share of all jobs in Eastern Oregon that paid the minimum wage. Malheur on the other hand had the highest share of jobs in both categories that paid the minimum wage.
It’s Coming Up

July 1st is just around the corner. An estimated 8.4 percent of Eastern Oregon jobs are expected to see a pay increase with two-thirds of these jobs in three broad sectors. Retail trade will see the second largest bump, which is nearly matched by natural resources and mining. Leisure and hospitality will see the largest bump (roughly 2,520 jobs); slightly more than retail trade and natural resources and mining combined.  

Each year the Oregon Employment Department produces a series of wage tables for Oregon’s 36 counties. These tables detail the number of jobs by wage category for 13 broad private sectors as well as state and local government. Although these county level tables are not published on Qualityinfo.org, they are available upon request. If you would like one on your county, please contact me at Christopher.M.Rich@oregon.gov.

 


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