How Much Will the Minimum Wage Hike Affect Us Here in Central Oregon?

by Damon Runberg

July 8, 2019

There are a lot of opinions about the minimum wage. Folks on either side of the political isle disagree over its merit. Some argue that the minimum wage is necessary to protect workers. Others want a higher minimum wage in order to ensure that everyone has a “living wage” job. Finally, others are opposed to the minimum wage as they see it as an artificial cost on businesses that will ultimately be passed down to consumers. Regardless of where you stand on this particular policy, the impact of this artificial floor for wages is likely much less than you would expect here in Central Oregon.

Due to our large tourism sector, many folks assume that we have a particularly high share of our workforce working a minimum wage job. It is true that we have a high share of leisure and hospitality jobs, with roughly 15 percent of all jobs in the leisure sector compared with 11 percent statewide. However, it is not true that we have a high share of minimum wage jobs. Our best estimates show that roughly 5.7 percent of Deschutes County’s jobs were minimum wage compared with 7.3 percent statewide. Believe it or not, Deschutes County has the lowest share of minimum wage jobs of Oregon’s metro areas and the fourth lowest of all 36 counties.
How can we have a lower share of minimum wage workers when we are highly specialized in lower paying service industries? It has to do with the rapid job growth we have seen over the past six to seven years, leaving the labor pool very tight. When unemployment is low after prolonged periods of hiring it puts considerable pressure on businesses to offer higher wages to compete for a declining pool of qualified workers.

The rapid job growth and tight labor market has shifted a considerable share of Deschutes County’s low wage jobs up into the next wage tier. The share of leisure jobs that pay less than $15 an hour dropped more than 10 percentage points between 2016 and 2018. The share of jobs in the $15.00 to $29.99 wage group showed a corresponding increase of 8.2 percentage points. This upward shift in jobs paying more than $15 an hour was likely not directly the result of the increasing minimum wage, which rose from $9.75 in 2016 to $10.75 in 2018. The minimum wage is still considerably below that $15 threshold.
It is possible that the shift in the share of workers in the higher wage categories was indirectly caused by the increase in the minimum wage through wage compression. As workers receive an increase in their wage due to a minimum wage increase, it compresses the wage difference between the higher paid workers and the minimum wage workers. This can lead to wage increases up the chain as higher paid workers demand to be a particular threshold above that minimum wage.

The share of minimum wage jobs is higher in our rural communities, with roughly 7.5 percent of all jobs in Jefferson County at the minimum wage and 6.3 percent for Crook County. Despite having a higher share of minimum wage jobs than Deschutes County, our rural communities in Central Oregon do not have a particularly high share of minimum wage jobs. The highest shares are concentrated in Eastern Oregon and Clackamas County in the Portland Metro area.

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