Minimum Wage Impact on Central Oregon

Minimum Wage Impact on Central Oregon

by Damon Runberg

March 21, 2016

With the signing of Senate Bill (SB) 1532 by Governor Brown the minimum wage is set to rise on July 1. The current minimum wage is $9.25 an hour. Before the new legislation Oregon's minimum wage was adjusted each year to account for inflation. The previous minimum wage was also consistent across all counties in Oregon. SB 1532 separates Oregon into three wage areas: Portland metro, urban counties, and rural counties. By 2023 Portland's rate will reach $14.75, urban counties (including Deschutes) will be $13.50, and rural counties (the remainder of Central Oregon) will reach $12.50.

On July 1 the minimum wage in Deschutes County is set to rise to $9.75, while our rural counties in Central Oregon will see a smaller jump to $9.50. More than 9,000 jobs in Deschutes County paid less than the upcoming minimum wage of $9.75 as of the second quarter of 2015, which is about 11 percent of countywide jobs. These are jobs affected and not a count of workers. It is likely that the number of workers is slightly lower than the number of jobs due to some of these workers being multiple job holders. Although the rural communities in our region will see a smaller increase in the minimum wage come July, the number of jobs affected is proportionally higher than in Deschutes County. More than 14 percent of jobs in our rural counties pay less than the new upcoming minimum wage of $9.50, which equates to over 5,100 jobs across Central and South Central Oregon. Klamath County accounts for the bulk of the jobs likely to be affected by the rising minimum wage with nearly 3,250 jobs potentially affected by the July 1 increase.

Central and South Central Oregon account for a high share of low-wage workers due to our seasonal tourism and retail sectors. However, the rising minimum wage will not affect a significantly higher share of our local jobs compared with other parts of the state. Counties in eastern Oregon will see the highest share of jobs affected by the rising minimum wage with 15 percent of Harney County jobs and 20 percent of Malheur jobs currently below $9.50 an hour. Surprisingly the changing minimum wage will affect Deschutes County less than comparable metro areas across the state. More than 12 percent of Eugene and Medford area jobs will be affected by the rising minimum wage. Overall, the effect on our local economy will only be slightly higher than the average community across the state where more than 10 percent of jobs currently pay below the new minimum wage threshold.
Going forward, SB 1532 will increase the minimum wage each year on July 1. The rate will rise by approximately $0.50 a year through 2023. The Portland Metro area will see a minimum wage of $14.75 by 2023, smaller metro areas (Deschutes County) will reach $13.50, and rural counties (the remainder of Central and South Central Oregon) will rise to $12.50 by 2023. It is important to emphasize that it will take nearly eight years for these new rates to be reached. Due the fairly drawn out glide path for these increases it is unclear how SB 1532 will affect our current job growth or the cost of goods and services. A $3.25 rise to the minimum wage in rural Oregon over the course of eight years seems like a significant jump. However, the current minimum wage rose by nearly $2.00 an hour over the previous eight years due to annual inflation adjustments. Any negative economic affects may by lessened by the predictable, drawn out nature of the increases, particularly if inflation ramps back up.