Fight for fifteen

Planners with 15 Now Oregon—an organization advocating for a $15 minimum wage in Oregon—filed with the State Elections Division on April 17 for a 2016 ballot measure that that would increase the statewide minimum wage to $15 per hour by 2019.

15 Now PDX organized a rally last week in order to call attention to their cause. The rally members gathered in O’Bryant Square Park in downtown Portland and made their way to Portland State, making stops at Pittock Place, Portland’s town hall, and PSU’s Smith Memorial Student Union. They utilized guest speakers at each location to urge employers to change their standards for minimum pay-grades.

The march was part of a national effort to raise the minimum wage. Seattle passed legislation to increase its minimum wage for city employees to $15 per hour, effective April 1, and San Francisco passed similar legislation. Similar movements are occurring in Chicago, New York, Philadelphia and Los Angeles.

Employees of PSU’s Helen Gordon Child Development Center and the university’s contracted food provider, Aramark Corporation, joined City of Portland employees to push for increased wages in Oregon. Members of the PSU Student Union participated as well.

Students and employees at PSU

According to Christopher Broderick, associate vice president of University Communications, as of April 2015, “PSU had 3,094 active hourly employees holding 3,696 job assignments. 2,130 of the 3,094 (68.8 percent) are hourly student employees.”

Broderick said via email that approximately 68.5 percent of the 4,200 hourly employees that have held positions at PSU in some point during this fiscal year have or had an hourly rate less than $15 per hour.

Some HGCDC employees have been involved in a movement called Worthy Work, Worthy Wages. The movement calls for higher wages for the early childhood workforce. They recently connected with 15 Now PDX in an effort to increase awareness and impact.

Lead teacher at HGCDC, Christy Palmer, said 15 Now is a larger movement that echoes the goals of Worthy Work, Worthy Wages.

“We were looking for a movement that connected with ours since Worthy Work, Worthy Wages was relatively small,” she said.

“Most childhood educators make very little money,” Palmer said.

“We have many teachers who are master’s degree graduates who make about $15 per hour.”

“We’ve been for a long time really struggling,” Palmer said. “Half of us rely on some form of state assistance. Some people rely on family, community homes, their parents, or some people rely on their partners to supplement their income.”

She added that low wages affect the function of the childcare center.

“Low wages contribute to turnover, stress and a lot of things that have trickled down and affected our profession as early childhood educators,” Palmer said.

Palmer has been employed at HGCDC for three years—two years as a student teacher and one year as a lead teacher. “I [made] $13.82 per hour—I just now was bumped up to 14 [dollars per hour]—with a bachelor’s degree and a Montessori certificate, and other qualifications on top of that.” She added that she has 18 years total experience in early childhood education.

Palmer said low wages in early childhood education are a nationwide problem that can be overlooked by the public. Because HGCDC is a specialized lab school, the center requires its teachers to have earned at least a bachelor’s degree, but they prefer master’s degrees, according to Palmer. She said rare hiring exceptions may exist when a candidate who has earned an associate degree has many years of experience.

Because the early childhood educators at HGCDC have earned professional degrees, they need to earn wages that can work toward paying off student debt, which Palmer said is challenging.

“There’s no possibility for paying off student loans,” Palmer said. “There’s people who will probably never pay off their debt because even the interest alone is mind boggling.”

She added that HGCDC educators are state employees and, as a result, can apply for loan forgiveness.

“That’s means we would have to work for 10 years and make 120 payments before loans debts were forgiven,” Palmer said.

“A lot of people don’t connect that low wage with people who are professionals—educators with professionals degrees,” she said. “I want people to understand it’s not teenagers living with their parents on these wages. Most of us are around early to mid-30s working on having families or already have families to support.”

Student employees and participants at last week’s rally spoke about similar struggles.

“Most of us are student workers,” said PSU Aramark employee Nicole Straub. “Most of us have two to three jobs, and even with those two or three jobs we can’t pay rent, we can’t pay for daycare, we can’t pay for parking; we have all sorts of things that we can’t meet.”

PSUSU member Sonya Friedman spoke about the limited options for international students.

“I don’t know if you know this, but international students can’t work off campus so I’m forced to work a minimum wage job,” Friedman said. “If I want to further my professional career, I have to go through a million bureaucratic hoops.”

Economic impact

Mary King, a professor of economics at PSU, said the majority of minimum wage earners are adults, and they “are increasingly likely to be living and raising children in poverty or near-poverty.”

Along with the 15 Now ballot measure, both the Oregon House and Senate are considering several bills on raising the minimum wage, according to King.

King testified on April 13 in front of the Senate Workforce and House Business and Labor Committees to advocate for a higher minimum wage and for Senate Bill 610, which would increase Oregon minimum wage in graduated steps to $15 per hour by 2018. In her testimony, she outlined five reasons to support a higher minimum wage.

According to King, even when measured against inflation, increased Gross Domestic Product, or rising productivity, the value of the minimum wage has fallen significantly in the past 50 years. The majority of minimum wage workers are adults who are likely to be living in poverty or near-poverty conditions.

King also said in her testimony that economics research has changed greatly over the past 30 years. She cited testimony from Arindrajit Dube, an economist teaching at University of Massachusetts Amherst, who studies the effects of minimum wage on the American Economy. Dube spoke at a U.S. Senate Committee hearing on Health, Education, Labor and Pensions.

Dube’s research has shown that increasing the minimum wage has had negligible or no impact on employment or business activity. In fact, Dube found that the economic benefits will likely outweigh the costs.

Raising the minimum wage, according to King’s testimony, will increase the purchasing power of minimum wage earners, resulting in increased sales and business tax revenues. Though “increased costs will be passed on to consumers, the lower consumer spending resulting from higher prices will be significantly outweighed by increased consumer spending from higher wages,” King said.

“I think people were kind of interested to hear that an economist would say that there’s plenty of evidence that an increased minimum wage would be good for the economy,” King said. “That’s not what they expect to hear.”

Potential problems

The push to increase minimum wage to $15 per hour may have the potential to increase costs in various ways.

Broderick said that, based on actual wages already paid for this fiscal year and projected wages for May and June, “had all hourly employees earning less than $15 per hour been paid at $15 per hour, PSU would have paid an additional $3,508,000 in wages plus an additional $265,000 in related employer paid ‘other payroll expenses.’ OPE includes FICA, SAIF, Transit tax, Unemployment tax and employer retirement expenses.”

Broderick continued, “The $3.7 million in additional payroll and benefits would require either a tuition increase or significant budget cuts, or a combination of both to balance PSU’s budget.”

Some business owners cite potential risks of passing the added labor cost onto the consumer. The 15 Now PDX website says they expect groups like the Portland Business Alliance and the Restaurant Association to oppose this type of increase.

Palmer, like King, testified in front of Oregon legislators on behalf of increased minimum wage. Of the few people she said she heard testify against the issue, both of them expressed concerns over how businesses would be affected.

“I think I only saw two people testify against [increased minimum wage]; they both represented a business perspective,” Palmer said. “I think they belonged to a business association.”

“They were concerned about having to pass the costs on to customers,” she added. “But they were far outnumbered by…hundreds of people who said this bill would raise their ability to shop at small businesses and contribute to the economy in a meaningful way.”

A report released by economist Michael Reich, cited by King in her testimony, states that the average annual earnings of affected workers will increase by 30 percent with the proposed wage increase. Overall business operating costs will increase by 0.9 percent, but the increased purchasing power of low-wage earners will increase tax revenue by a projected $4.7 million.

“I think that there’s going to be a lot of roadblocks to increased wages,” Palmer said. She emphasized that people’s opinions on the matter differ. “There are a lot of deep and troubling structural problems in our state. I foresee a major roadblock being large corporations that have built their economic plan around low wages. They have quite a large say in this wage structure.”

King said the people she heard testify at the hearing against raising minimum wage were mostly agricultural employers and restaurant owners.

“The [agricultural] employers talk about the fact that they can’t raise prices because they’re in global competition, [but] the answer is that labor is not their only cost,” King said. “Other prices change, and along with those changes, they’ll adjust.”

King said restaurant owners in Oregon testified that they already cannot afford employee wages. Reich’s study states that the food service industry will experience the greatest impact of increasing the minimum wage with a projected increase of 7.8 percent in operating costs.

In most states, restaurants are only required to pay tip minimum, which is $2.13 per hour, but King said Oregonian restaurants are flourishing despite paying above tip minimum.

“Oregon restaurants are already paying $7 per hour more than they have to, and we have a foodie culture,” King said. “All those restaurants operate in Oregon, despite the fact that they pay [$9.25 per hour]. People imagine that nothing else will change…[but] other people will eat out [if wages increase]. There’s another side to things.”

Some have argued against raising the minimum wage citing the Benefits Cliff—a term that refers to a signifigant loss of public benefits when workers’ wages increase. Wage gains would be undermined when individuals’ income increased enough to phase them out of eligibility for certain public programs. Take-home income would ultimately be less due to loss of public assistance.

According to a recent report from the Oregon Center for Public Policy, however, the Benefits Cliff argument is overblown.
OCPP’s report states, “Most public benefits are designed to promote work and self-sufficiency. The benefits phase out gradually as income rises, so that wage gains…leave families better off.”

According to the report, raising the minimum wage to $15 by 2018 would benefit more than half a million Oregon workers and hundreds of thousands of children. Those who earn the Oregon minimum, $9.25 per hour, and work 35 hours per week, for instance, would gain $10,465 in yearly income, or $872 per month.

There would be educational and economic benefits for the children of minimum wage earners as well. OCPP’s report states “that every $1,000 in additional yearly family income increases the academic performance of a young, low-income child…[this] is associated with a 17 percent increase in annual earnings when the child becomes an adult.”

Palmer said employees who earn less than $15 per hour at HGCDC cannot afford to enroll their own children in the center if they don’t not have supplemental income from another source.

“Most employees at [HGCDC] who have children—not all, but most people who have children—end up leaving,” Palmer said. “It costs up to 70 percent of someone’s income to have their children go to [HGCDC] if they’re making [low wages].”

“Ironically, they spend their whole lives dedicated to providing quality education, but they can’t afford high quality childcare for their own families,” she added.

The OCPP report also addresses to the gradual decline in benefits as income increases. Public benefits “are designed to encourage workers to gain more income through work and to achieve self-sufficiency.”

A higher minimum wage would increase the net income of low-income workers through tax credits, for instance. The report states that the tax benefits from Earned Income Tax Credit and Child Tax Credit increase as earnings rise above the lowest income levels.

Where public benefits do not phase out as gradually, the problem “is independent of any minimum wage increase.” For instance, as family income increases, ERDC co-payment increases, and in some cases, the increase in co-payment exceeds the increase in income. This, according to the OCPP, is a failure of the legislature’s past budget cuts to the program and must be fixed by the legislature.

Currently, according to a study by the University of Oregon, the cost of public assistance to employees of Oregon industries is about $1.8 billion. Oregon has one of the lowest corporate tax rates in the nation.

“Why should taxpayers be subsidizing employers? That’s not a good model,” King said. “And then there’s the dignity. People want to earn their way.”

Next steps

Now that 15 Now Oregon has filed to the Elections Division to begin the ballot measure process, they will need to take further action for a ballot measure to reach voters.

Next, they will need to collect 1,000 valid signatures in support of the $15 minimum wage ballot measure. If they do this, Oregon’s Secretary of State Jeanne Atkins will draft a ballot title. Supporters will then need to collect at least 88,000 valid signatures by July 2016 in order to meet the qualifications to be on the November 2016 ballot, according to an April 17 press release from 15 Now Oregon.

In the meantime, Palmer said she would like to see employees continue to develop a relationship with PSU President Wim Wiewel.

“I think we are building a relationship with [Wiewel] and we really want PSU as a community to understand what [HGCDC] is: it’s a place of research, it’s a place where educators go to learn, it’s a lab school as well as a center,” Palmer said. “It’s not just a daycare…It’s a place where parents can go and they know that their child is safe. It’s a vital component of the academic piece of PSU’s value as well as a place for children to be and learn. I hope PSU understands that we have a vital role on campus and knows the story of educators making as little [money] as we do.”

Palmer added that those advocating for $15 minimum wage understand that the process of earning higher wages will take time, planning and procedure.

“I think we have very realistic expectations and it’s very important for us that people understand that we are reflective individuals and we understand there are constraints and budgets and things don’t happen immediately—especially really large changes,” Palmer said.

“We want living wages as soon as possible, and we respect and understand that process,” she continued. “We want to make sure it is done properly.”

Additional reporting by Evan Birkeland.