Minimum wage gets a hike

Oregon has the second-highest minimum wage in the nation as 2005 begins, trailing only its neighbor to the north, Washington State, where the minimum is now $7.35 an hour.

The $7.25 per hour rate in Oregon that took effect Jan. 1 is well above the federal minimum of $5.15 an hour, a rate that has not changed since 1997.

The minimum wage has been a politically charged issue since Oregon became the national pioneer for a basic wage level in 1913 with a successful crusade by Sister Miriam Theresa to force the Legislature to pass a wage law to address sweatshop practices in the state.

But the effect of the minimum wage has been debated ever since, with labor groups arguing that low-income families cannot survive without it and businesses, notably restaurant and bar owners, arguing it reduces the number of available jobs.

"If it costs more to hire people, you’ll probably hire less people," said Mike McCallum, spokesman for the Oregon Restaurant Association, a trade group that represents the industry where many lower wage jobs are concentrated.

Economists, however, have not found any significant correlation between the minimum wage and the jobless rate.

Oregon has consistently had the highest unemployment rate in the nation for nearly the entire past three years, now hovering around seven percent.

But Washington state, which has the highest minimum wage nationally, has seen its unemployment rate drop from 7.4 percent in November 2003 to 5.7 percent last November, said David Cooke, a labor economist for the Oregon Employment Department.

California, which also requires a higher wage than the federal minimum, saw its jobless rate improve to 5.7 percent in November compared to 6.6 percent in November 2003.

"Whether there is a link between the minimum wage and unemployment would not be an obvious relationship," Cooke said. "There may or may not be, but it’s a very complex issue."

Only a dozen states require a higher minimum wage than the federal standard of $5.15 an hour, according to the U.S. Labor Department. They are concentrated on the West Coast and the Northeast, along with Alaska, Hawaii and Illinois – mostly Democratic states with strong organized labor groups.

"All we are doing is keeping up with the very real cost increases of putting food on the table and keeping a roof overhead," said Tim Nesbitt, president of the Oregon AFL-CIO, which pushed hard for the latest wage increase in Oregon.

Margaret Gunn, 60, who works on the support staff for a nonprofit education college, said the increase is welcome but people also must be careful with spending, no matter what wage level.

"You need to have a good living wage but people need to be more responsible with their money," she said.

Rob Green, spokesman for the National Restaurant Association in Washington, D.C., said the trade group opposes any increase in the federal minimum wage because states need the flexibility to adapt to local economic conditions. There also is a substantial split between the level of wages that metropolitan areas can support, compared to rural areas, he said.

"Markets are significantly different from state to state," Green said, noting the restaurant industry is considered the largest private employer in the nation.

Cooke, however, pointed out the industry has grown at a steady rate in Oregon, despite recession, and fared better than more cyclical industries.

"And we have had a high minimum wage for at least 10 to 20 years," he said.