Minimum wage $7.95 an hour effective Jan. 1

The ushering in of the New Year will bump up Oregon’s minimum wage by 15 cents, helping low-wage earners keep pace with inflation. Despite the increase, many at the bottom rung of the pay scale will remain mired in poverty, according to the Oregon Center for Public Policy.

Oregon’s minimum wage will increase from $7.80 to $7.95 per hour on January 1, 2008, the Oregon Bureau of Labor and Industries announced earlier this year. The increase reflects the rise of the cost of living as defined by the Consumer Price Index and is mandated by Ballot Measure 25, approved by voters in 2002.
The increase means an extra $312 a year and a total annual income of $16,536 for a full-time minimum wage worker. That is still below the $17,170 that constitutes the 2007 federal poverty line for a family of three.

"Adjustments to the minimum wage are essential for keeping the
lowest-paid workers from falling further behind, but they are not a
ticket out of poverty for most families depending only on a minimum
wage job," said OCPP policy analyst Michael Leachman.

In 2006, the
most recent year for which data is available, about one out of every 15
working families with children remained poor despite their work effort,
said Leachman. He stressed that the percentage of working families
falling below the federal poverty line is more than twice as high as a
generation ago.

Moreover, the federal definition of poverty
undercounts the poor, critics have long noted. Devised in the 1960s,
the definition excludes costs such as child care, housing and
transportation, which today make up a larger portion of a family’s
budget than they did a half-century ago, said Leachman.

2008’s minimum wage increase won’t necessarily help alleviate poverty,
it will help ensure that the problem does not worsen, according to the
Silverton-based think tank.
"The minimum wage sets the floor," said Leachman, "and in that respect, Oregon has demonstrated leadership."

the 2002 passage of Measure 25, Oregonians voted to increase the
state’s minimum wage from $6.50 to $6.90 per hour effective January 1,
2003, and to tie it to inflation, as defined by the August Consumer
Price Index.

In 2008, Oregon will have the nation’s third-highest
minimum wage, behind Washington ($8.07), California ($8.00) and
Massachusetts ($8.00). Oregon’s minimum wage will remain ahead of the
national minimum wage of $5.85 per hour, scheduled to increase to $6.55
per hour on July 24, 2008.

Oregon’s inflation-adjusted minimum
wage has not dampened job growth, as critics of Measure 25 predicted,
according to OCPP. The Center’s analysis shows that Oregon’s non-farm
payroll employment growth was 12th fastest in the nation from 2002 to

The Oregon Restaurant Association’s 2002 prediction that
"nearly 30,000 more Oregonians could lose their jobs" as a result of
Measure 25 has not panned out. Since the measure’s enactment,
employment in the restaurant industry — one with a relatively large
share of minimum wage workers — has grown 19 percent, more than twice
as fast as the overall non-farm payroll statewide, OCPP found.

job growth in the restaurant industry appears set to continue. The
Oregon Employment Department recently forecast that from 2006 to 2016
the restaurant industry will add more jobs — about 22,700 — than any
other industry in the state. The department estimated that during that
period, restaurant jobs will grow by 19 percent, faster than the
projected 14 percent growth in all non-farm payroll jobs.

New Year Oregonians should make a resolution to focus on how we can
best help those in our state who cannot make ends meet despite the
minimum wage gains," said Leachman.

The Oregon Center for Public
Policy does in-depth research and analysis on budget, tax, and economic
issues. The Center’s goal is to improve decision making and generate
more opportunities for all Oregonians.

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