Oregon's nearly $15 minimum wage law tests tiered raises

The law's three tiers of wage increases are meant to account for different industries and costs of living in the state's urban and rural communities. 

Oregon Gov. Kate Brown signed legislation Tuesday to make the state's minimum wages the highest in the country, implementing a gradual, three-tier plan balancing the needs of Oregon's sharply divided urban and rural areas, an unprecedented model that might address concerns from wage-raise skeptics in other states.

Hourly wage increases will begin in July and continue until 2022, slowly raising Portland paychecks from $9.25 to $14.75 per hour, smaller cities to $13.50, and rural areas to $12.50. Previously, Massachusetts and California were home to the nation's highest minimum wages. Both states implemented a $10 law on January 1, amid a three-year "Fight for $15" debate about the rising cost of living.

The law "makes sense for workers and for businesses no matter where in Oregon they are," Governor Brown told reporters before signing. "I’m so pleased to sign a bill that represents the innovative and collaborative spirit of Oregon."

Despite the state's small size, Oregon has found itself increasingly divided between an urban west and rural east, tensions thrown into the spotlight by the armed occupation of the Malheur National Wildlife Refuge, which ended last month after a five-week standoff. The Bundy brothers' tactics dismayed some fellow ranchers, loggers and farmers, but many agreed that their underlying premise: that rural communities were struggling economically, their land needs poorly understood by booming cities like Portland, now home to roughly one in eight of Oregon's 4 million residents. 

Across the country, business owners have often protested wage raise bills meant to match pay with rising living costs, arguing that companies will have to lay off workers. But Oregon's wage-hike advocates argue that the three-tier system will help employers provide a living wage at a cost they can absorb. If anything, some say, the increase isn't enough, or won't be by 2022.

The state's agricultural industry, however, has said it is uniquely vulnerable, since farmers have little control over pricing. 

The Oregon Farm Bureau, which opposed the bill, argues that it threatens hallmark Oregonian crops that require particularly labor-intensive harvesting, like apples and grapes. If farmers can't find ways to quickly mechanize, "some will give up and sell, while others will simply go out of business," Bureau president Barry Bushue told the Associated Press in February, calling the hike "enormous." 

Elsewhere, legislators have objected to "patchwork" plans like Oregon's, which raise wages unevenly throughout the state. In February, Alabama Gov. Robert Bentley signed a law forbidding individual cities and counties from setting minimum wages, overriding Birmingham's decision to raise it above the federal minimum of $7.25. 

But region-adjusted plans could effectively address the two "seminal issues" of minimum wage, the centrist think tank Third Way has argued: purchasing power is shrinking, but unevenly. Given how much the cost of living varies from place to place, flat raise hikes, such as a federal law, would "either excessively raise employer hiring costs to a point leading to unnecessary job losses, or leave workers in high-cost areas unable to afford a basic standard of living," it wrote in a February report.

The group recommends evaluating regions' cost of living and assigning wage raises on a five-tier scale. "This policy would ensure that a cashier in Manhattan is essentially earning the same minimum wage in real terms as a cashier in Carbondale, IL and largely addresses fears that a big city minimum wage would destroy jobs in low-cost small towns," they write.

Many Portlanders, in particular, think that a wage raise is long overdue to help keep up with the city's rapid gentrification: the most widespread in America, according to a report from Governing, a website aimed at state and local leaders.  

Part of Portland's gentrification, however, comes from struggling workers themselves: a flood of young people, often well educated, for whom the city's cultural scene outweighs the importance of well-paid work. Many college graduates find themselves underemployed in jobs that don't require a degree, a phenomenon now common across the country, but more than twice as common in Portland, joked about as a "retirement community for the young."

Whether long-term Portlanders or Ivy League barista newcomers, the minimum wage worker conundrum highlights a widespread problem: minimum wage jobs, often thought of as teenage training, are now supporting adults and families. 

Fourteen states raised minimum wages on January 1, although none so high as Oregon. 

"People cannot pull themselves up by the bootstraps if they can’t afford to buy boots," Birmingham City Council President Johnathan Austin wrote in a fiery statement after Alabama barred the city's wage raise.