Oregon Restaurant & Lodging Association Sees Minimum Wage Increase Stump Job Growth

Oregon Minimum Wage Increase Creates Challenges for the Industry

October 20, 2011 - Wilsonville, OR
Oregon Restaurant & Lodging Association (ORLA) continues to challenge one of the most talked about issues among industry members: minimum wage. State Labor Commissioner Brad Avakian announced last month that Oregon’s minimum wage will be raised to $8.80 per hour starting January 2012. The 30-cent increase mirrors a 3.77 percent increase in the Consumer Price Index (CPI) since August 2010.

“Given the economy in Oregon, it seems more people are worried about simply having a paycheck or job now more than ever before,” says Bill Perry, vice president of government affairs. “Oregon should consider ways to address the problems with the failed policies that continue to put us at the bottom of job growth and get more people working and receiving a paycheck.”

Ballot Measure 25, enacted by Oregon voters in 2002, requires a minimum wage adjustment annually based on changes in inflation as measured by the CPI. The Bureau of Labor and Industries (BOLI) is directed to adjust the minimum wage for inflation every September, rounded to the nearest five cents. Although Washington does not round up, the minimum wage increase distinguishes them as the first state to go above the $9 level, increasing the rate to $9.04 per hour. Oregon’s minimum wage, currently at $8.50, is the second highest in the country behind Washington.

Oregon’s unemployment rate continues to be one of the highest in the country, and this wage increase is not expected to help the situation. The fact that the increase goes up automatically does not take into account some of the factors that most state and federal minimum wages do, such as youth employment and other income sources (i.e., tips). Most states have a youth or “opportunity wage” that allows employers to reduce the minimum wage for the first 60-90 days on minors, essentially during their training period. The youth unemployment rate is twice what Oregon’s unemployment rate is, and the minority youth rate is even higher at more than 30 percent. Oregon’s minimum wage law ignores this fact and will likely increase the disparity that these young workers are facing in Oregon.

Oregon is also one of only a few states that don’t allow an employer to take into account declared tips as part of the wage. Tipped employees average close to $20 an hour and are the highest hourly wage earners in restaurants. The state and federal government tax the tips, so they take their share, but do not allow the employer to account for the tips. Restaurant hourly wage workers that do not receive tips average between $9-15 an hour, and the law ignores the struggles these workers are often facing.

For more information about the Oregon Restaurant & Lodging Association and the issues affecting Oregon’s hospitality industry, visit OregonRLA.org or call 800.462.0619.