The ripple effect of minimum wage increases | Business

The mid-Willamette Valley had nearly 6,900 jobs paying the minimum wage of $10.25 in the summer of 2017 — roughly 4,300 in Linn County and 2,600 in Benton County, according to Oregon Employment Department data.

As of July 1, that minimum wage is scheduled to jump to $10.75.

But pay also likely will be pushed up for many workers who make slightly more than the minimum wage, and that could create a massive impact on local shops, stores and other operations, according to experts.

“The ripple effect is significant. It’s not just those minimum wage workers. It elevates everyone,” said Pat O’Connor, a regional economist with the Oregon Employment Department.

Workers making more than minimum wage but less than $15 accounted for roughly 30 percent of all jobs in the mid-Willamette Valley in the summer of 2017. That’s 17,000 jobs in Linn County and 11,400 in Benton County, according to state data.

Minimum wage workers accounted for 7.3 percent of jobs in the area, state figures indicate.

“We don’t have a huge share of workers who only make minimum wage, but we have a fairly large share of workers who earn less than $15 an hour,” O’Connor said.

And businesses with many of those employees will feel the pressure of increased labor costs, he added.

After all, if the new employee gets a raise, the seasoned worker with more responsibilities also may get a bit of extra compensation so resentment doesn’t build up — and so they don’t jump for another job in this hot market.

Cooper Whitman, president and CEO of the Corvallis Chamber of Commerce, said that long-term and loyal workers need to be rewarded.

“You want to be a good employer,” he added.

The sectors in the mid-Willamette Valley with the most minimum wage jobs are retail trade and leisure and hospitality, including eateries. Those also have the most workers earning less than $15, according to state data.

Agricultural operations and social assistance organizations, such as the YMCA and the Boys & Girls Clubs of America, also have large numbers of workers being paid less than $15, O’Connor said. “Nonprofits in general employ a lot of lower-wage workers,” he added.

Whitman said that nonprofits will face a double impact. Along with higher payroll, they’ll likely receive fewer donations as expenses for local businesses increase.

“In Corvallis, we have so many nonprofits, and those survive due to business support. Our business owners and businesspeople donate so much to our nonprofits. If they are less in the black, that is less money they will give,” Whitman added.

The July 1 minimum wage increase is the third of seven scheduled in Oregon, and every minimum wage hike frustrates local business owners and officials, who said increased costs will be passed along to customers.

On July 1, 2016, the minimum wage rose from $9.25 to $9.75 in Linn and Benton counties. By July 1, 2022, it is scheduled to be at $13.50.

The state has three tiers for minimum wage, however.

In summer 2022, the minimum wage will be $14.75 in the Portland metro area and $12.50 in nonurban counties. The next year, the state will start adjusting the minimum wage in all tiers for inflation.

A report by the Oregon Office of Economic Analysis stated that 40,000 fewer jobs are expected to be created by 2025 due to the state’s minimum wage increases.

However, O’Connor doesn’t expect any particular spike in unemployment as a result. That’s because job growth has been surging, particularly in Linn County, which is outpacing both state and national gains. One result: Many companies can’t find enough workers.

The debate over minimum wage increases isn’t going to disappear anytime soon, and both sides have valid points, Whitman said. “Everybody wants to see people make a living wage. At the same time, people need to understand that business owners, creators of jobs … are absolutely put in difficult positions because of minimum wage issues,” he added.

These aren’t fat cats living the high life, at least not in the mid-Willamette Valley, Whitman said. “Business owners in Corvallis, a lot of them are just trying to make enough to pay their mortgage,” he said. “No one’s trying to pay for their third yacht.”

Janet Steele, president of the Albany Area Chamber of Commerce, said that small businesses might hire fewer people or closer their doors due to the minimum wage increases.

“The government’s annual increase makes the employer increase salaries when there is no merit or cause. It’s just a law that was made by legislators who in many cases have not owned a business or met a payroll,” she said.

Courtney Sanders, 16, who will be a junior at South Albany High School in the fall, sees a different set of impacts. She’s currently working as a waitress at Sizzler and she’s looking forward to the minimum wage increase.

“I’m saving up to buy a car right now, and to get some school supplies for next year,” she said.

But Sanders thinks others will benefit far more than she will. “It’s going to be super helpful for the single parents who work and only get minimum wage. It’s getting harder to buy places and pay rent now,” she said.

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