Oregon Makes Leap With Minimum Wage Three-Step Increase Will Boost Wage To $6.50 An Hour In 1999

The highest minimum wage in the nation is going into effect in Oregon, which has weathered smaller increases in the past but now must make a big jump as the result of an initiative approved by voters.

The three-step increase from $4.75 an hour to $6.50 an hour by Jan. 1, 1999, has drawn complaints from small business owners and industries dominated by low-wage workers, but economists predict little effect in a state that also was the first ever to pass a minimum wage law.

“We don’t anticipate any large impact,” said Paul Warner, the state’s chief economist, who noted that Oregon is entering its eighth straight year of growth, most of it outpacing the national average.

The minimum wage increased to $6 an hour on Jan. 1, the second step in the three-step increase, but it still lags behind the lowest market rate for wages in most of the state, he said.

Only the District of Columbia has a higher minimum wage this year, at $6.15 an hour, which will be eclipsed by Oregon next year. The federal minimum wage stands at $5.15 an hour.

The $6 Oregon minimum for 1998, part of the state’s first increase since 1991, still fails to restore the purchasing power workers had when they made a minimum $2.30 an hour in 1976, adjusted for inflation, said Jeff Hannum, the state’s labor economist.

In fact, the state’s minimum wage has declined by 11 percent since 1976 after inflation is taken into account, he said.

“The real minimum wage, in terms of purchasing power, is still lower than it was 22 years ago, but it’s better than it was a few years ago,” Hannum said.

About two-thirds of Oregon’s 220,000 minimumwage workers are women, and more than half range from 16 to 24 years old, he said.

Much of the criticism of the new minimum wage has come from the restaurant industry, one of the largest employers of low-wage workers.

“I’d say there is nobody who has been affected in the job market who is better off with the minimum wage increase, and some may even be worse off,” said Bill Perry of the Oregon Restaurant Association.

Shawn Wojack, manager of the Big Town Hero sandwich shop in downtown Portland, said the increase could create tension between restaurant workers who already earn more than the minimum or who boost their income with tips, such as waiters and bartenders, and new hires or workers who get a flat wage, such as dishwashers.

“I think it may affect employee morale,” Wojack said. “Employees who receive more than minimum wage might feel resentful because new employees get a pay increase, while they don’t receive a wage increase.”

But Elissa Vecchione, a spokeswoman for McDonald’s restaurants in Oregon, said the increase would have almost no effect on the chain or its franchises, which already pay more than the minimum.

“The simple reason is, we need to attract and retain good workers,” she said.

Oregon was the first to pass a minimum wage law in 1913 when a nun, Sister Miriam Theresa, did a survey that found workers - mostly women - earned a nickel an hour under sweatshop conditions. Despite opposition from employers, the Oregon Supreme Court and the U.S. Supreme Court upheld the law, paving the way for passage of the national minimum wage law backed by President Franklin D. Roosevelt in 1938, granting workers 25 cents an hour.