Massive Minimum Wage Increase Threatens Small Businesses

Date: March 15, 2016

Oregon small business owners might soon face difficult decisions as minimum wage increases loom.

Massive Minimum Wage Increase Threatens Small Businesses

It appears that having the eighth highest minimum wage in the country wasn’t enough for lawmakers. During its short 35-day session, the state legislature passed Senate Bill 1532—legislation that will eventually give Oregon the highest minimum wage in the United States.

“Businesses are hunkering down into survival mode now,” NFIB/Oregon State Director Anthony Smith says. “They’re not talking about expanding; they’re not talking about growing or hiring.”

The new minimum wage will result in fewer hours for employees or force employers to lay off workers, according some prominent Oregon business leaders. Jason Brandt, president and CEO of the Oregon Restaurant and Lodging Association, predicts Oregon will lose more than 62,000 jobs because of the increase.

The pay hike is structured as a three-tiered system that is based on population density. Rural areas will increase their minimum wage to $12.50 by 2022; middle-density areas will have to increase their wages to $13.50; and Portland’s minimum wage will reach $14.75, up from its current level of $9.25.

Adding to the frustration for some business owners is that voters already approved a ballot initiative in 2002 to deal with the minimum wage. The initiative—Oregon Ballot Measure 25—increased the minimum wage from $6.50 to $6.90, with increases tied to inflation for every subsequent year.

Legislators should be focused on poverty-reduction measures beyond the minimum wage, Smith says. “That’s what SB 1532 really is: It’s folks who are doubling down on an idea that didn’t work 14 years ago.”

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