Oregon Business Owners Brace for Wage Increase

Date: April 06, 2016 Last Edit: April 07, 2016

The newest hike leaves business owners with an uncertain future and some difficult decisions.

Oregon Business Owners Brace for Wage Increase

Oregon’s minimum wage of $9.25, already one of the highest in the country, wasn’t enough for lawmakers. The legislature recently passed Senate Bill 1532, which will incrementally raise the minimum wage as high as $14.75 by 2022.

Small business owners in industries such as farming, human services and hospitality are bracing for the effects of this bill, which will force business owners to make some tough decisions, said Anthony Smith, NFIB/Oregon State Director. The first increases will take place on July 1, raising the minimum wage 50 cents in urban areas and 25 cents in rural parts of the state.

Oregon farmers will be hit particularly hard by the increase; farmers don’t set the selling price for their crops, so an increase in labor costs can only hurt profit margins, he said.

The increase also puts Oregon at a competitive disadvantage. Neighboring state Idaho, for instance, produces many of the same crops, but the state’s minimum wage is only $7.25, a significant labor cost reduction.

Human services such as daycare and retail stores will also be affected, Smith said. Rising labor costs will force businesses to raise prices, cut jobs or reduce hours. This will affect people who use these services, such as working parents who might not be able to afford the increased costs but still need to care for their children, Smith said.

“Small businesses are frequently communicated with as if we were a Fortune 500 operation, but we are not,” said Jessie Burke, owner of Posies Bakery & Café in Portland, in The Guardian. “When wages go up, prices have to go up. There’s no margin to absorb that cost.”

Oregon restaurants might change to a no-tip business model for servers because of the wage increase, which would eliminate an important source of income for workers in food service, Smith said. Additionally, the increase in wages would not make up for the loss of tips and would result in lower incomes for those workers, he said.

“This is just one more thing that makes doing business in Oregon a scary prospect,” Smith said.

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