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HELEN HUNTLEYOregon's experience with a state minimum may predict how such a measure would affect Florida, if it passes.
No one is likely to confuse Mount Hood with Mount Dora or to mistake an Oregon drizzle for a Florida thunderstorm. But the two states on opposite coasts could soon have at least one feature in common: A state minimum wage that adjusts every year for inflation.
Florida voters will decide in November whether to make a minimum wage part of the state constitution. A St. Petersburg Times/Miami Herald poll released Sunday shows the issue has strong support among voters, with 73 percent in favor and 21 percent opposed. Six percent are undecided.
If they approve, the minimum wage will increase from the current federal minimum of $5.15 an hour to a new state minimum of $6.15 an hour, adjusted annually thereafter for inflation.
The initiative would make Florida the 13th state with a minimum wage higher than the federal minimum and only the third to provide for automatic inflation adjustments. Oregon was a pioneer in both areas and its experience offers Floridians some clues of what to expect.
The campaigns for and against the Florida proposal are deep in argument over what will happen if the minimum wage is raised, but the evidence collected in Oregon so far suggests that any impact, positive or negative, is likely to be minor.
Through five minimum wage increases in eight years, Oregonians have learned that the state of their economy has far more of an effect on job growth and unemployment than any change in the minimum wage.
When Oregon voters decided in 1996 to raise the minimum wage in three steps, opponents predicted that thousands of jobs would be lost, based on the premise that when the minimum wage goes up, employers compensate for the higher payroll by reducing the number of workers they employ.
After the first step went into effect, an Employment Policies Institute study predicted the next two steps, raising the wage from $5.50 to $6.50, would cause 5,400 workers to lose their jobs. The study's author, David Macpherson, an economics professor at Florida State University, forecast $50-million in wages would be lost and the wage increase would do little to combat poverty.
However, employment in Oregon kept growing. Any jobs that were lost were replaced.
Still, Macpherson said Oregon would have created even more jobs in the late '90s had the minimum wage not gone up.
"It's not so much that people get laid off when the minimum wage goes up, it's that it makes it harder for people to get a job because jobs are less likely to be created," he said.
A University of Oregon study concluded that if restaurant employment had grown as fast in Oregon as it did in neighboring Washington, Oregon restaurants would have employed 3 percent more people, meaning an additional 3,000 workers would have found jobs.
In response, the Oregon Center for Public Policy said growth in the state's restaurant employment slowed in the late 1990s because there weren't enough workers to fill all the jobs. Employment of young workers with high-school educations or less, many of them low-wage workers, grew faster than the work force as a whole, with many finding jobs outside the restaurant industry.
"We were in a booming economy," said Ronald Hill, former dean of the College of Business at the University of Portland. "We couldn't turn out graduates fast enough for that economy. At the minimum wage level, there were signs everywhere. They were constantly looking for people."
Hill is now dean of the College of Business at the University of South Florida St. Petersburg.
He said the Oregon experience indicates the ability of Florida businesses to absorb a higher minimum wage depends to a large extent on the strength of the economy, particularly tourism.
Hill said this year's ballot measure shouldn't be a problem "if we have a strong tourist year, which means people aren't skittish about travel and the basic economy is strong enough that people can afford to take vacations. There are lots of people who support tourism who are at or near minimum wage who potentially would be affected. The only reason we would get job loss is if those numbers turn down below what people expect."
Opponents of minimum wage say some employers cut back the number of hours employees work to trim their labor costs when the minimum wage goes up. The theory is that when wages are pushed higher employers have an incentive to do jobs more efficiently, perhaps by using machinery or higher-skilled workers. According to an online poll by the state restaurant association in Oregon, which opposed the state's minimum wage increase, most restaurants cut employee work hours when last year's minimum-wage increase went through.
But officials of Oregon's Employment Department say there is no evidence worker hours were reduced on a widespread basis as the minimum wage rose in the late 1990s. The average number of hours worked did not change appreciably for workers in the bottom 20 percent of earnings, the department found. In fact, earnings increased as the minimum wage rose, then flattened out.
"It appears pretty likely that those increases did get translated into higher earnings at the bottom of the workforce," said Eric Moore, senior analyst for the department. "During a slower economic period like we're in at the moment, the numbers might look different, but at least during the mid to late '90s when our economy was real strong, the dire impacts weren't apparent in the data."
In recent years, Oregon's jobs picture has been much less rosy. The state lost 65,500 jobs between the end of 2000 and mid 2003. Although half those jobs have since been replaced, the state currently has one of the highest unemployment rates in the country, at 6.8 percent.
"The primary reason we have a high unemployment rate is that people keep coming to Oregon because they like it out here in spite of rain and the weather," Moore said. "The population is growing faster than the jobs are growing."
In spite of continuing increases in the minimum wage, one of the brightest spots in the employment picture has been leisure and hospitality, including the restaurant industry, which relies heavily on low-wage workers.
However, Art Ayre, an economist with the Oregon Labor Department, said the state's minimum wage may be a factor in deterring job creation in some industries. In a report on Oregon's unemployment, he also cited other factors, including the geographic isolation of workers in rural areas and Oregon's high rate of seasonal employment and corresponding unemployment.
"We have a big state with large rural areas where the economies have never really recovered from the collapse of the timber industry," said Michael Leachman, an analyst for the Oregon Center for Public Policy. In addition, many jobs created by the high-tech industry in the 1990s disappeared with the shakeout in that industry, he said.
A center analysis found that on average, the industries losing jobs during the downturn were higher-paying and more likely to provide health insurance than the industries creating jobs since employment turned up last year.
There are some key differences between the minimum wage in Oregon and the one proposed for Florida. Oregon's is more onerous for the restaurant industry. Florida restaurants would be able to count tips of up to $3.02 per hour toward meeting the new $6.15 minimum wage. Oregon restaurants cannot count any tips toward that state's $7.05 minimum.
The Oregon Restaurant Association fought the minimum wage increases and has made repealing the annual cost of living increase and adding a tip credit two of its top priorities.
On top of the statewide minimum wage, the City of Portland has a minimum wage of $8 an hour, which applies to contractors who supply janitorial, security and parking lot attendant services to the city.
Studies done on a national level reach no consensus over whether changes in the minimum wage lead to job loss. Studies from conservative think tanks typically say they do; those published by liberal groups say they don't.
FSU professor Macpherson said increases in the minimum wage reduce employment, but the impact is small and difficult to measure.
"If you're trying to find a relatively small effect, it's not surprising that sometimes you don't find an effect and other times you do," he said. "It's hard to do good research looking at the effects of the minimum wage in an economy that has a lot of things going on at the same time."
Ed Lazare, who analyzed the impact in Oregon for the Center on Budget and Policy Priorities, said moderate increases in the minimum wage have little impact on employment.
"It is unfair to argue that any increase in the minimum wage from any level reduces employment," he said. "A lot of employers who pay the minimum wage are providing local services that people want. Those jobs aren't easily shipped to another state or across the sea. You can't have somebody serving hamburgers from India."
He said businesses should prefer an annual cost-of-living adjustment in the minimum wage like the one proposed for Florida because the increases will be gradual and predictable, making it easy to plan for them.
Both liberals and conservatives agree that the size of the increase and the number of workers affected make a difference in the impact.
Oregon's employers have absorbed a 48 percent increase in the minimum wage since 1996, while Florida's have had only the 8 percent increase in the federal minimum wage. The proposal to raise Florida's minimum wage by $1 represents a 19 percent increase.
One Oregon study estimated that as many as 16 percent of the state's workers benefitted from the increase in the minimum wage, including those who earned just above it.
Relatively few Florida workers will be directly affected; about 377,000 workers, or a little less than 5 percent of the state's 8-million workers, make less than the proposed minimum of $6.15 an hour.
Helen Huntley can be reached at huntley@sptimes.com or 727 893-8230.