Roughly a dozen states in the U.S. base their annual minimum wage rate hikes on regional inflation levels.
The state of Oregon is one of these. Because Oregon’s cost of living increased by a dramatic 5.37% between August 2007 and August 2008, the minimum wage rate also increased significantly.
The minimum wage went up 45 cents an hour on January 1, 2009, from $7.95 to $8.40 hourly. The increase is one of the largest such hikes in recent years, and results from the inflation rate.
“This increase is the direct result of the rapidly rising cost of living facing Oregon workers,” said Labor Commissioner Brad Avakian. The Commissioner added, “By helping workers and their families preserve their purchasing power in difficult times, our strong minimum wage law also benefits our local economies, where workers spend most of their paychecks.”
Some question the wisdom of a large increase during recessionary times. The law, however, was passed in 2002 and must be adhered to. The relevant legislation was Ballot Measure 25, approved by state voters, adjusting the minimum wage to follow the inflation rate.
A state agency known as BOLI (the Oregon Bureau of Labor and Industries) is in charge of adjusting the minimum wage to follow the inflation rate. The agency rounds it to the nearest 5 cents.
Other states where the inflation rate triggers minimum wage increases are Washington, Vermont, Arizona, Colorado, Florida, Missouri, Montana, and Nevada.
In the state of Oregon, roughly 7.5% of the total workforce (or about 143,000 people) are struggling to support families or themselves on the minimum wage. The figures come from the Oregon Employment Department.
Unlike some other states, where wait staff or food servers and other workers receiving tips get a lower minimum wage, Oregon tipped employees get the normal rate. Employers in Oregon are not allowed to take a so-called “tip credit.”
State Rep. Diane Rosenbaum (D-Portland), Chief petitioner for Ballot Measure 25, said thousands of Oregon families struggle to escape poverty while working full-time and their minimum wage jobs.
“This increase helps low-wage workers put food on the table and a roof over their heads,” she said.
