How the Oregon minimum wage law impacts small business

September 25, 2017
Iris Hodge

The latest increase in the Oregon minimum wage law happened in July 2017. Employers across the state have been preparing for this since the new wage legislation was passed, along with several other job quality issues, during the 2016 legislative session. The Main Street Alliance Oregon (MSAO), a network of 3,500 small business owners and part of the nationwide Main Street Alliance coalition, worked with the Fair Shot Coalition to push through this minimum wage legislation because we want to build healthy communities across Oregon. We know that a strong local economy requires that people earn a living wage.

The Oregon minimum wage law that passed is a three-tiered compromise bill created by Governor Kate Brown. That tiered structure increases the minimum wage differently across three geographic regions in order to accommodate the unique diversity of each community across the state.

oregon minimum wage
By 2022, wages in all three tiers will increase. The third tier is the Urban Growth Boundary, where wages will top out at $14.75 an hour. The second tier surrounds the I-5 corridor and extends to Eugene. Wages in this tier will increase to $13.50 an hour. The first tier includes rural parts of Oregon, where minimum wage will go up to $12.50 an hour.

As Engagement Program Manager at Main Street Alliance, I had the pleasure of working on the Oregon minimum wage bill with Main Street Alliance small business owners. When we first started talking about the issue, though, I’ll be honest: some were wary. They believed the misleading narrative that conservative business organizations routinely feed the public — that ANY money put towards employees decreases their bottom lines. I admit, this is a story that is convincing to many people.

This regressive business narrative has long served only the largest of companies. After all, small businesses are not controlled by stockholders and corporate structures that only serve the top stakeholders. Small businesses rely on their communities, and one small business’ employee is another’s customer. So the research underlying a minimum wage increase is best summed up with the old maxim “a high tide lifts all boats.” If the lowest earners have more money, they have more money to spend, on dinner with their families, on a cup of coffee in the morning, on healthier groceries, or on more home and car repairs.

I want to share a story from one of MSAO’s board members, Deborah Field, co-owner of Paperjam Press in northeast Portland. Deb and her husband John opened Paperjam Press after spending many years in corporate America. Deb was a numbers person, working in accounting and taxes. Initially when I spoke to Deb and John in early 2015, they weren’t sure if they could “afford” to increase the wages of their workers. Deb is a strong proponent of shopping local and investing in community, from healthcare to education and everything in between, but she just didn’t think it would work for their business. Fast forward to a few weeks later, when Deb had crunched the numbers hard to find places in the budget where she could reallocate money for wage increases, and had increased all her employees’ wages to $15 an hour in anticipation of a state-mandated increase. Here’s what Deb had to say in 2015 when she testified at the State Capitol after she made the increase in wages to her employees.

”I have joined other small businesses who have decided that paying our employees a minimum wage of at least $15 is not only the right thing to do, but is a very good business decision. Investing in our employees, sending them a message that they are worth a fair wage, goes a long way.

When employees feel they are important enough to be compensated for their work at a level that allows them to have a better quality of life, we are enhancing a sense of confidence and pride. This can lead to better performance and a stronger sense of happiness and loyalty which can be a factor for improving the bottom line. When I talk to my fellow business owners, the #1 thing that we can all agree on is the need for more customers.

We feel by being leaders and fighting for a higher minimum wage, we are supporting our local communities by bringing more money to those local economies. The statistics show that lower wage earners will spend more money in their local business districts, which is primarily made up of small businesses.

My experience of running a small business has shown me that my employees understand the importance of supporting other small businesses and shopping locally. So, by giving them more money to spend, they will be increasing the dollars owing into the local businesses which adds more customers. In addition, by paying a higher minimum wage, we will become more competitive for attracting quality employees. And last but not least, by paying our employees a wage of at least $15 we become part of a combating a bigger issue — income equality. By paying a higher minimum wage, we are contributing to narrowing the income gap which supports a more democratic income distribution system in this country.”

– Deborah Field, Co-Owner, Paperjam Press, Portland

Increasing Oregon minimum wage impacts employee satisfaction

In June, Deb and I sat down to again discuss the upcoming increase in the Oregon minimum wage, even though her employees already make more than other Portland employees will make with the final wage increase in 2022. Deb tells me that business is growing and her employees are more productive. She says she’s glad she made the choice to invest in her employees, not just because it feels good to pay something closer to a living wage, but also because she knows that her employees can afford to shop local and spend money at all the other great shops in the Beaumont Neighborhood that the shop is located.

In states across the U.S., income inequality is one of the most profound problems of our time. And as a community organizer who works with small business owners every day, I know that many small businesses are operating with razor-thin profit margins. But I also know that small business owners see the value in investing in their businesses, their employees, and their communities, starting with ensuring that the people who work for them are earning a living wage that strengthens the local economy for everyone. The old regressive narrative that low wages are good for business is clearly not convincing people as thoroughly anymore, either. Across the country, we’re seeing the fight for a $15 an hour wage gain traction. I’m proud to have worked with so many in Oregon to improve the lives of small business owners and workers across the state.

Iris Hodge is the Engagement Program Manager for Main Street Alliance of Oregon. She is proud of her Native Oregon roots, committed to fighting the “good fight” on behalf of her community. And she loves shopping local.

MSAO members are main street, small businesses across Oregon from boutique retail shops to general contractors, tech firms, and startup small businesses. MSA small business owners share a vision of public policies that work for business owners, their employees, and the communities they serve. 

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