Wage Wars: The Battle for a Higher Minimum Wage

Laurelhurst Cafe has become a popular hangout in the heart of Portland's bleeding heart.

The café—with its corrugated metal and orange trim façade—sits at East Burnside Street and Northeast 47th Avenue, in one of the most politically liberal neighborhoods in the state. The owner, Ken Bareilles, welcomes dogs, caters to gluten-free customers and keeps a bicycle pump at the ready. Regulars include state Rep. Alissa Keny-Guyer (D-Portland).

Bareilles likes the progressive nature of his cafe and says he supports efforts to improve the lives of working-class Oregonians. Yet he worries about the recent proposal by House Speaker Tina Kotek (D-Portland) to boost the minimum wage in Oregon to $13 an hour. He fears that such a wage hike will fall hard on small-business owners like him.

"Some kind of safeguard needs to be in place where it works for all parties involved," Bareilles says, "or there will be a lot of unintended consequences."

Kotek's proposal has support among Democrats who want to do more in Salem to address economic inequality. But if she faces a struggle convincing even progressive businesspeople like Bareilles, her plan could be a tough sell.

Kotek issued her plan June 15, late in the current session, dimming its chances of sparking serious debate before legislators adjourn, probably within the next two weeks.

Senate President Peter Courtney (D-Salem) has said he’s opposed to a vote on the minimum wage in that chamber this session. According to the Medford Mail Tribune, Courtney has said the earlier proposal of a $15 minimum is too high. “The Senate president continues to be a strong supporter of the minimum wage,” Courtney spokesman Robin Maxey said in a statement to WW. “He does not, however,  favor raising the minimum wage this session.”

But Kotek's proposal is a sign that the push for a higher minimum wage will extend into 2016, when she can push for it during the shorter legislative session. Meanwhile, supporters threaten to send the question to the November ballot.

"They're just trying to keep the issue alive," says Bill Perry, a lobbyist for the Oregon Restaurant and Lodging Association, which opposes the wage increase. "They're going to continue to push it. I don't see them backing off."

It's also a sign Oregon Democrats are playing catch-up on the minimum wage issue. Cities such as Seattle have pushed the minimum wage to $15, while Multnomah County and the city of Portland have voted to pay a $15-an-hour minimum to their employees.

In 2002, Oregon voters approved a ballot measure raising the wage floor from $6.50 to $6.90. The measure's real innovation was an annual increase based on inflation. 

Since then, Oregon has regularly had one of the nation's highest minimums. The state's current wage of $9.25 ranks second behind Washington's $9.47. Both are a full two bucks above the federal minimum.

Supporters of a higher wage say Oregon needs to do more to bring low-income workers above the poverty level. Yet economists warn there's only so much money at any given time that employers can afford to spend on payroll, and a sharp, government-mandated increase in wages for some industries could drive costs higher than some businesses can sustain.

The exact tipping point at which a minimum wage does more harm than good is unknown, and that's at the center of the political debate. A January analysis, done for the Oregon Neighborhood Store Association, which represents convenience stores, says raising the minimum wage to just $12 could cost 52,000 jobs statewide.

Anne Weaver, CEO of Elephants Delicatessen, thinks Oregon should take this raise slow, sitting back to see how other states fare in raising their minimum wages. 

"It's not that we are against the minimum wage going up at all," Weaver says, "but it shouldn't be some mammoth hike all at once."

Weaver says Elephants is a progressive business paying above the current minimum wage and providing benefits for employees who work 25 hours a week or more. (Weaver says that's about half of Elephant's 380 employees.)

"The good things we are doing are going to have to be curtailed if this isn't taken slowly," she adds. "Even a dollar a year is too much too fast."

Kotek's plan calls for raising the minimum wage to $11 an hour in 2016, and then a dollar a year until it hits $13. After that, the wage would go up with inflation, as it does now.

Weaver says Elephants would have to cut jobs to pay the higher minimum, or raise prices beyond a level she thinks consumers will pay. "Do you think people will be able to spend $10 on a sandwich for lunch?" she asks.

Kotek's proposal may reflect some political realities in Salem. Her target of $13 an hour may sit better with voters than the bigger increases proposed by others.

Lawmakers looked at a $15 minimum when a Senate committee held hearings in April. Democrats then put the issue aside to tackle two other pieces of their economic agenda: requiring employers to offer paid sick leave, and promoting private sector retirement plans. 

When Kotek rolled out her new proposal, she trotted out several business owners who said they'd be happy to pay the higher wages. 

Rosalind McCallard and her husband, Clayton, own Snackrilege, a vegan comfort-food cart on Northeast Killingsworth Street. They pay their seven employees $10 an hour and will pay above $13 if the state raises the minimum wage.

McCallard says Snackrilege would have to raise its sandwich prices by $1 or $2, but that it would be worth it.

"We value our employees," says McCallard, who has spoken out in favor of Kotek's proposal. "If you pay them the minimum, you're saying that you'd pay them less than the minimum if you could."

Mike Riley runs a polling and research company in Southwest Portland, where he employs a full-time staff of four and hires temps to conduct telephone surveys.

He says permanent staffers at Riley Research already earn more than $13 an hour, but that Kotek's proposal would raise the cost of hiring temps, who earn about $10 an hour, by 30 percent. 

Riley says he would have three ways to maintain profitability: raise his rates by at least 15 percent, encourage clients to use more efficient methods like online polling, or hire out-of-state research firms to conduct surveys. 

"That's the last thing I want to do," Riley says. "I like having local people working on our projects, but it might be my only option."

At the Laurelhurst Cafe, Bareilles says he believes he contributes to his employees' welfare by giving work to people with no food-service experience. It takes a long time for a new employee to return value to the business—something he can afford now.

"I'd have to think twice about spending any time training inexperienced workers at $13 an hour," says Bareilles, who's owned the restaurant for four years. "I wouldn't be able to take a chance on anyone."

With a higher wage, he might have to reduce staff hours, cut some employees and raise prices—all of which hits customers. He says he now has excellent employees, who get tips and a free meal every shift. 

But he says the work itself is reflected in what he and other restaurant owners pay.

“This is minimum wage work,” Bareilles says. “It’s a leap of faith that the worker making $13 an hour is going to be worthy of the $13-an-hour wage. If professionalism, effort, worth ethic and personality are included in the deal, sign me up.” 

WW staff writer Nigel Jaquiss contributed to this story.

WWeek 2015