Page 15 Portland Observer JUNE 22,1989
MINIMUM WAGE CHANGE COMES TO OREGON
A b ill has been introduced in the
Oregon legislature which would raise
the state's current m inim um hourly
wage rate by more than 40 percent
over the next three ycars.Thcse pro
posed changes would affect approxi
mately six percent o f the wage and
salary em ploym ent in the state. The
new legislation (Senate B ill 335)
would significantly alter the current
m inim urn wage law in Oregon. Some
o f the m ajor changes would be:
« Add coverage o f agricultural
workers with some exemptions
for students who arc 16 years
old or younger. The exemp
tions would allow the employer
to pay the student at less than
the established minimum hourly
rale. However, the exempted
student would have‘to be paid
the same piece rate as the
workers who arc over 16 years
old.
« • Define subject agricultural em
ployers as those who had 500
piece rate work days in any
quarter o f the previous year. A
“ piece rale” workday would
be defined as having worked at
least one hour for the estab
lished piece rate standard dur
ing any one day by one worker.
« • Elim inate the “ training wage”
provision o f the current law.
*»■ Raise the current minimum wage
o f S3.35 per hour in three an
nual adjusunents to $3.75, $4.25
and $4.75 per hour effective
July 1 o f 1989,1990, and 1991.
Biennial adjusunents after 1991
w ould be indexed to 50 per
cent o f the average annual
weekly wage as determined by
the Oregon Em ployment D iv i
sion. The average weekly wage
would be divided by forty hours
to derive the comparable total
average hourly wage rate.
In 1987, nearly twice as many
women as men earned the m inim um
wage or less.
The discussions that occurred in
the Oregon Senate on this proposed
piece o f legislation centered on the
direct economic impacts o f the wage
changes specified in the b ill.
These debates ranged from rais
ing the purchasing power o f workers
in lower wage jobs to jo b losses cre
ated by increasing employer costs to
the potential o f product price increases.
These debates were usuajly based
upon the assumption that raising the
m inimum wage leads to significant
job losses, product price increases,
and business closures. One o f the
first m ajor issues discussed was the
characteristics o f the people who are
currently w orking at or below the
current minimum wage level o f $3.35
per hour. From studies that have been
done on this question the fo llo w in g
profile o f m inim um wage workers
emerges at the national level.
AGE
Over half (57.2%) were young jwoplc
under 25 years o f age. Teenagers
(age 16-19) accounted fo r 36.3% o f
minimum wage workers.
SEX
In 1987, nearly twice as many women
as men earned the m inim um wage or
less. Women accounted fo r 65% o f
all m inim um wage workers.
R A C E -E TH N IC GROUP
Nearly one-fourth o f a ll m inim um
wage
w o rk e rs
w ere
e ith e r
Black(14.3%) or Hispanic(8.9%).
F U LL OR P A R T -T IM E
Two-thirds o f those earning $3.35 or
less worked part-tim e (Le.less than
35 hours per week).
GEOGRAPHIC D IS T R IB U T IO N
M inim um wage workers were much
more lik e ly to live in the South (41 %)
or the M idw est (28.6%). O nly 14.4%
lived in the Northeast region, w hile
16.1% lived in the West.
O C C U PATIO N
Over h a lf (52.5% ) o f a ll m inim um
wage workers were employed in
service occupations. Sales and ad-
m inistrativesupport(includingcleri-
cal) occupations also employed a
relatively large share (22.7%).
IN D U STR Y
Nine out o f ten (88.5% ) m inim um
wage workers were employed in serv
ice-producing industries. One indus
try, retail trade, employed over half
(51.4%) o f a ll m inim um wage w ork
ers.
E D U C A T IO N
Years o f school completed and wage
levels were strongly related. Over
80% i f a ll m inim um wage workers
had cither completed no more than
four years o f high school (45.7% ) or
had not yet finished high school
(34.7%).
W ith some m inor variations, most
o f these characteristics o f m inim um
wage workers w ould be applicable to
the Oregon w orkforce. This conclu
sion was reached after analyzing labor
force inform ation that was available
to the Em ployment D ivision. The
second m ajor question that came up
in the analysis o f this legislation was
the potential unemployment that
would be created i f the m inim um
wage was increased in Oregon. A
review was conducted o f several
m inim um wage studies to attempt to
answer this question. The m inim urr
wage studies were segregated into
tw o separate groups based upon the
time period in which they were
completed. Most o f the m inim um
wage studies completed during the
1970s suggested that a 10 percent
increase in them inim um wage would
reduce teenage (16-19 years old)
employment by 1 to 3 percent. I f
these factors are applied to the esti
mated 87,750 teenagers in Oregon’ s
1987 w orkforce, the job loss would
range between 880 and 2,630 for
teenagers.However, these m inim um
wage changes w ill also affect the
employ men t opportun ii ies fo r young
adults (20-24 years old) in Oregon.
Using inform ation from these stud
ies conducted in the 1970s shows
that for this group a 10 percent in
crease in the m inim um wage would
reduce employment by on-quarter to
one-half o f one percent. A pplying
these factors toO regon’ s 1987 young
adult w orkforce estimate o f 157,380
would produce jo b losses o f 390 to
790. Combing th tw o age groups
would produce an estimated jo b loss
ofbetween l,2 70 an d 3 ,4 2 0 fo re ve ry
10 percent increase in the m inim um
wage.
Over 80% o f all m inim um wage
workers had cither completed no more
than four years o f high school 1(45.7%)
or had not yet finished high school
(34.7%).
The second set o f m inim um wage
studies used to analyze the impact o f
m inimum wage changes in Oregon
were those that were conducted us
ing information developed during the
1980s. These stud ies estimated that a
10 percent increase in the m inim um
wage would reduce teenage em ploy
ment by approximately one percent
and about one-fourth o f one percent
fo r young adults. These new factors,
i f applied to the two w orkforce esti
mates mentioned previously, would
produce job losses o f 1,270 fo r every
10 percent increase in the m inim um
wage.
The questions that remained after
these analyses were completed
were:
«■ What factors were creating the
differences between the job loss
estimates developed for Ore
gon using the data from the
two groups o f m inim um wage
studies?
*3’ What other possible local
sources o f inform ation could
be used to select which set o f
factors to use in estimating the
jo b losses crated by the [pro
posed changes in Oregon’s m ini
mum wage by Senate B ill 335?
The answers to the firs t question
involve understanding the different
economic and labor force environ
ments which existed in the 1960s and
1970s versus those that persisted
throughout the 1980s. D uring the
1960s and 1970s the labor markets
were driven by a surging workforce
which was fille d by large numbers o f
people and females entering the
workforce for the first time. Although
the state and national economies were
growing rapidly, this growth was not
strong enough to absorb a ll o f the
new entrants to the labor market.
This created a situation throughout
this twenty year period where there
was a tremendous surplus o f labor
available fo r the new jobs that were
being created by the economic growth.
The 1980s brought a complete rever
sal in this pattern o f labor force growth.
Due to a decline in birth rates in the
1960s and early 1970s and the slow
ing down in the rale with which women
entered the w orkforce in the 1980s,
the supply o f labor began to decline
for the new minimum wage jobs which
were being generated by the econ
omy. This change in the labor force
demand/supply fo r these m inim um
wage jobs caused shortages o f appli
cants to develop which as caused
wages to rise for many o f the jobs
which had previously paid the m in i
mum wage. In some areas o f the
United States, some o f the wages for
these jobs have risen to the S5-S6 per
hour range.
Since the proposed changes would
increase Oregon’ s m inim um wage
by 42 percent between 1989 and 1991,
jo b losses fo r youth could be ex
pected to be approxim ately 4 percent
or 3,510 jobs.
The second question above re
quired the identification o f an alter
nate local data source which would
support using the results o f one o f the
two m inim um wage group studies to
estimate the employment impacts o f
the proposed m inim um wage law
changes in Oregon. The independent
data source chosen fo r this analysis
was the jo b orders arrayed by wage
listed w ith the Oregon Em ployment
D ivision between 1984 and 1988.
These jo b orders were compared lx»th
fo r the absolute number listed by
hourly wage and the percentage these
groups made up o f the total number
o f job orders. The comparisons si lowed
that in 1984 the Em ployment D iv i
sion registered 13,509 jo b orders
paying $3.35 per hour. This repre
sented 19.4% o f die 69,698 jobs which
were listed during that year. In con
trast, the Employment D ivision reg
istered 11,791 job orders paying $3.35
per hour in 1988 which comprised
only 10.5 % o flhc 112,173 joborders
taken during that year. The analysis
o f the job orders over this fiv e year
period shows both an absolute reduc
tion (-1,718) in the number and a
decline in the percentage o f jo b o r
ders (-8.9 percentage points) that pay
$3.35 per hour. The trends identified
in this data source led to the selection
o f the m inim um wage studies com
pleted in the 1980s to estimate the
jo b loss which would txi created by
the current changes being consid
ered by the Oregon legislature in the
m inim um hourly wage.
The fin al act in this article is to
apply the selected factors from the
1980s m inim um wage studies to esti
mate the total impact o f these pro
posed changes in Oregon over the
three year period. Since the proposed
changes would increase Oregon’ s
m inim um wage by 42 percent be
tween 1989 and 1991, job losses for
youth could be expected to be ap
proxim ately 4 percent or 3,510 jobs.
The same analysis applied to young
adults would cause a job loss o f 1
percent or about 1,570 jobs. This
represents a combined total jo b loss
estimate o f almost 5,100 jobs over
the three year period i f the proposed
m inim um wage legislation becomes
law.
Although other modifications w ill
probably be made to the current
proposal in the legislature, there is
sufficient support to assume that
Oregon’ s m inim um wage w ill rise in
the next tw o o r three years. S im ilar
legislature to raise the federal m in i
mum wage (currently $3.35) is also
being considered in the U.S. Con
gress. This article has focused only
on the proposed increase in the State
m inim um wage.
LOOKING FOR THE
BEST HOMEBUYING
VALUE?
LUCKY YOU.
IT’S HUD
SIGN UP TIME!
W hen you see our sign up in your
real estate agent's w indow , y o u 'll know
that this is a place that can make buying
your next home both easy and fast.
Your agent w ill tell you that H U D
homes are priced to be te rrific values.
A n d w ith F H A M ortgage Insurance, a
buyer’s down payment can be ju s t 3%.
So watch the Friday and Sunday
Oregonian fo r our w eekly H U D home
listings, and then look fo r our "B u y a
H U D home here” sign.
For people w ho want a good deal
on a good home, it ’s a beautiful sign
o f the times.
HUD
DEPARTMENT OF HOUSING
AND URBAN DEVELOPMENT
B 1989 by M UD PoiHand O ftic.
Equal Housing Opportunity
HUD TAKE NA
TIONAL
ACTION
Secretary o f Housing and Urban
Development Jack Kemp today took
steps to ensure reforms in the sale
and disposal o f all HUD-owncd prop
erties to bring H U D into strict accor
dance w ith federal laws and regula
tions and Department standards.
Secretary Kemp has ordered all
H U D Regional Adm inistrators and
Field O ffice Managers to implement
new properly disposition procedures
to more adequately m onitor sales
closing, closing agent performance,
and the handling o f sales proceeds on
H U D property.
The new procedures include a new
standard contract for all closing agents;
stricter documentation o f closing agent
performance; prom pt w ire transfer
o f sales proceeds on H UD-owned
properties; s w ift review o f a ll clos
ing packages to ensure the accuracy,
completeness, and timeliness o f the
entire closing process; and greater
accountability fo r H U D ’ s Regional
Adm inistrators and Field O ffice
Managers lo r m onitoring and m ain
taining these standards.
The H U D Inspector General w ill
audit key areas around the country
including Denver, Dallas, Houston,
New Orleans, Los Angeles, and
Washington, DC, to ensure that these
standards arc met.
In addition, an independent ac
counting firm w ill undertake an audit
o f H U D ’s internal systems fo r m oni
toring the sale o f H U D-ow ned prop
erties to determine the financial and
managerial integrity o f the system.
“ President Bush and I arc com
m itted to m aintaining the highest
standards o f conduct and accounta
b ility fo r the Department o f Housing
and Urban Development, including
the proper disposal o f HUD-ow ned
properties’ ’ , Secretary Kemp said.
"These actions w ill help us achieve
that goal.*’
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