Minimum wage under attack in Oregon House

SALEM- A debate over the state minimum wage has flared up again in the State Capitol, with the Oregon Restaurant Association (ORA) and Oregon Farm Bureau leading the charge to fight automatic cost-of-living increases that voters in a majority of all legislative districts approved last November.

The House Business, Labor and Consumer Affairs Committee voted 4-3 March 21 to send House Bill 2624 to the floor with a "do pass" recommendation. The vote followed party lines, with Republican committee members Bill Garrard of Klamath Falls (the bill's sponsor), Betsy Close of Albany, Derrick Kitts of HIllsboro, and Mary Gallegos of Cornelius voting approval; and all three Democrats -Diane Rosenbaum and Jeff Merk-ley of Portland, and Mike Schaufler of Happy Valley - voting against.

The bill would eliminate the cost-of-living adjustment (COLA) that was contained in Ballot Measure 25 - which raised the state's minimum wage Jan. 1 by 40 cents an hour to $6.90. The COLA, set to take effect in January 2004, is likely to generate an increase of 10 to 15 cents per hour. During testimony March 19 and March 21, Garrard repeatedly asked witnesses opposed to his bill how much they earned per hour and Close, who chairs the committee, quoted from the Communist Manifesto to suggest that government intervention in setting standards for wages was communistic.

Among those testifying in opposition to HB 2624 were Rosenbaum, Labor Commissioner Dan Gardner, and Oregon AFL-CIO President Tim Nesbitt. Gardner is a member of Portland Electrical Workers Local 48 and Rosenbaum is a member of Communications Workers of America Local 7901. Both Gardner and Rosenbaum were co-sponsors of Ballot Measure 25.

Rosenbaum called the bill "an affront to the electorate. It would drive Oregon low-wage workers and their families further into poverty even as they struggle to put food on the table and a roof over their heads." She noted that while the inflation rate for the past four years was 8.8 percent, "the minimum wage went up by only 6 percent."

"The economic stimulus of a raise for Oregon's lowest paid workers is immediate and local," she testified. "These employees are spending every cent they make at local businesses, buying food or medicine or shoes for their kids." She said repeal of the annual increases would "drain money directly out of those local businesses and the communities they support."

Gardner said that prior to Measure 25 the minimum wage had not increased since January 1999. He noted the consumer price index increased 1.8 percent from August 2001 to August 2002 - a time when workers did not receive more money and their purchasing power declined by 10 cents per hour for the same work.

There is no doubt many businesses are suffering in the current recession, as are many workers, Nesbitt testified. But he asked the committee not to overlook the real causes of recent job losses in Oregon, including the impacts of foreign trade and higher energy costs, or to use those causes as an excuse to force more workers into poverty.

"Just as a business has to pay its rent and utility bills, it should have to pay a minimum wage that doesn't force a worker to live in poverty. And a 2 percent to 3 percent increase in the minimum wage is going to be a lot more manageable than a 30 percent or 40 percent increase in the cost of electricity."

ORA's Bill Perry said the wage increase has forced many businesses to lay off workers. He called the cost-of-living adjustment "damaging" because it is keyed to the higher urban cost of living and not rural, where he said most farm operations and their employees are. He also said both insurance benefits and training funds have been cut.

"Minimum wage increases during an economic recession kill job creation and hurt entry-level workers by decreasing existing hours and benefits, or by elimination of their job altogether," said Dan Floyd of the Oregon Grocery Association.

But some business owners had a different take on the issue.

Sean Brown and John Doyle, co-owners of a seafood restaurant, said they have paid above minimum wage for the last two years. "Our business has not suffered because of increased overhead. Instead, we have employees who stay longer, reducing our training costs. We have happier employees who give better service to our customers. It's a win-win for all of us."

Joseph McKinney, president of a business finance company called Oregon Roads, told the committee that consumer spending by working families is the key to his clients' ability to buy more vehicles and equipment. "My electrical contractors are not leasing new vans because the restaurant they just remodeled is not paying their bill, because working people are not going out to eat," McKinney said. "Every penny that finds its way into a worker's paycheck is funneled back into our local economy where it is spent again and again."

"Shame on us," McKinney told the committee, "if we can't afford to keep the minimum wage in line with the cost of living."

ORA and the Farm Bureau were among a business association that outspent supporters of Ballot Measure 25 by more than 2-1 in a half-million-dollar campaign that failed to defeat it. A floor vote on HB 2624 was expected sometime during the first week of April (after this issue went to press).

(Editor's Note: Neil Heilpern and the Weekly Update of the Oregon AFL-CIO contributed to this report.)