The push to increase minimum wages in the U.S. has picked up steam since the financial crisis, spurred on by mounting public pressure to combat income inequality. President Barack Obama has become a vocal advocate for boosting the federal minimum wage from $7.25 to $10.10, while Democratic presidential candidates Hillary Clinton and Bernie Sanders support increases to $12 and $15, respectively.
Efforts at the federal level continue to be blocked by Republicans, leaving state governments to take action themselves. Since January 2014, the effective minimum wage has risen in 26 states, including conservative bastions Arizona and South Dakota. The main reason: strong popularity across the political spectrum. A 2014 Pew Research poll found 73 per cent nationwide support for Obama’s proposal.
Where opinion remains split is among economists on whether minimum wage increases result in job losses, and if so whether it remains an acceptable trade-off. Research projecting job losses tends to focus on the adverse impact a national or state minimum wage increase would have on areas with lower costs of living.
With this in mind, Oregon is forging a new path by adopting the first minimum wage law in the U.S. with three separate tiers. The state is geographically split between its affluent coastal cities like Portland and its more rural interior cities where the cost of living remains much lower. Over the next six years, the current state minimum wage of $9.25 will increase to $14.75 in metro Portland, $13.50 in smaller cities and $12.50 in rural communities.
The idea is that adjusting minimum wage levels according to the local cost of living would ensure that more workers are paid a living wage. This could also make it easier for low-income workers to move up the economic ladder by bringing them closer to higher-paying jobs in metropolitan areas.
“Oregon has always been at the forefront of new ideas in the country. We were the first to actually have a minimum wage,” said Democratic state representative Paul Holvey. “We’re trying to move people to where they can reach closer to that self-sufficiency.”