Minimum-wage bill's unknown costs will mean real cuts in counties: Editorial Agenda 2016

1wage.JPG

Rural residents with concerns about raising the minimum wage address staffers from Oregon Gov. Kate Brown's office at a hearing Jan. 14, 2016, at the Capitol in Salem.

(Denis Theriault/Staff)

Oregon's leaders have a curious strategy to try to prevent really bad public policy from getting approved through ballot measures: They're opting to beat initiative backers to the punch by cramming slightly-less bad public policy through a short legislative session first.

That's the takeaway from efforts to hurriedly devise, amend and vote on Senate Bill 1532, which would boost the minimum wage statewide. The bill, passed by Senate Democrats on Thursday, would create a three-tiered system of minimum wages depending on an employer's location with increases phased in over the next six years. By 2022, Portland employers would pay the highest minimum wage of $14.75 an hour, while employers in suburban and rural counties, where the cost-of living is lower, would be required to pay minimum wages of $13.50 and $12.50 an hour, respectively.

Certainly, the state should be aiming to lift low-income families out of poverty and off public assistance. But, as we've noted before, it's entirely speculative that hiking Oregon's minimum wage -- which has been one of the highest in the country for years -- will achieve that. Backers instead point to studies such as a University of California, Berkeley paper, which projects that the benefits of a minimum wage hike in Los Angeles -- a city of about 4 million people -- would outweigh costs.

Editorial Agenda 2016

Worse, in the rush to pass the legislation, there's been little consideration of the unintended consequences that a blanket wage hike would trigger. It's not just businesses warning of layoffs to compensate for higher costs, or seniors on fixed incomes who will have to stretch their limited dollars to cover more expensive food and other staples. Local governments are weighing in on the double whammy that Oregonians will face on the local level, with a reduction in both county jobs and services to the public as a result of such a mandate.

Consider first that no one really has a solid idea of what the total cost to public employers will be. The bill has evolved rapidly over the past two weeks of the session and the fiscal analysis that accompanies the bill concedes that the direct cost of raising the minimum wage is "indeterminate." The fiscal office also did not attempt to calculate such indirect costs as "the effect on the salaries of other employees who are making slightly above minimum wage, often referred to as salary compression; the potential  for increased contractor costs; increased prices for services and supplies; pressure in the collective bargaining process; and changes in eligibility for benefits or assistance." Those, the analysis notes, are once again "indeterminate."

Oregonian editorials

reflect the collective opinion of The Oregonian/OregonLive editorial board, which operates independently of the newsroom.

are Helen Jung, Erik Lukens, Steve Moss and Len Reed.

To respond to this editorial:

Post your comment below, submit a

,

or write a

.

If you have questions about

the opinion section,

contact Erik Lukens, editorial and commentary editor,

at

That's not exactly comforting for anyone who understands that taxpayers are the ones who cover such costs, indeterminate or not. Nor is it reassuring when considering that public employers -- school districts, county governments, state agencies and others -- will be devoting extra dollars to cover wage increases at the same time that they will be ramping up contributions for public employees' pensions. The pension system, currently underfunded to the tune of $20 billion or so, is expected to eat up as much as 40 percent of some agencies' payrolls in coming years. Every dollar -- or million -- that goes to PERS catch-up contributions and wage increases means fewer dollars to pay for teachers in the classroom, to provide mental health services or to fund affordable housing initiatives.

The hit public employers will take with both PERS and a wage increase has not been a focus for policymakers in considering the minimum wage hike, concedes Sen. Michael Dembrow, D-Portland, who drafted the proposal.

But it has for Linn County Commissioner Roger Nyquist and several other county representatives who have seen legislators saddle their counties with other financial burdens, such as mandatory sick pay, regardless of their ability to cover such costs. While Multnomah County may be seeing strong job growth and a seasonally adjusted unemployment rate of 4.7 percent in December 2015, rural counties still weigh in at 7 and 8 percent unemployment. The state, the Association of Oregon Counties argues, should be focusing its resources on creating better jobs and educational opportunities. Instead, the state is doubling down on making low-skill jobs the norm.

Nyquist raised the question of whether the higher minimum wage amounts to an unfunded mandate prohibited by the state Constitution, an issue that he expects to press in court. While the office of Legislative Counsel offered its preliminary opinion that a minimum wage hike won't amount to an unfunded mandate, it concedes that the question is "not free from doubt."

Dembrow deserves credit for trying to fashion a bill that is sensitive to the economic constraints of rural Oregon, unlike the backers of the two proposed initiatives who seem to believe Portland is a state of its own. He also recognizes that the rush to approve the bill during an abbreviated session means that legislators have not had time to figure out how to avoid some of the probable negative consequences of the law, such as as reduction in youth employment opportunities. That is one of the loose threads that will need to be quickly addressed in the 2017 session, he told The Oregonian/OregonLive editorial board.

But as Dembrow himself acknowledges, it will take far more than a wage hike to help low-income families achieve financial stability, from child-care support to better workforce training. Unfortunately, the path being pushed by Democrats will make it tougher.

-- The Oregonian/OregonLive editorial board