As the nation grapples with chronic unemployment and stagnant or falling pay, Oregon is among 10 states that raised their minimum wages on Jan. 1.
That's good news for the estimated 96,000 workers who are paid at the minimum in Oregon — and for 750,000 low-income workers in Arizona, Colorado, Florida, Missouri, Montana, Ohio, Rhode Island, Vermont and Washington.
In Oregon, the minimum will bump 15 cents to $8.95, adding more than $300 to a full-time worker's yearly compensation. That may not sound like much to some people, but it makes a big difference for low-wage workers and their families who struggle to deal with rising costs for utilities, housing, food and other essentials.
The minimum wage goes up annually in states that have laws requiring annual inflation adjustments. Oregon voters approved an initiative requiring wage indexing in 2002 in an election that prompted an intense debate over whether a high rate with indexing helps or hurts the economy.
Oregon's experience suggests that proponents of indexing have the stronger argument. Most Oregon employers pay more than the minimum wage. The raises that the lowest-paid workers receive result in increased consumer demand as the money immediately flows back into local and state economies as workers pay for basic necessities. Meanwhile, other Oregon workers often receive indirect raises as their pay rates are adjusted to reflect the new minimum wage.
The net result has been a modest but certainly welcome boost for the state's economy and the wages of its neediest working citizens. And these benefits have been realized without any additional government spending.
Since indexing took effect in Oregon in 2004, the state's minimum wage has climbed $2.05 per hour. Critics rightly note that the higher wage has created some upward pressure on the price of some goods and services, but that pressure has been more than offset by the increase in workers' purchasing power.
Critics also note that indexing creates disparities between states with automatic minimum-wage increases and those without them. That's true, but there is little evidence these disparities have sent businesses fleeing to the lowest-wage states, although that eventually could happen if the differences become significant.
The clear solution is for Congress to raise the federal minimum wage and require annual adjustments.
Proposals to do precisely that have been fiercely opposed by big business and congressional Republicans, although it's worth recalling that Republican Mitt Romney supported indexing both as governor of Massachusetts and earlier this year as a presidential candidate.
There's another, more compelling reason to increase the minimum wage: It's simply the right thing to do. It's increasingly clear that the nation's economic recovery will remain in low gear for an extended period, perhaps years, and it's a cynical, uncompassionate nation that allows the working poor to steadily become even poorer over the long term.
It's time for federal lawmakers — including those who have dedicated their political careers to benefiting the nation's wealthiest — to follow Oregon's example of mandating cost-of-living increases for the nation's lowest-paid workers.