WAGE BUMPS AND BRUISES
Oregon's minimum wages will click upward Saturday, raising the minimum from $9.75 to $10.25 an hour for 10,000 to 15,000 mostly young and lower-skilled workers in Jackson County. But for many employers and employees, the boost in the local hourly minimum wage will have little effect, as a tight job market has already pushed wages above that mark.
The Portland metro area will see a 13.3 percent bump to $11.25, while Jackson County is among a large number of counties instituting a 50-cent raise in entry-level hourly wages. Some rural areas will move to a $10 minimum.
Oregon lawmakers passed legislation in 2016 to boost minimum wages each year through 2022, when the minimum hits $13.50 locally and then is tied to the Consumer Price Index.
Employers have had a year to brace for the latest change, adjusting prices and budgets.
"It will only affect starting positions at this point," said Kent Cohee, who owns hardware stores in Eagle Point and Shady Cove. "The front-end impact is not as great as it will be at the end of five years, providing inflation hasn't accelerated."
The most recent Employment Department data indicates between 10 and 15 percent of Jackson County's approximately 100,000 workers earned less than the new minimum. Most of the those jobs are in the retail or leisure and hospitality fields, Regional Economist Guy Tauer said.
While there are no precise numbers for current employment pay, Jackson County had 13,692 employees making less than $10.25 an hour in the third quarter of 2016. Josephine County had 5,066 reporting less than the new minimum for that same time period.
Minimum wage positions generally go to the youngest, least-experienced and least-skilled workers, Tauer said. About 30 percent of leisure and hospitality positions are minimum wage, with one in five retail jobs falling in the minimum-wage category.
The Rogue Valley's tight job market, where the jobless rate is hovering around 4 percent and many advertised openings go unfilled, has already driven many employers to pay above the minimum to maintain staffing levels. The ripple effect, however, will still hit many small businesses already paying higher wages.
"We pay our folks more than minimum wage, hopefully to get some halfway decent employees," said Scott Brechtel, owner of Artisan Bakery Cafe in Medford. "It doesn't affect us as much right now, but in the big picture it affects businesses like ours. Just the talk of the minimum wage going up has an impact. I've noticed ingredient costs, delivery costs going up, increases for laundry, just everything, due to the increase of labor costs. We're downhill and feel the effects."
Cohee said his Ace-affiliated Eagle Point Hardware & Rental and Shady Cove Hardware store have a total of 20 employees when fully staffed. Ace prices many of the items taking Oregon's wage increases into account.
"We have budgeted for the increase for quarters three and four," he said. "It increases our costs, and it will affect the net price to the customer."
In July 2018, the minimum wage rises to $10.75, then to $11.25 in 2019, $12 in 2020, $12.75 in 2121, and $13.50 in 2022. After that, inflation will dictate future escalation.
The pay gains for lower-end workers may lead to some discontent among mid-level earners who see the minimum wage move closer to their pay.
Tauer recently saw a blog post by a worker who had been making above the minimum wage, but will now be at the minimum plateau.
"There's a little trickle-up effect," he said. "If you're making above the minimum, you shouldn't necessarily expect a bump."
Tauer doesn't forecast a rash of retail price jumps in coming days.
"I think it's already baked into the pie, because people already know what wages are going to be," he said.
Brechtel raised prices four months ago to compensate for rising expenses.
"We have a lot of Danish pastries for under $5, so I need to kick a lot of that stuff out the door to pay $15 out of the chute for someone who knows nothing about what we do. It hurts everybody, not just the little guys trying to live off minimum wage. Once you get the raise, everything goes up across the board, and they've actually lost ground instead of gaining ground."
Ultimately, he said, he may reverse the direction of a business he started in 2004.
"I've already told my wife, there's no point in trying to grow this place. I'm more likely to shrink it down, especially when you consider the cost per customer to come into our place."
Grocery stores are labor intensive and historically operate on tight margins.
Steve Olsrud, who oversees his family's Food 4 Less and Sherm's Thunderbird grocery stores in Southern Oregon, said the wage hikes are something everyone has to deal with.
"It runs our costs up," he said. "But it doesn't change anything when we're adding a new employee; we have different starting wages for different positions. Trying to fill any job is always an issue. For us, it changes from time of year to time of year.
Even with a higher minimum wage, Cohee expects to have difficulty filling openings and is considering using an employment service.
"Things have changed, we can't get applicants," he said. "High school just got out, and I was wondering why we don't have applicants; it might be the wording in the ad. Normally, we say 'salary commensurate with experience.' That might scare some people off because those are some big words."
— Reach reporter Greg Stiles at 541-776-4463 or email@example.com. Follow him on Twitter at www.twitter.com/GregMTBusiness, on Facebook at www.facebook.com/greg.stiles.31.