Oregon CPI Drops – Yet Minimum Wage Rises?

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Minimum wage will increase in 2011 despite overall decrease in state CPI
By  J.L. Wilson
Associated Oregon industries,

Oregon employers will find themselves disadvantaged once again in 2011 by Oregon’s minimum wage law that increases the state minimum wage based on increases in the state Consumer Price Index (CPI). Oregon’s CPI is actually lower than 2008 levels – yet Oregon employers will face a .10 cent/hour hike in the minimum wage to $8.50 per hour.

How is this happening?

In September 2009, Oregon Labor Commissioner Brad Avakian announced that Oregon’s minimum wage rate would stay static (at $8.40 per hour) in 2010 based on a falling Oregon CPI. In his announcement, Avakian highlighted that Oregon’s CPI had declined by 1.48% in 2009, but Oregon’s minimum wage law did not allow him to make a downward adjustment to the minimum wage.

This week, Commissioner Avakian announced a .10 cent increase in the minimum wage for 2011 based on a 1.15% increase in Oregon’s CPI.

The net effect: Oregon’s CPI is 0.33% lower than it was two years ago, yet Oregon employers will see an increase in the state minimum wage. Oregon takes yet another small step toward being uncompetitive in the competitive marketplace.

A reasonable solution: AOI will introduce legislation that will require the Labor Commissioner to credit employers the full decrease in the CPI before increasing the minimum wage in subsequent years. As applied to current law, Oregon’s minimum wage would be held static again in 2011 and the next minimum wage increase would not be triggered until the CPI increased by at least 0.33%. Under this solution, the minimum wage would never go down, but the wage would be an accurate reflection of the CPI going forward.