Minimum wage zones: 'I would think that would make Eugene a little bit more attractive'
EUGENE, Ore. - The federal government sets the minimum wage from coast to coast. Right now it stands at $7.25 per hour.
But states are free to require a higher wage. Arizona sets the minimum at $8.05; in Alaska, it is $9.75.
And some cities have set a wage higher than either the feds or state require: local government in Seattle and San Francisco both set the minimum wages there at $15.
This week, Oregon lawmakers approved a state minimum wage increase. The governor said she will sign the legislation.
However, the Oregon law is unique: it raises the wage to different levels depending on where you live.
The Portland metro area will see the largest increase over time, rising to $14.75 on July 1, 2022.
Counties with large urban populations will hit $13.50.
At the same time, rural counties will see the wage rise to $12.50 - a full $2.25 per hour less than the Portland metro area.
'I would think that would make Eugene a little bit more attractive'
Professor Benjamin Hansen in the University of Oregon economics department said this is the first time a state has implemented a tiered plan.
Hansen said the wage could result in some shifts, with people settling for longer commutes in order to earn a higher wage at a lower cost of living.
And the lower wages outside of Portland could attract businesses to Lane, Douglas or Coos counties where employees earning the minimum wage will come at a discount.
"One of the things that you have to consider is the cost of labor," he said. "If labor is going to be roughly 10 percent more expensive at a minimum in Portland relative to Eugene, then I would think that would make Eugene a little bit more attractive in terms of where firms are thinking to locate in the future."
Economist's advice on poverty: Look at the earned income tax credit
However, Hansen said that if lawmakers think the wage increase will fix poverty in Oregon, they might want to consider other options.
He said the most successful solution he has seen in recent years is an earned income tax credit.
"The earned income tax credit is basically a negative tax on income," he said. "So usually we look at tax as a bad thing, but the earned income tax credit says basically: if you're working, we're going to pay you even more. And so that's been something that's been basically targeted to try to eliminate poverty in the lower part of the income distribution."
Hansen said that what's unique about the earned income tax credit is it effectively raises earnings without the potential side effect of decreased employment.
How it breaks down by county
Inside Portland's Urban Growth Boundary: $14.75 by 2022
Rural counties: $12.50 by 2022 in Malheur, Lake, Harney, Wheeler, Sherman, Gilliam, Wallowa, Grant, Jefferson, Baker, Union, Crook, Klamath, Douglas, Coos, Curry, Umatilla and Morrow counties
Urban counties: $13.50 by 2022 in Benton, Clackamas, Clatsop, Columbia, Deschutes, Hood River, Jackson, Josephine, Lane, Lincoln, Linn, Marion, Multnomah, Polk, Tillamook, Wasco, Washington and Yamhill counties