Monday, August 17, 2009

Poverty and Prosperity Part 1: Minimum Wage

A multitude of wage and income measures are produced by the federal government, state governments, and private entities. Many of these measures attempt to gauge the relative prosperity or poverty of Oregon's individuals and households.

While each measure varies in purpose, scope and definition, they all help illustrate the financial situation of Oregon's individuals and families...

Minimum Wage
Like many states in the U.S., Oregon has a law that guarantees a minimum hourly wage to workers. Nearly all of Oregon’s employers are required to pay workers at this rate, but there are a few exceptions, including some agricultural workers and work done for a family business.

Due to a law passed in 2002, Oregon’s minimum wage is adjusted every year based on inflation. Thus when the average cost of goods increases from one year to the next. Oregon’s minimum wage increases at the same rate, with the new minimum wage taking effect on January 1st. The increase is calculated the prior September using August data on inflation. This advanced timeline gives the state government time to announce the new minimum wage, and gives businesses time to plan accordingly.

In 2009, Oregon’s minimum wage rose to $8.40 per hour. This is an increase of 5.4 percent from the rate of $7.95 in 2008. While 5.4 percent seems large, it is exactly the same increase seen from August 2007 to August 2008 in the Consumer Price Index for All Urban Consumers – the most commonly used measure of inflation. Oregon’s minimum wage is also $1.15 higher than the federal minimum wage. In the 27 states where the state minimum wage is higher than the federal rate, workers receive the higher state rate.

Before taxes, a full-time, year-round worker earning $8.40 an hour makes about $17,500 per year. At the federal minimum wage ($7.25), a full-time worker earns about $15,100 before taxes. In the first quarter of 2008, slightly less than 6 percent of Oregon’s population earned the minimum wage.

For Tomorrow: Part 2 - Poverty Thresholds

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