Wednesday, February 13, 2013

Oregon's Minimum Wage Outpaces Federal Minimum Wage

We wrote about Oregon’s minimum wage back in September when the Oregon Bureau of Labor and Industries announced the inflation-linked increase to $8.95 per hour for 2013. Oregon’s minimum wage is the second highest state minimum wage in the nation behind Washington’s $9.19, and $1.70 more than the national rate of $7.25 per hour. Employers pay the higher of the minimum wage that applies to their workers.

The graph below shows Oregon and U.S. real minimum wages going back to 1968. The wages are adjusted using the U.S. Consumer Price Index (CPI-U) to reflect purchasing power in 2012. 

The graph shows the “choppiness” of minimum wage purchasing power over time. Minimum workers receive a boost in real pay following legislative increases in the minimum wage, but rising prices erode their purchasing power over time, until the next legislative increase. That’s the pattern under the current Federal minimum wage, and was the pattern in Oregon until 2002, when minimum wage increases were linked to inflation.

Back in the 1960s and 1970s, real minimum wages were usually higher than today. The Federal minimum wage in 1968 ($1.60 per hour at the time) was equivalent to about $10.50 in 2012 dollars. Oregon’s current minimum wage is $1.05 above the state’s average minimum wage between 1986 and 2012, but the current Federal minimum wage is $0.35 below the average Federal minimum wage during that period.

Our state employment economist, Nick Beleiciks, provided today's post summary. You can find more information about the minimum wage on, or by contacting Nick.

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