Oregon's new minimum wage law is considered landmark by some, deadly by others. The bill signed into law Thursday by Gov. Kate Brown will raise their minimum wage to $15 per hour faster than any state in the U.S. so far.

Despite warnings from various business groups and leaders, and strong evidence of negative economic impact from such cities as San Francisco, Oregon's legislature approved the idea, and Brown signed off on it.

The bill will raise the minimum to $14.75 by 2022 in urban areas, smaller cities will go to $13.50 and rural areas $12.50. Officials said economic factors were considered in these figures.

However, it doesn't make a lot of sense because despite higher business traffic in larger cities like Portland, the cost of living is also considerably higher as are other expenses, including supplies for businesses.

The first $.50 cent bump in the wage occurs this July. According to a report in the Daily Signal, Oregon business officials expect to lose over 62,000 jobs.  The president of the Oregon Restaurant and Lodging Association, Jason Brandt, says it's not a political problem for businesses, it's a math problem.

On average, he says, most small to medium businesses operate on about a 4% profit margin, some a few points higher, some lower, but that's the general ballpark. Now, for a business that does tremendous volume, such as a fast-food franchise owner, they can make some pretty good money.

But when labor costs go up to double digit percentage points, as this $15 wage would cause to happen, owners are forced to make tough choices. Do they expand? Add more workers to meet growing demand? Do they open another branch of their business? Do they buy that new work truck?

Probably not, he says. And in many cases, business owners will sometimes be forced to lay off some workers, especially newer ones who might not be getting as many hours.

Sure, workers will make more money, which supporters say will increase their lifestyle. But it won't do anything for the workers who lost their job, or didn't get hired in the first place, because the business labor costs are too high.

 

More From 870 AM KFLD