Another US state increases minimum wages

April 7, 2004

Free Market Foundation

In November 2002, Oregon voters followed the national trend by narrowly passing Measure 25, a piece of legislation that raises the minimum wage from $6.50 to $6.90. The measure also requires the minimum wage to be adjusted to the Consumer Price Index (CPI). Oregon’s minimum wage laws will now likely be the fourth highest in the US.

Unfortunately, say researchers from the Cascade Policy Institute, these policies will not help the state’s already middling economy. A new Cascade Policy Institute report says that, while well-intentioned, minimum wage laws do not help their intended beneficiaries:

Employers tend to reduce or freeze hiring because employment becomes too expensive, particularly in the case of unskilled workers like teenagers and the poor.

Minimum wage laws do not reduce poverty after all, there remains significant poverty despite the existence of such laws for the past 90 years.

Instead, such policies benefit high-wage union members because it reduces the number of employable workers and raises the bar for union wages.

The report concludes by noting that Oregon currently has one of the highest unemployment rates in the country a dubious accomplishment that isn’t likely to change anytime soon.

Source: Ayse Evrensel, Oregon’s Maximum Unemployment Law, Cascade Update, December 2003, Cascade Policy Institute.

For more on Economic Issues (Minimum Wage) http://www.ncpa.org/iss/eco/

FMF Policy Bulletin/ 30 March 2004