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Boosting minimum wage could be a net loss for some

Anna Staver
Statesman Journal
Maureen Crawford (center) hands a flier to a customer as Peter Bergel (left) looks on during a protest outside of the McDonald’s restaurant on Center Street NE in December. Members of the OSEA are seeking an increase in minimum wage.

Gov. John Kitzhaber wants to raise the minimum wage.

The easy part would be passing legislation.

Which means the hard part isn't convincing Republicans or business advocacy groups to go along with the idea, it's explaining to minimum wage advocates how raising wages for low-income Oregonians without adjusting the social safety net could do more harm than good.

"Unless you address these other issues ... you can actually disadvantage a lot of people by simply raising it a dollar or so without addressing the benefit cliff," Kitzhaber said.

The benefit cliff occurs when the raise a person gets is eaten up by a loss in social services.

For example, a single mother in Salem with two children (12 and 3 years old) who works 15 hours per week at $9.25 per hour would earn $597 in a month.

She'd also likely receive food stamps, cash assistance and childcare that's worth about $1,382, according to data provided by the Oregon Department of Human Services.

If her income rose to $12 an hour, which is the level Oregon's Labor Commissioner Brad Avakian has hinted he'd like to see, that same mother would earn $774 a month — a monthly raise of $187.

However, she wouldn't be eligible for cash assistance any longer and her other benefits would decrease to the point where the raise would actually cost her $16 a month.

And that doesn't include the increase in rent if she's using a Section 8 voucher or living in subsidized housing.

The state legislature does not have the power to make changes to eligibility requirements for programs like Temporary Assistance to Needy Families and the Supplemental Nutrition Assistance Program. Changes would require an act of Congress.

In this 2014 file photo, organizer Bryan Watson, left, gestures during a march to raise the minimum wage to $15 per hour in Seattle.

And that's not an easy task, Kitzhaber said.

"I not only share (Kitzhaber's) concern, but I appreciate his understanding of the complexity of the concept," Rep. Cliff Bentz, R-Ontario, said. "I'm very happy that he's not doing the political thing that we heard so much about during the campaign, which is to say lots of stuff that's easy to say but hard to do."

Bentz has spent countless hours talking about this problem with the House revenue committee.

He's also spent a lot of time talking about the issue with his wife, who runs a veterinary practice in Ontario.

"A higher minimum wage means the seven people she employs on the lower end of the pay scale their pay has to go up regardless of performance and regardless of whether she has the profit margin for it," Bentz said. "It puts pressure on her to reduce the number of employees."

The eastern Oregon city of Ontario has a population of about 11,000 and a median household income of $30,000. That's less than half the median household income for Hillsboro.

"In that kind of a community it might be a little easier to ignore the consequences for small businesses," Bentz said.

Groups like 15 Now Oregon are pushing for higher minimum wages in Portland and throughout the state.

There's even talk of a ballot initiative if lawmakers decide not to act in 2015.

"Our basic position that everything else kind of comes out of is that nobody who works deserves to live in poverty or to have to be on government assistance," said Justin Norton-Kertson, a steering committee member for 15 Now Oregon. "What it (government assistance) really amounts to ultimately is a tax subsidy for companies who pay their employees poverty wages."

Bentz agreed with Norton-Kertson's premise, but he thought it missed the larger problem of why so many people can only find minimum wage jobs.

"The answer may be there's not much available to them on the other side," Bentz said. "We are trying to move people through this, not make them a permanent home at the lower end of the pay scale.", (503) 399-6610, or follow on Twitter @AnnaStaver

Residents gather during a minimum wage rally outside the district offices of U.S. Rep. Fred Upton, R-Mich., in St. Joseph, Mich., Tuesday, April 1, 2014. Raise Michigan needs to gather 258,000 valid signatures by late next month to put before the Legislature a measure that would gradually raise the state's minimum wage from $7.40 to $10.10 an hour by 2017 and automatically increase it with inflation in future years.

Benefit Breakdown:

Here's what the SNAP, TANF and ERDC benefits could look like for a single mom with two children who lived in a two-bedroom apartment in Salem if the mom earned $9.25 an hour working 15 hours per week.









Here's how it would look if that same mom earned $12 an hour working 15 hours per week.









A note about the estimated benefits used in this story:

The data provided by Oregon's Department of Human Services made several assumptions to create an average client.

These included assumptions about family type, home size, city of residency and whether any family member had a disability.

Benefits from programs like SNAP and TANF vary from family to family.

Program participants with questions about their benefits should call their DHS case worker or their local DHS office.