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Understanding Oregon’s New Minimum Wage Law

In 2016, Oregon’s minimum wage law got an overhaul that raised the minimum wage across the entire state, set different tiers with different minimum wage rates based on county and tied the state’s minimum wage rate to inflation.

Senate Bill 1532

Oregon lawmakers passed Senate Bill 1532 during the 2016 legislative session. The law revamped Oregon’s minimum wage system (covered under ORS 653.025). The law set a new minimum wage (which was $9.25 at the time the law was passed) and laid out annual increases. Lawmakers recognized that different areas have different costs of living, and therefore created a multi-tiered approach, which applies to the various counties.

A County-Based Approach

The law created a three-tiered system, which determines what Oregon’s minimum wage. The system is based entirely on the county in which the employer is located. The three tiers are classified as Standard, Nonurban, and Portland Metro.  Since, the Portland Metro area is considered to have a higher cost of living, its minimum wage will be the highest. To the contrary, counties classified as Nonurban (such as Coos, Curry, and Douglas Counties) are thought of as having a lower cost of living, and as such, their minimum wage will be the lowest. In the middle are Standard counties such as Lane, Jackson, and Lincoln Counties.

Annual Increases

The ultimate function of Oregon’s new minimum wage law is to increase the minimum wage across the entire state. The minimum wage rates will eventually be at least $12.50/hour, $13.50/hour, and $14.75/hour for the Nonurban, Standard, and Portland Metro counties (respectively). This means that Coos County, as a Nonurban county, will eventually have a minimum wage of $12.50/hour, while Portland will eventually have a minimum wage of $14.75/hour. Lawmakers understood that an instant, drastic rise in the minimum wage rates could be profoundly detrimental to businesses, and as such, set the minimum wage rates to increase gradually with each passing year. The increases take effect July 1st of each year until July 1st, 2022. This means that there will be increases in the minimum wage on July 1st of 2019, 2020, 2021, and 2022. After 2022, the minimum wage rates for the various counties will be adjusted for inflation each year.

Inflation Adjustment

Effective July 1st, 2022, Oregon’s minimum wage rates will reach the peak set out in SB 1532, however that doesn’t mean they will stop rising. Effective July 1st, 2023, minimum wage rates will be adjusted based on inflation. That means the minimum wage could continue to rise year over year. The law sets Standard counties as the yardstick for the other two. Portland Metro counties will be required to be $1.50 more per hour than Standard counties, while Nonurban counties will be set at $1.00 per hour less. The tool for determining the rate of inflation is the Bureau of Labor Statistics Consume Price Index (CPI). As an example, if, for the year 2024, the rate of inflation is 2%, then the Standard minimum wage would be $13.80 ($13.50 x 1.02 – rounded to the nearest 5 cents). That $13.80 minimum wage for the Standard counties would mean that Portland Metro counties would be $15.30, and Nonurban counties would be $12.80.

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