Weighing Minimum Wage Hikes

Via Today's Papers, in an article of the same title in the Wall Street Journal, Deborah Solomon discusses the results of a minimum wage hike (and mandatory increases to keep pace with inflation) in Oregon in 2002. From the WSJ article:

During the 2002 debate in Oregon, foes of a minimum-wage increase argued that it would chase away business and cripple an economy that traditionally had higher unemployment than the national average. "With so many Oregonians already unemployed, raising the minimum wage and then increasing it annually would devastate our economic recovery," Bill Perry, head of the Oregon Restaurant Association, wrote at the time. Four years later, though it is impossible to say what would have happened had the minimum not been raised, Oregon's experience suggests the most strident doomsayers were wrong. Private, nonfarm payrolls are up 8% over the past four years, nearly twice the national increase. Wages are up, too. Job growth is strong in industries employing many minimum-wage workers, such as restaurants and hotels. Oregon's estimated 5.4% unemployment rate for 2006, though higher than the national average, is down from 7.6% in 2002, when the state was emerging from a recession. Some employers are being squeezed, for sure, and their experiences will become ammunition for those who will fight any increase in the federal minimum wage. Agriculture is pinched because sellers can't raise prices, set on global markets, when labor costs go up. Some businesses say they have avoided expanding in Oregon because labor costs have risen, the sort of change in behavior at the margin that foes of a minimum wage worry about.

Barb Iverson and her brother say higher wages prompted them to stop cultivating daffodils and potatoes at their Willamette Valley farm. "Why grow a potato here when you can do it in Idaho for $5.15 an hour?" asks Ms. Iverson.

Maybe because paying your employees enough to live on is the right thing to do.