Last week, Oregon’s house of representatives passed a bill that would make the state’s minimum wage one of the highest in the country. While the bill still needs the approval of Oregon Governor Kate Brown for the bill to pass, Brown has already said that she intends to sign the bill.
But what’s most noteworthy about the Oregon bill isn’t how high the minimum wage will be. It’s that different minimum wages will go into effect in different parts of the state, roughly based on their population density. In and around Portland, the state’s biggest city, the increase will be the largest: The minimum wage will rise there to $14.75 in 2022. Outside of Portland, the minimum hourly wage in mid-sized counties will go up to $13.50 over the next six years, and more rural areas will see theirs increase to $12.50.
Oregon’s tiered system is interesting because it addresses one of the chief concerns some economists have about raising federal or state minimum wages: that rural areas will struggle to weather a decrease in jobs that may come with the increased cost of labor. A 2014 study by the Congressional Budget Office estimates that while a federal minimum-wage hike to $10.10 (from $7.25) would lift nearly a million workers above the poverty line, it’s expected that it would also result in 500,000 fewer jobs nationwide. Many economists point out that these job losses would not be evenly distributed—they’d likely cluster in the cities and states whose economies aren’t strong enough to start paying their low-wage workers a bit more. Oregon’s tiered approach is an attempt to try and avoid this consequence.