Out here in Oregon, NBA Trailblazer turned Republican candidate for governor Chris Dudley has set off a debate about minimum wage laws. Currently set at $8.40 per hour and set to automatically rise with the Consumer Price Index to $8.50, Oregon has one of the highest minimum wages in the country. Additionally, Oregon is one of only seven states that doesn’t allow a tip credit or other discount for tipped employees. So while bars and restaurants in most states can pay less than the minimum wage to tipped employees on the assumption that gratuities will make up the difference, businesses in Oregon pay the full rate regardless.
In response to a question at a recent campaign event, Dudley suggested that the state should re-examine the issue and possibly implement some sort of reduced “training wage” for new hires. Video of the event is being used to drum up opposition among service industry workers:
Of course, for people fortunate to have jobs, the prospect of reduced wages is unappealing, and Dudley has had to emphasize that he doesn’t propose cutting the minimum wage.
But what about those who aren’t employed? Being able to lower the price at which they can be hired might improve their prospects. With Oregon boasting one of the highest unemployment rates in the country, accepting a short-term training wage is a deal many job-seekers might be willing to make.
Minimum wage laws are usually viewed as restrictions on employers, but they are equally a restriction on workers: They forbid a person to sell his labor at a rate below the mandated minimum. This can have tragic results, as currently demonstrated by South African workers protesting the loss of jobs in factories shut down by authorities. Closer to home, illegal immigrants in the US have a high rate of employment in part because they can credibly commit to not reporting labor law violations, including pay beneath the minimum wage.
There’s enough disagreement over the magnitude of correlations between unemployment and minimum wage hikes that I wouldn’t hold up minimum wage reforms as the solution to Oregon’s employment woes. Ideas such as implementing a training wage or tip credits aren’t crazy, however, and they deserve serious consideration.