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The State of Oregon has a law that ties the minimum wage to the Aug-to-Aug CPI of the preceding year. Jan 2009, the OR min wage will increase by 5.37%.

With private companies increasing wages between 2.5% and 3.1%, and Oregon increasing the min wage 5.37%, we're in for some serious wage compression; at least in the short run.


Interesting scenario and you're right - it will create some interesting dynamics, and ultimately compression, on the low end of wages. Oregon employers, depending on the demographics and mix of their employee population, might have to play that one out carefully.

Thanks for sharing!

I happen to be in WA, which has the highest minwage in the country, currently $8.07 and ratcheting up every January 1. Wage compression is a constant factor at the bottom of the scale. Know of many cases where 20-year veteran store managers earn merely 5 cents an hour more than the newest least-skilled teenage student part-time worker. So much payroll at places hiring relatively unskilled folks goes to cover the annual minwage escalation than there is virtually nothing left to be allocated for superiors to stretch-out their progressions for rational lead positions. People have no idea what the growing trend towards State overrides to the Federal minwage has done: it has legislated locally required COL-justified pay at the bottom levels where maturity curve trumps promotability. Here's the seminal research @ http://www.erieri.com/PDF/COLvsMerit.pdf and it's gotten worse since then, as more states pass overrides. Compare the W@W map of state minwages (noting those adding them in Jan 2009) with the post-election Obama electoral vote distribution map... substantially an overlay.


Intriguing points and data - thanks for sharing it here. Not many are paying attention to the macro-level impact of some of these trends and decisions. Good to raise awareness of this, thanks for doing so here.

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    Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.

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