Kerby Anderson

Every few months a city council decides to substantially increase the minimum wage in their city only to have economics provide a reality check. The last time I wrote about this, the focus was on the Seattle, Washington City Council. This time the economic lesson took place on the other side of the country in Portland, Maine.

On January 1, the minimum wage in Portland spiked to $19.50 from $13. To put this in perspective, this was five dollars higher than in the other Portland (that would be Portland, Oregon). The reason for the dramatic increase in the minimum wage goes back to a ballot referendum that would raise the minimum wage in stages.

The referendum stipulated that if Portland were under an emergency proclamation, the hazard-pay multiplier would go into effect. That multiplier was 1.5 times the minimum wage. But the City Council didn’t lift the state of emergency before New Year’s Eve. The minimum wage jumped on January 1.

The owner of a fitness business told the City Council that her business was down 50 percent since the pandemic hit. This minimum wage hike would have required her to lay off all her employees, including her manager. She would have to work all the hours by herself because she doesn’t get paid.

The owner of a coffee shop testified that this minimum wage hike would force her to leave Portland. She used her 2019 profits to ensure her employees got a raise even though her business plummeted during the pandemic. She couldn’t guarantee their jobs if the hazard pay remained in effect.

You may have noticed my use of the word “if.” Fortunately, the Portland City Council heard these testimonies and lifted the state of emergency. Chalk this up to one more city council that learned a lesson in economics.