EUGENE–Sharp increases in Oregon’s minimum wage have boosted some hourly workers’ salaries–but pay increases also have led to wage freezes, reduced hours and lay-offs for many employees in the restaurant industry, according to a new report from the University of Oregon’s Charles H. Lundquist College of Business.

James R. Terborg, a UO researcher and professor of management, surveyed 1,000 owners and managers in the state’s restaurant industry to assess the impact of recent state-mandated wage hikes. The Oregon Restaurant and Beverage Association provided funding for the survey, which eventually will be published.

"While these wage increases benefit those at the lower end of the wage scale, there are trade-offs," Terborg says. "Skilled workers such as chefs may find their wages frozen and waitresses and waiters, who often make $5—$10 per hour in tips, may work fewer hours to subsidize pay increases for those at the minimum wage. Employers are also hiring fewer teenagers because of the higher wages."

Oregon’s minimum wage, currently the highest in the nation, increased from $5.50 to $6 per hour in 1998, then jumped again in 1999–this time to $6.50 an hour.

Sixty-three percent of the 207 survey respondents report they are more likely now to hire part-time employees, and 40 percent are more likely to hire employees who are over 21.

Seventy-nine percent of the respondents raised menu prices in 1998 to defray higher labor costs. Another 84 percent say they likely will hike prices this year for the same reason.

The majority of respondents said increases in the state minimum wage have a chilling impact on the industry.

Seventy-five percent of the respondents believe that minimum wage increases are a major contributor to recent restaurant business failures. Another three-fourths said they believe Oregon’s high minimum wage would be a major reason for a firm not to locate in Oregon.

Terborg concluded that if restaurants were allowed to pay a separate and lower wage to workers such as waitpersons who receive tips, restaurant managers would hire more employees and increase the hours they worked. Sixty-five percent of the survey respondents said they would hire more minors if they could pay them a lower training wage. Oregon is one of only seven states that does not allow for a separate salary rate for workers who receive tips.

The 1999 Oregon Legislature is considering two bills that would allow separate salary rates for workers who are eligible for tips and for teenage employees.

—30—

#F-6076/Local,OrDailies,PDX,ORBUS,NB,NN,NW