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7/25 EDITORIAL

Our compensation laws need changing



The current system for determining minimum wage and unemployment in Oregon is broken.

This leads to inflation and discourages unemployed workers from taking minimum wage jobs.

The problem isn't how much is being paid out in unemployment or what we do or don't pay for minimum wages. The problem is that both the minimum wage and unemployment benefits are continuing to rise despite the fact that the average worker in Oregon is not seeing an increase in his or her pay.

The reason for this is simple. Oregon automatically adjusts its minimum wage to match cost of living expenses and unemployment benefits are calculated using a percentage of the average wage. Consequently, each time the minimum wage increases, so does the amount of money being paid out in unemployment benefits.

Of special note to the unemployed, however, is that the increase in benefits only applies to those who file unemployment claims on or after July 1. Those with existing unemployment claims will see no jump in their benefits.

In January 2012, the state's minimum wage rose from $8.50 to $8.80 per hour, a 3.5-percent increase, which is far above the federal minimum wage of $7.25. Meanwhile, as of July 1, unemployment benefits in the state also rose by 3.4 percent.

Individuals earning maximum unemployment benefits will now receive $524 per week, while a minimum wage-earner working a 40-hour week will earn $352 per week. In the current system, if someone on unemployment accepts a minimum wage job and is later laid off, their new benefits are calculated based on the minimum wage job rather than their former earnings. As a result, unemployed workers have little incentive to take part-time or minimum wage jobs, and may ultimately receive lower benefits than if they had never gone back to work.

The current system becomes a vicious cycle with higher minimum wages leading to higher costs, which leads to higher minimum wages and higher unemployment benefits, leaving Oregon with higher inflation than the national average.

Even more troubling, the average Oregon wage-earner may have not seen a pay increase in several years. The result is that the average Oregonian ends up paying the price in higher costs for goods and services.

If we are not careful, the steadily increasing minimum wage costs will drive some businesses out of Oregon while at the same time making it more and more difficult for first-time wage earners to get a job.

We should be encouraging the unemployed to take any job and should be encouraging workers to educate themselves and work hard to climb up the business ladder. Instead, we are making it more and more profitable to remain either on benefits or in a job with little to no possibility for higher earnings while the rest of us end up footing the bill.

This isn't just a problem for government to address. It is a problem for all Oregonians and we as citizens need to work together to solve the problem.

--Central Oregonian newspaper (Prineville)



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