Why does Oregon have 3 different minimum wages?

When the Oregon Legislature overhauled the state's minimum wage in 2016, lawmakers set varying minimum wages for different parts of the state to account for differences in the cost of living.

Legislators also mandated annual increases that are now pegged to inflation, which is why Oregon's minimum wages went up on Monday.

The new hourly minimum tops out at $15.95 in the Portland area, $14.70 in many counties in the Willamette Valley and Oregon coast, and $13.70 in the most rural parts of southern, central and eastern Oregon.

The Portland area's minimum wage has climbed by nearly two-thirds since 2016, and the region now has one of the highest state-mandated minimum wages in the U.S.

Even as Oregon's minimum wage has risen, the share of workers earning the minimum has fallen rapidly – from 7.4% in 2017 to 4.1% in each of the past two years, according to the Oregon Employment Department.

That may reflect the state's extremely tight labor market, especially in the years since the pandemic. Most employers must pay above the minimum to fill jobs openings and hold onto workers.

Deschutes County has the lowest share of minimum wage jobs among large Oregon counties at just 2.5%. The cost of living has risen sharply in the Bend area, where housing is more expensive than in much of the Portland area.

That wasn't necessarily true eight years ago when Oregon lawmakers classified Deschutes County as having a lower cost of living than Portland and set its minimum wage $1.25 lower.

There is no provision in the state's 2016 minimum wage law to reclassify a county with a rising cost of living so that workers in such places receive a higher minimum wage. Regardless, employers in the Bend area have already concluded they have to pay more than the minimum to attract workers.