Minimum wage earners in the Portland area will see the biggest raise in two decades kick in on Saturday, the second of seven increases that has thrilled some workers but left business owners wondering if they can keep up.

The hourly rate will jump $1.50, to $11.25, within Portland's urban growth boundary – the most populous parts of Multnomah, Washington and Clackamas counties – thanks to 2016 legislation that tied the annual increases to geography.

(Do you work within the urban growth boundary? Find out here.)

Minimum wage growth will accelerate more slowly in less populated areas. It will, for example, go from $9.75 to $10.25 per hour in Hood River, Deschutes and Lane counties, and from $9.50 to $10 in Klamath, Malheur and Coos counties.

All told, 301,000 jobs will be affected, according to the Oregon Employment Department. That's about 14 percent of all jobs in the state.

Though a pay bump would seem to be good news, not everyone is cheering. Workers' rights groups contend it still doesn't pencil out to a living wage. Workers who rely heavily on tips say it may not make much difference.

And some employers warn it will force them to raise prices, hire fewer workers and automate production – strategies that would seem to align with the findings of a recent study out of Seattle that concluded a higher minimum wage could actually hurt the people it's meant to help.

CONSUMER WILL PICK UP TAB

David Brown opened Menchie's, a frozen yogurt franchise in Sherwood, with his wife Janice in early 2015. The hourly minimum wage has risen $2 since then.

David Brown says he's already raised prices at his Sherwood frozen yogurt shop to offset the added labor costs. He started in January, charging another 4 cents an ounce but expects he'll have to raise prices every year to keep pace with an hourly rate set to top out at $14.75 in 2022. It hasn't hurt sales so far, he says, but he imagines it will eventually.

"When do we stop seeing guests come into the store because they can't afford it anymore?" he asked.

Ken Gordon, who owns Kenny & Zuke's Delicatessen in downtown Portland, is also raising prices. The state-mandated pay hike has a ripple effect, he explained.

"At some point, the staff who have been with you a while will start demanding increases to keep pace," he wrote in an email to The Oregonian/OregonLive. "This is already starting to happen, and will not be insignificant."

Gordon isn't sure how the industry will respond to the step increases beyond raising prices. But restaurants could, for example, eliminate tips and add a service charge, he said, which could lead to more equitable pay and help small businesses survive.

He's hoping customers will understand as the industry adjusts. "It creates a different business model -- not better or worse, just different -- that will require more creative ways of dealing with slim profit margins," he said.

Andrew Dyke, a senior economist with Portland economic consulting group EcoNorthwest, said smaller companies could be hit harder by the wage hikes. Larger chains can demand lower prices from suppliers and may have the ability to operate on thinner margins. Smaller operations likely don't have those luxuries, he explained.

"In the short term, larger entities may have more ability to absorb the increases in cost of labor," he said.

THE FARMER'S PERSPECTIVE

Some businesses don't have the option of raising prices. Farmers, for example. Crops are part of a global market, so individual farmers have no control over the price they get for their wheat, berries or grass seed. Lately, commodity prices have been down.

"Our industry is unique because we're price takers, not price setters," said Jenny Dresler, director of state public policy for the Oregon Farm Bureau.

Dresler said the farmers she represents – many of them in the Willamette Valley – have tried to cut costs. Some are scaling back employee hours and turning to family to pitch in, or doing more of the work themselves. Others have given up on crops that need to be hand-picked, such as tree fruits and berries, in favor of those that are less labor intensive.

And Dresler said nearly every farmer is looking to machines to shoulder more of the burden.

"As the cost of production increases and the cost of commodities stays flat, they're going to have to automate more, or they're not going to make it," she said.

MIXED REACTIONS FROM WORKERS

In this 2015 photo, cook Bulmaro Sosa, right, goes over a food order with server Zachary DeYoung at an Ivar's restaurant in Seattle. Cooks, servers and cashiers make up a large segment of Oregon workers paid minimum wage.

Taryn Judah, 21, earns minimum wage plus tips at her waitressing job. Though she's glad for the higher rate, she doubts it will mean more money in her pocket.

"The minimum wage going up just means I'm going to be taxed more," she said.

The restaurant's owner has already raised drink prices to offset the higher wages, and Judah worries customers won't be as generous with tips.

"I'm excited for more money," said Emily Hill, 21, a student-teacher at a preschool at Portland State University. "I'll just have more money in my savings account."

Over at Portland International Airport, Jeremy Boutwell already earns $11.25 per hour as a Hudson newsstand cashier. But he's still getting a raise: the company is bumping hourly pay to $11.90 to comply with union requirements, he said.

Still, Boutwell is worried it won't be enough to offset the price increases other companies may institute to cope with their higher labor costs. What's more, the new wage at the shop doesn't account for years with the company.

"It's frustrating that the increase I will see in my paycheck is not equal to the increase that the people making minimum wage will see," he said. "As somebody with 25 years' experience standing behind a cash register, it's a little annoying to learn that I'm going to earn the same amount as kids right out of high school."

THE LONG-TERM IMPACT

Though a person working full-time will collect an additional $60 a week under the new law, state economist Josh Lehner says this bump in pay for individuals doesn't necessarily equate to a big economic impact. This is because minimum wage workers in Oregon make up a relatively small share of all workers, he explained.

"By and large, we're not expecting a ton of change," he said, though hiring is expected to slow a bit over the next 10 years.

Fair Shot for All, an Oregon coalition of unions, multicultural groups and others dedicated to expanding workers' rights, fought for raising the minimum wage in 2016.

Coalition director Heather Stuart said in a statement that a higher wage would help working Oregonians, especially women and people of color, who have a disproportionate share of low-wage jobs.

"No one who works full-time should live in poverty," she said.

According to a living wage calculator created by the Massachusetts Institute of Technology, adults living in Multnomah County working full-time needs to make $13.09 an hour to support themselves. An adult supporting a child would need at least $26.35 an hour.

Though some states and cities have taken it upon themselves to raise their respective minimum wages, the federal minimum wage – $7.25 an hour – hasn't budged in eight years.

Up in Seattle, which is phasing in a $15 minimum wage, two recent studies have attempted to parse its effects.

The first study, from the University of California at Berkeley, found that an increase in the minimum wage like Seattle's could lead to a small amount of job loss, at most.

These findings echo those in previous studies, as well as those by Oregon's economists.

But a study released Monday by University of Washington researchers showed something different: Seattle's pay increase led to a significant decline in worker hours. Those workers, on average, earned $125 less a month, the study found.

In this June 2, 2014, file photo, a sign that reads "15 Good Work Seattle" is displayed below Seattle City Hall, right, and the Columbia Center building, left, after the Seattle City Council passed a $15 minimum wage measure.

Critics of the UW study say the results were probably skewed by the city's hot job market. During economic boom times, employers are willing to pay workers more. This translates to fewer hours worked by low-wage workers.

Dyke, the EcoNorthwest economist, acknowledged that while no study is perfect, he wasn't surprised by UW's findings.

"When the cost of labor goes up, there is likely to be some type of employment effect," he said.

The key question – and where the two studies diverge – is how dramatic that effect will be.

"I think in Oregon, overall I wouldn't expect the wheels to fall off the economy," Dyke said. "The negative impacts are not going to be huge. We just don't know how big the downside is going to be. And that's the risk."

Any downside could be felt more intensely in rural parts of the state, despite the smaller wage increases.

"Maybe we do see a meaningful reduction in employment, but it's offset by the benefits to the workers," he said. "We don't know. We're in almost uncharted territory in terms of the magnitude of these things."

-- Anna Marum

amarum@oregonian.com

503-294-5911

@annamarum

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