Bare Minimum A Radical City Council Candidate Finally Has Us Talking About the Minimum Wage—But How Far Will It Go?

THE DIGNITARIES LEAVING Mayor Charlie Hales' State of the City speech at the Sentinel (née Governor Hotel) on Friday, March 14, had a choice.

They could duck through Jake's Grill—the esteemed see-and-be-seen eatery on the first floor—and maybe stop for a drink on their way out the doors on SW 10th. Or they could strut through the hotel's grand lobby along SW 11th and bask in the sunlight while waiting for the valets to fetch their cars.

State Representative Jessica Vega Pederson, a Democrat from East Portland, chose the latter. But she had some company.

A dozen activists had spread up and down the curb in front of the hotel, all waving cheerful red placards showing a large "15." They'd come with Nick Caleb, a newly declared Portland City Council candidate, on a mission to visibly promote perhaps the most important issue in his campaign: raising the city's minimum wage to a nearly unprecedented $15 an hour.

And Pederson—someone with the power to do something about that—was precisely the kind of captive audience member they'd been hoping to engage. She smiled at them while they shouted Caleb's name to passersby. Then, when her black SUV pulled up, she got in and drove away.

Pederson, at least, was pleasant. Most people walked right by.

"There was one lady waving at us," says Caleb, an attorney and Concordia University professor, "like we were smelly."

That's not to say either Caleb or the minimum wage issue he's seized on will go away any time soon.

In announcing an insurgent bid against City Commissioner Dan Saltzman, Caleb has shaken awake an otherwise sleepy re-election season. And he's done it by forcing Portland, and by extension the rest of Oregon, to finally take part in a debate that's not only washed over the White House, but also our biggest neighbor to the north, Seattle.

Winning that debate won't be easy. It might be impossible. Oregon law—shaped by business interests deeply opposed to minimum wage hikes—prevents cities from passing their own comprehensive living wages. And that means Portland's fight is just as much Salem's.

But even if Caleb loses—distinctly likely in a city where incumbents clutch power like monarchs—he'll have planted a flag.

Saltzman has since come out publicly in favor of an increase—risking the ire of the business interests who've traditionally funded him. He's even looking to lobby Salem to do something, anything.

Maybe we won't get $15 an hour. But we might get something.

At the dinner hour on the day of Hales' speech, customers inside the McDonald's at NE Weidler and Grand stared out the glass doors, leery.

The sidewalks outside the restaurant are dingy and often crowded. On this evening, they were packed with tambourining humanity. Drivers heading north after another workweek laid on their horns, spurred on by signs ordering them to "Honk for $15 Now," telling them "Portland Needs a Raise."

"I got a question," a woman headed into the restaurant said to one of the sign bearers. "What is '15 Now'? What is that?"

The real answer is longer than what the woman got. It starts with the obvious: The 25 or so people rallying outside of the McDonald's want a $15 minimum wage. Now.

Spurred on by Caleb's call to arms—and emboldened by successes elsewhere in the Northwest—Portland activists were finally ready, on March 14, to rally for higher wages.

To say our progressive city is late to the party doesn't quite capture how far we've trailed the rest of the nation.

Low-wage employees in cities around the country have been clamoring for better pay since fall 2012. In New York, St. Louis, Chicago, Detroit, and Milwaukee, workers held protests demanding better pay and the right to unionize. Some employees walked off the job. Managers, too.

By December 2013, the Service Employees International Union (SEIU) had joined the fight, sparking more walkouts and pickets in dozens of cities. And, at some point in between, the fervor reached Seattle and caught fire.

Seattle, in fact, has everything to do with Portland's newfound conscience about the minimum wage.

Caleb has cribbed much of his campaign—and strategy—from Kshama Sawant, a socialist, economics instructor, and former Occupy organizer who shocked the nation last year by unseating an established Democratic incumbent in a hard-fought race for Seattle City Council.

The rhetoric that sent her to office included doing away with "corporate politicians," lowering rents, and raising taxes for the rich. Most of all, though, she pushed the $15 minimum wage.

Sawant and her political organization, Socialist Alternative, first grabbed hold of the $15 figure early last year—taking the baton from fast-food workers in New York, who claimed they couldn't survive in that expensive city without at least that much. Socialist Alternative had previously advocated a $12.50 wage.

But $15 has taken root in Seattle like nowhere else.

As Sawant won her council seat last November, voters in the industrial suburb of SeaTac approved a $15 minimum wage for all but the smallest businesses. By that time, Seattle mayoral candidate (and now mayor) Ed Murray had promised he'd push the wage if voted into office. Today, the entire city council publicly backs an increase.

"We've won the public debate," says Ramy Khalil, a Socialist Alternative organizer and activist with 15 Now, the group pushing the $15 minimum wage in Seattle. "Similar things can be done in Portland."

Roughly a month ago, Khalil and others organized Portland's first-ever Socialist Alternative chapter. It's small, members say—about seven members. But it's that group that organized the March 14 McDonald's rally.

"We've been waiting to start a branch of our membership in Portland for a long time," Khalil says. "It wasn't until we got one of our members elected to Seattle City Council that we got the interest."

Caleb, while mulling over his own city council race, says he chatted up Khalil and other Seattle activists who'd been in town organizing. Since announcing, Caleb's continued to speak with them. His platform, after all, is rife with the values that propelled Sawant to office.

Beyond a higher minimum wage, Caleb is pushing strong unions and better environmental protections. He's advocating for a more compassionate approach to homelessness, stemming gentrification, and better police oversight. Plus, Caleb's vowed to forego a full council salary and accept only what an average Portland worker makes (almost $50,000, compared to more than $100,000).

"One of the primary responsibilities of political leaders is to actually have politics," Caleb says. "We need movement building."

After some extended consideration, Socialist Alternative's Portland branch formally endorsed Caleb. The group had been conflicted because Caleb—a registered Green Party member who speaks candidly about his disillusionment with Democrats—hasn't declared war on establishment politics.

"We really like his platform," Khalil says. "The only big issue is he hasn't said clearly whether he's going to be independent from the Democratic Party. We see the Democratic Party as a trap."'

But mainstream politicians have come around to a wage hike, too. Democrats are flogging the notion of increasing the federal minimum wage as the November elections approach. President Barack Obama proposed increasing the federal minimum wage from $7.25 to $9 in his 2013 State of the Union Address, but has since joined the call for a $10.10 wage.

That measure has so far been delayed by Republicans, who claim an increase would kill jobs and/or harm small businesses. So Obama's done what he can; he signed an executive order requiring federal contractors to pay their employees at least $10.10 an hour.

There's movement among the states, too. In September, California lawmakers agreed to set a nation-leading $10 minimum wage by 2016. New Jersey voters bumped their minimum wage $1 in January. It's now $8.25. Activists in other states are circulating petitions.

"I don't believe elected leaders have an appetite for any big social change, frankly," says Felisa Hagins, political director for SEIU Local 49, which represents thousands of hospital, custodial, and security workers. "It's up to the grassroots folks to change that appetite. Obama didn't wake up one morning and say, 'You know what would be awesome? Raising the minimum wage.' It was workers standing up."

Oregon deserves a round of perfunctory applause for doing something only 10 other states have managed: In 2002, we approved Measure 25, a ballot initiative that raised our minimum wage some 40 cents and then built in annual increases so that new minimum would keep pace with inflation.

Washington State's minimum wage leads the nation at $9.32. But Oregon is now right behind it, at $9.10. That's less than $19,000 a year for a full-time worker, not enough to keep a family of three above the federal poverty line. It's also a far cry from $15­, which works out to $31,200 a year. Or the $10.10 figure being tossed about nationally ($21,000 a year).

And even Measure 25 wasn't without controversy.

"People said all kinds of things would happen: mass unemployment, businesses shutting down," says Hagins. "None of that came to fruition."

Chuck Sheketoff of the progressive-leaning Oregon Center for Public Policy said not only did raising the minimum wage not have a "negative impact," but that "poverty would be worse if we didn't have it."

"It's been good for Oregon and good for Oregonians," he says.

But Oregon's bold leap forward followed a little-known policy secret.

More than a year before voters approved Measure 25, the Oregon Legislature sent Governor John Kitzhaber a bill that pre-emptively stripped away local governments' ability to set their own minimum wages.

That legislation, HB 2744, was the brainchild of the Oregon Restaurant Association—the powerful lobbying group for the state's restaurateurs. It meant Oregon, for better or worse, would have just one minimum wage—even if more progressive towns, like Salem, Portland, or Eugene, might heartily support something higher.

The lore today is that the two policies were connected as part of a compromise—the pre-emption traded for annual increases. That's how Saltzman and others initially described it. Bill Perry, the restaurant group's top lobbyist then and now (it's since merged with the hotel industry's trade group to become the Oregon Restaurant and Lodging Association [ORLA]), insists that isn't the case.

"They were separate," he says, arguing the pre-emption was driven by the fear of a patchwork nightmare of local wage laws.

"It's too hard to do business in that environment," he says. "We were saying this is a statewide issue."

Perry's version of the origin story seems to be borne out in Oregonian clips from the 2001 legislative session. Neither Measure 25 nor the general notion of an inflation-indexed minimum wage appear in stories chronicling HB 2744's rise to law. The patchwork argument did. So did fear of the growing living-wage movement—and brewing talk that cities might take minimum wage matters into their own hands.

"I see it coming," Perry candidly told the Oregonian in April 2001. "I'm just trying to stop it."

Measure 25 was never seen as a panacea.

"We indexed our minimum wage 15 years too late," says Hagins, arguing that keeping the minimum wage mostly stagnant before 2002 had already sapped it of the purchasing power it had years ago.

But in providing for automatic annual increases—letting lawmakers off the hook—it's effectively quashed any serious talk about a more dramatic hike.

That might change in an election year that's seen Democrats across the nation go lockstep in raising hell over income inequality—and in the shadow of a decisive populist victory by a radical like Sawant.

In Oregon, until Caleb made himself the local face of the $15 movement, that public conversation had mostly been led by Labor Commissioner Brad Avakian. Avakian's been everywhere talking up the minimum wage—telling a forum of Democrats in Marion County last month, for example, that he'd rather index it to the federal poverty line for a family.

And, for what it's worth, prominent political polling firm DHM Research told the Mercury it couldn't comment on how a minimum wage fight might play in Oregon because it's actively working on the issue.

The wage fight has been slower, however, to penetrate the veils of power in the Oregon Legislature.

Talk about income equality and workers' rights has focused more on issues like paid sick time, affordable housing, and income disparities for women and minorities. Those issues may yet loom larger during next year's session.

"There should be room for a variety of progressive causes," says Hagins, calling the minimum wage "wildly important."

Even if legislative leaders do create that space, it's unclear what a minimum wage fight might look like.

If it's framed as a fight against the state pre-emption on local minimum wages—prompted by agitation in Portland—that may not impress rural and suburban lawmakers loath to let Oregon's biggest city get its way. Plus, lifting a pre-emption on any subject is a tough sell: Multnomah County has tried for years to win permission to raise its tobacco tax in order to better fund health programs.

"If we can't allow Multnomah County to raise a cigarette tax, then I don't know how you'll get them to allow anyone to raise their own minimum wage," says Joe Baessler, political director for the American Federation of State, County, and Municipal Employees of Oregon. "The 'patchwork' argument is something a lot of legislators fall back on as an excuse for not wanting to do this stuff. It's a very frustrating argument."

Not fighting over the pre-emption could still leave a debate over a statewide increase. And even that comes with questions: How much? Should we keep the inflation index? Should legislators approve it themselves? Or should they punt to voters?

"There needs to be a conversation," says Tom Powers, a spokesman for Senate Majority Leader Diane Rosenbaum, one of the leaders behind Measure 25. Powers says his boss has been talking to Avakian. "We're definitely hearing about this more than we have in the recent past."

Portland may not be as powerless as it thinks.

Saltzman has come out for a wage between $10 and $15. But he initially threw up his hands when we spoke to him, citing the pre-emption. Now, he says, upon further reflection, Portland should target that pre-emption when it drafts its legislative lobbying agenda next year.

And in case lawmakers are turned off by the notion that this is a Portland-only problem, he also wants to take it before the League of Oregon Cities, which could push it at the statewide level.

"I'm definitely interested in both," he says.

Saltzman's embrace of the issue is canny: He's tied it to his longstanding advocacy for women's and children's issues. And he pointed to existing city policies—under a loophole in the pre-emption measure—that force contractors to pay certain workers more than the minimum wage. He wouldn't vote for the Portland Timbers stadium deal in 2009 unless the Timbers agreed to pay their concession workers about $11 an hour.

"I've been talking about it for quite a while," he contends, taking pains to stress that he advocated for a minimum wage increase in a Portland Business Alliance candidate questionnaire. "It's no secret. I just haven't been talking about it publicly. I've been thinking about it since the president's State of the Union. A lot of people have been thinking about it more."

(The Mercury asked the Portland Business Alliance, small business lobbying group Venture Portland, and several small business owners for their reflections on what a higher minimum wage could mean. Only the PBA responded, declining to comment.)

Caleb, when he first proposed a $15 minimum wage, didn't realize there was a state pre-emption until told by the Mercury. "It took me a whole 30 minutes to come up with a plan," he joked at his first campaign rally. "We can be creative."

Caleb's proposal is to tax businesses who aren't paying their workers $15 an hour, then use that money to create a city fund that would subsidize employees' pay.

"We're pre-empted from raising a minimum wage," he says, "but we're not pre-empted from creating a penalty system for people who won't pay a living wage."

Saltzman's support, as the presumptive favorite in the city council race, has encouraged at least one of his colleagues on the council to join him. And that makes things even more interesting.

Nick Fish, a former labor lawyer also up for re-election this spring, tells the Mercury he'd back a fight against the pre-emption, as well as a broader effort to raise the statewide wage.

"As a consistent champion for reducing inequality and helping struggling families," he said in a statement, "I fully support legislative action to provide a living wage for Oregon workers. It is unacceptable that people working at Walmart still qualify for food stamps."

Dana Haynes, a spokesman for Mayor Charlie Hales, says an earnest dive into the city's legislative agenda won't start until after the city's budget is approved this spring. But he says Hales' chief of staff, Gail Shibley, and Martha Pellegrino, the city's top lobbyist, are interested in taking a deeper look.

"There was nobody who said, 'Nah, we don't want to talk about it,'" Haynes says.

That all presumes the Oregon House doesn't flip Republican this fall. Because ORLA—traditionally a generous supporter of the GOP—clearly doesn't want to talk about the minimum wage.

"It's a political diversion," says Perry, the ORLA lobbyist. "There's no proof that it helps or hurts anybody."

It's true a higher minimum wage isn't rocket fuel for the country's recovery. Economic policy is far more nuanced, and the purchasing power and stagnating pay of the broader middle class must also be addressed.

But it's also important to note that today's minimum wage is a shadow of what it used to be. From its apex in 1968—when the $1.60-an-hour minimum was worth the equivalent of $10.69 today—the federal minimum wage has been only sporadically increased. And it hasn't remotely kept up with inflation.

At the same time, the Great Recession has made lower-paying jobs more prominent. Research shows that medium-wage jobs shed in the fallout have been largely replaced by low-wage work. Regardless of what Congressional Republicans tell you, it's not just industrious teens working the McDonald's counter these days. More and more, it's people looking to support themselves, and maybe their children.

A recent parsing of census figures from the data wonks at fivethirtyeight.com found that more than half of Americans earning less than $10.10 an hour are trying to live off those wages, as opposed to roughly 39 percent in 1990. "Back then, nearly a quarter of low-wage earners were teenagers, compared to just 13 percent today," the site found.

And a 2013 study found frontline fast-food workers' families are enrolled in public welfare programs, which is more than double the rate of the entire workforce.

But disagreement has been a hallmark of the wage debate. Proponents say a raise is valid and useful, while opponents fret it would imperil businesses and workers alike. Such contradictions are front and center now that the discussion's gone national.

Consider a recent study from the Congressional Budget Office (CBO): Cheered by opponents of an increase, the report predicted some 500,000 jobs (0.3 percent) would be lost nationwide. The White House and a number of prominent economists called that number ridiculous.

The CBO also predicted 900,000 workers would be lifted above the poverty line. But that pales to the number put forward last year by a University of Massachusetts Amherst economist, Arindrajit Dube: 4.6 million people out of poverty.

And people on the same side of the issue sometimes disagree on details. The White House claims a raise to $10.10 would affect 257,400 Oregonians. A report from the Economic Policy Institute, which has helped lead the call for an increased minimum wage, puts that number at 269,000.

That's all before you talk to economists, and find yourself beset with nuance.

"It's a real mistake to believe that raising the minimum wage creates unemployment," says Mary King, a Portland State University economics professor. King is one of a handful of local economists who signed her name—with about 600 others nationwide—to a recent letter supporting a federal wage hike.

Then there's Tony Rufolo, an economist and professor emeritus of urban planning at PSU—one of roughly 500 experts who signed another letter, arguing against an increase. A raise in Portland's minimum wage, he says, might send businesses scurrying over city lines. He also says it might hurt low-skilled workers, since employers who pay more are likely to be choosier.

"The people who are most negatively impacted are those you're trying to help," Rufolo says.

Then again, giving workers more spending money might help with the slow-going economic recovery.

"If you're going to do a minimum-wage increase," says PSU economics professor John Gallup, "now is the time."

Even advocates admit, though, that the minimum wage is a clumsy instrument if all you want to do is tackle poverty. The president's proposed wage hike would reach more people above the poverty line than below it, the CBO report found.

But as Dube, the Amherst economist, noted in a paper, support for a higher minimum wage goes "beyond reducing poverty. The popular support for minimum wages is in part fueled by a desire to raise earnings of low and moderate income more broadly, and by concerns of fairness."

A minimum wage increase can address those things, studies show. With fewer Americans impoverished at the end of the day.

"This is responding to huge declines to relative earnings for people with low levels of education," says University of Portland associate professor Todd Easton, a labor economist. "We're rich, right? We ought to do more for people at the bottom of the wage distribution."

But Easton's not sure a $15 minimum wage is the answer for Portland. That would be a 65 percent increase on Oregon's current minimum, after all. None of the economists the Mercury interviewed were familiar with a study that tackled a hike like that, though a recent study from the University of California, Berkeley, found "no measurable effect" on employment for an increase to $13.

Of course, Seattle is in the midst of investigating. With a $15 minimum wage likely there, two separate commissions are exploring how it might affect local businesses.

They're also strategizing how best to enact the policy: Should corporations have to bump pay to $15 right away, while smaller businesses take their time? Should an employee's total compensation—including health benefits and vacations—be included? Or strictly their hourly wages?

These are questions Portland and Oregon will have to ask—if our leaders are serious about having the discussion.

We're also a different city than Seattle, with lower mean and median wages, and a lower cost of living. That suggests the effect of a $15 wage would be more dramatic here, Easton says.

"If you just think about the disruption it would represent to businesses, the increase in costs, it would be bigger," he says. "If you think about the cost of living, the rationale is weaker."

On the evening of the McDonald's rally, a cashier named Kevin rang up a long line of customers at the Walgreens across the street.

"So what do you think of the protest?" he asked, unprompted. "I'm against it, actually."

Walgreens, in Kevin's opinion, isn't nimble enough to cope with a two-thirds increase in Portland's minimum wage. "I'd lose my job," he said.

A middle-aged man waiting in line grumbled sarcastically: "Why wouldn't they just make it $25 an hour?"

Back across Weidler, McDonald's employee Israel David was just getting off his shift. Or so it seemed until he approached the gathered activists.

"You guys picked the perfect day to do this," the 17-year-old high school senior said. "I just quit my job."

David held down the position for four months. He'd been planning to quit that day, anyway—only when his shift was done at 11 pm, not in the middle of the dinner rush, as he did. The McDonald's gig conflicted with his studies.

"And it's not enough pay, anyway."

David walked off up NE Grand, raising his hands in the air, yelling: "Freedom!"