A potential rise in the state minimum wage from $9.25 to $13.50 or $15 an hour is making some Oregon long-term care and social service providers with fixed budgets anxious unless the state follows through with a corresponding increase in the state spending on these services to avoid squeezing the providers.

A concrete budget impact has not yet been released, but the Oregon Health Care Association has hired a study through Portland State University’s Northwest Economic Research Center to determine the budget effects that increasing the base wages for workers will have on their ability to provide Medicaid and other state social services.

The study should be ready for review in time for the February legislative session, which should feature a lively debate over the minimum wage.

OHCA lobbyist Phil Bentley explained that his organization’s coalition of long-term care providers generate income from three sources: private payers, Medicare and Medicaid.

Increased charges could possibly be passed onto private payers, but those rates are already set according to what the market will bear. Medicare costs are fixed and unlikely to change. “Medicare’s not going to care what Oregon does with its minimum wage,” Bentley said.

That leaves the state Medicaid program to loosen up its purse strings so the state can assure its providers they can leave their lights on while giving something closer to a living wage to its workers.

For years, Oregon had the second-highest minimum wage of any state, behind just its neighbor Washington. But now, as of New Year’s Day last Friday, Oregon has fallen to eighth, as new rates take effect in other states even as Oregon remains stuck at $9.25 an hour. Massachusetts and California lead the pack at $10 an hour, with plans for Massachusetts to increase to $11 next year. By 2018, Oregon would fall to tenth if nothing happens.

The state has been very responsive in recent years to homecare workers -- whose wages are set directly by the state and who bargain collectively through the Service Employees International Union Local 503. These workers will reach $15 an hour in 2017 -- up from $10.10 an hour as recently as 2013.

Those kind of wages have not materialized for workers who earn wages from money that passes from the state to independent providers.

A report commissioned by the Department of Human Services and released a year ago showed that the mean wage of direct-care workers assisting the elderly was only $11.10 an hour. And although their wages had increased by about $2 an hour since 2003, they actually make about $1 less an hour now than at the start of the century, when adjusted for inflation.

“We want to pay $15 but we’re boxed in,” said Janet Arenz, director of the Oregon Alliance of Children’s Programs, a statewide coalition of nonprofits that provide a multitude of services to children, including mental health and developmental disabilities.

She noted that any raise in salary for entry-level workers would have a ripple effect, as skilled and supervisory people would also want to make proportionately higher wages than minimum wage.

Bentley agreed: “When you adjust the minimum wage, it sets the floor by which everybody else gets paid.” He said certified nursing assistants and other skilled workers would expect to be paid a few dollars above the minimum wage, while registered nurses would accordingly be paid higher than CNAs.

Arenz said the state already doesn’t adequately compensate its member organizations for their services. “If contracts don’t keep up with the mandated increase, they won’t be able to continue service.”

Two key economic arguments should work in favor of proponents of a minimum wage hike: since the state is so heavily reliant on personal income taxes, higher wages mean higher tax receipts and more funds for the state to do right by its service providers.

The state would also save on costs to Medicaid, the children’s health insurance program, housing assistance and employment-related day care as more people would exceed the income limits for state assistance. A study from the University of Oregon found that taxpayers provide a safety net of $1.75 billion for low-age Oregon workers, although most of those dollars are federal, including food stamps as well as Medicaid.

Chris can be reached at [email protected]