Russ Kremer, owner of the Ponderosa Pizza Parlor in La Pine, spends more time mopping floors and prepping ingredients these days, and he says it’s because of the recent increases in Oregon’s minimum wage.

The second hike since July 2016 took effect Saturday, raising the minimum wage in Deschutes County by 50 cents to $10.25 per hour. That is the “standard” rate, which applies to urban counties outside the Portland metro area. Rural counties, including Jefferson and Crook, have a lower minimum wage, which also rose by 50 cents, to $10 per hour.

“I take care of more of the cleaning duties and stuff so I can cut the hours down,” Kremer said Monday.

Because businesses may compensate for minimum wage hikes by cutting hours, there’s a long-running debate between business and labor camps about whether such mandates ultimately hurt or help low-wage workers. A recent study of Seattle’s $13 per hour minimum lends credence to the pro-business argument, although with several caveats.

In a working paper published by the National Bureau of Economic Research, University of Washington researchers found that after Seattle’s minimum wage went from $11 per hour to $13 per hour in 2016, the number of hours worked in low-wage jobs fell by 9 percent, while the hourly wages increased by about 3 percent.

“So the net effect is a 6 percent reduction in take-home pay,” said Mark Long, one of the co-authors and a professor at the Evans School of Public Policy and Governance at the University of Washington.

In the study, low-wage is defined as less than $19 per hour, which is the point at which Seattle’s minimum wage hike stopped cascading through payrolls.

It could be that employers made up for the loss in low-wage hours by shifting the work to people with more skills, or, like Kremer, taking on the work. But how they compensated isn’t clear yet, Long said.

The University of Washington team found that Seattle’s previous wage increase, from $9.47 per hour to $11 per hour, had a smaller effect, so phased rate hikes, like the one Oregon enacted in 2016, might not have as big an impact on workers’ hours, Long said.

The researchers also think the effect is muted after statewide or federal wage hikes because it’s more difficult to move work out of a state or country than a metro area, Long said. Oregon’s approach is regional with different rates for the Portland metro area, other urban counties and rural counties. “These kind of local details make a big difference in what we can expect in terms of impact.”

Kremer said his starting pay is minimum wage, but he’s also given raises to long-standing employees. He’s made up for the cost of labor by raising menu prices, but he said that doesn’t go unnoticed in a community like La Pine. Ponderosa Pizza gets its share of tourists, but it also serves a lot of seniors who are on fixed incomes, he said.

A general labor shortage in Bend is driving wages at entry-level jobs well above the state-mandated minimum. Joe Devencenzi, owner of Planker Sandwiches downtown, said he’s starting employees at $11 per hour.

Oregon will continue to raise the minimum wage each year until the standard rate reaches $13.50 per hour on July 1, 2022. After that, the standard rate will be indexed to inflation, with the Portland-area rate at $1.25 more and rural-area rate $1 less.

Devencenzi said the next minimum wage increase, or perhaps the 2019 hike, will be a challenge. It doesn’t make sense to pay “a more premium wage” to high school or college students with no work experience, so labor-intensive businesses such as restaurants have to find a way to increase productivity, he said.

“I’ll have to make some sort of substantial change next year,” Devencenzi said. “I don’t know yet what that’s going to look like.”

Minimum wages hikes are generally passed on during boom times, but research has shown they have a greater impact on workers during recessions, Long said. The Seattle study showed a similar pattern with the largest negative effects on employment showing up in the first quarter of every year. “In Seattle, that’s the lowest point of demand for low-wage work,” he said. “Like a mini recession every winter.”

—Reporter: 541-617-7860, kmclaughlin@bendbulletin.com

By the numbers

New minimum wage rates took effect July 1. Here are the wages for different parts of Oregon:

“Standard” urban counties

$10.25

Portland metro area $11.25

Rural counties $10

July 1, 2018

$10.75

$12.00

$10.50

July 1, 2019

$11.25

$12.50

$11.00

July 1, 2020

$12.00

$13.25

$11.50

July 1, 2021

$12.75

$14.00

$12.00

July 1, 2022

$13.50

$14.75

$12.50

July 1, 2023

Inflation-adusted

$1.25 over standard minimum

$1 under standard