When the cost of living differs from one place to another, there is some common sense in setting different minimum wage levels. These wage decisions seem to be best made at the state level, where the costs of living are best estimated, as opposed to the federal level. Further, the minimum wage may even need to be different within states where different economic conditions exist.
Earlier this month, Oregon governor Kate Brown signed a minimum-wage law that makes the state the first to mandate higher pay in urban areas. The law enacts a series of wage increases through 2022 with the ultimate minimum-wage rate reaching $14.75 in Portland. That amount will be one of the highest minimum-wage rates in the country, according to The Wall Street Journal. In more rural areas of Oregon, the minimum wage will increase to $12.50.
What I found to be most interesting about the article was not the absolute value of the minimum wage(s) in Oregon, but the recognition that a different minimum wage should exist between rural and urban areas. States are free to establish minimum wages in excess of the federal minimum or they can let the free market establish them. What would happen if Atlanta established a minimum wage of $15.00/hour? Would businesses take a closer look at where they locate their operations? I would think so. The bottom line is the free market is best at establishing a minimum wage but even legislatures recognize that a one size fits all isn’t the right solution.