Oregon’s Minimum Wage and the Federal Poverty Threshold

by Nick Beleiciks, nick.j.beleiciks@oregon.gov

UPDATE: This post was originally written on August 14, 2015. It was updated on February 4, 2016 as part of our minimum wage report. For more information on minimum wage, read Oregon's Minimum Wage Jobs: Facts, Figures and Context.

Recently, we were asked to illustrate how changes in Oregon’s minimum wage over time related to poverty. That is a complex comparison because the minimum wage applies to jobs, while the federal poverty level threshold varies by how many people are in a family. Add in the amount of time spent working during the year and there are three points that need to be considered: the wage; the number of weeks on the job; and the number of family members.

One approach, shown here, is to graph the number of weeks it would take to reach the federal poverty threshold while working one full-time job at the minimum wage.

An individual working 40 hours per week at Oregon’s minimum wage needs to work 34 weeks during the year in order earn enough to reach the poverty threshold. If the individual worked more than 34 weeks, their income would be above the federal poverty threshold.

The poverty threshold is higher for families, so someone supporting a family of three would need to work 52 weeks during the year in order to earn enough to reach the poverty threshold. These are just examples; other family sizes require a different number of weeks to reach the poverty threshold.

Oregon’s minimum wage and the federal poverty threshold are adjusted annually for inflation using the same index of consumer prices, so the number of weeks worked at minimum wage required to meet the poverty threshold has been fairly stable since 2003.

Prior to annual adjustments to Oregon’s minimum wage, the number of weeks reached a high of 46 weeks for an individual and 70 weeks per year for a family of three in 1988. Looking forward, the number of work weeks should remain stable unless there is an additional change in Oregon’s minimum wage, beyond the annual adjustment for inflation.

The federal minimum wage is lower than Oregon’s minimum wage, so workers in other states earning the federal minimum wage need to work longer before they reach the poverty threshold. An individual needs to work full time for 42 weeks at the federal minimum wage to reach the poverty threshold. In this straightforward example, someone supporting a family of three would have to work 65 weeks during the year at the federal minimum wage to reach the poverty threshold. Of course, it is impossible to work 65 weeks in one year, which means a family of three with one wage earner at the federal minimum wage will be in poverty without another source of income.