As you know, the Oregon legislature passed a stepped increase to the minimum wage that took effect July 1st, 2016 and runs through 2022, when the minimum wage will rise to $14.75. Washington also passed a similar legislation that increases their minimum wage to $13.50 by 2020. Compared to 2016, prior to this legislation, the minimum wage in Oregon will increase by 60% and the Washington minimum wage will increase 40% during this 5 years.
Although the minimum wage rate does not directly impact us, it does indirectly. We have always paid above minimum wage for our entry labor position. Our work is harder and requires more effort and training than most traditional minimum wage jobs. Our current entry level wage is at $15.50 and has increased significantly over the past 5 years due to the historically low unemployment levels due to the great economy. While the minimum wage wouldn't directly, the wage pressure it will place on us due to the great economy and low unemployment.
Setting all political opinions aside as to whether it was "the right thing to do", we all must understand that it will impact the cost of products and services we all use. We at Pacific have always worked hard to offset inflationary impacts to our pricing through efficiency improvements and innovation. With an historical annual 2.8% labor cost increase is possible to offset some or all with efficiency and innovation, especially in a slower economy. With the current 10% annual average increases, combined with a hot economy, our industry, as will most service industries, will see prices increase greater than in recent history. Say goodbye to the five dollar foot-long and dollar menu.
And it is great to have such low unemployment as we can all remember when it hit 10% during the recession. It is nice to have work for all those who want it but the current historically low unemployment has driven wages up for all service and construction industries. This has had as much impact as the minimum wage increases.