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During the 2023 legislative session, employers from the public and private sectors implored lawmakers to remove a significant workforce barrier created by the Oregon Equal Pay Act. The 2017 law makes it extremely difficult for employers to offer hiring and retention bonuses, without which businesses, police departments, transit districts and many other employers have struggled to hire the people they need to function.

The Legislature failed to remove this workforce obstacle in 2023, but Oregon’s workforce challenges persist – and are likely to worsen. The Bureau of Labor Statistics projects that the national labor force participation rate will drop from 62.2% in 2022 to 60.4% in 2032. And in Oregon, where the population has declined for two straight years, the Office of Economic Analysis is giving serious consideration to a scenario under which the state’s population continues to do so for years to come.

Lawmakers will have another chance in 2024 to fix the state’s pay equity law, which can be done without undermining its intent by adding language used by other states with equal-pay protections. House Bill 4050 would allow employers to offer pay differentials (such as signing and retention bonuses) for “overriding legitimate business purposes” (such as acute workforce shortages) as long as doing so does not discriminate on the basis of a protected class status. An employee who believed that the business need could have been addressed without a pay differential would be entitled to file a complaint.

Without such flexibility, employers will continue to lose key employees and applicants, often to employers in neighboring states unencumbered by Oregon’s uniquely onerous restrictions.

As they’re weighing HB 4050, lawmakers should consider the significant investments planned for behavioral health and other purposes. It would do little good to make millions of dollars available to hire mental health and treatment specialists, who could work anywhere, without giving Oregon employers the tools they need to compete on a level playing field.