Ohio’s minimum wage jumped 50 cents on Jan. 1, rising to $9.30 an hour. That’s higher than all but one adjacent state.
Minimum wage in three of the five states surrounding Ohio remains at the federal minimum of $7.25: Indiana, Kentucky and Pennsylvania. West Virginia’s minimum wage of $8.75 did not change with the new year. Michigan’s minimum wage rose on Jan. 1 by 22 cents to $9.87 an hour.
“Overall, Ohio’s minimum wage could be a lot worse,” said Hannah Halbert, executive director of progressive think tank Policy Matters Ohio.
Ohio voters passed a constitutional amendment in 2006 to annually increase the minimum wage in line with inflation. The job market disruption caused by COVID-19 made more recent data unreliable, but the 15-cent minimum wage hike in 2019 raised pay for 84,000 Ohioans, according to Policy Matters.
There are about 5.4 million in the state’s active workforce, according to the U.S. Bureau of Labor Statistics.
The federal minimum wage has not increased since 2009. It reached the peak of its purchasing power in 1968; had minimum wage increases kept pace with inflation since then, it would be close to $13 an hour.
“In general, we think that that government-mandated increases in the minimum wage are not good policy,” said Greg Lawson, research fellow at the Buckeye Institute, a conservative/libertarian Ohio think tank. But since inflation-related wage increases are now in the state constitution, he doubts that will ever be undone.
Labor shortages and other market forces are already driving up pay, Lawson said.
“And that’s what we think should happen,” he said.
Small “Main Street” businesses such as independent restaurants and bars, already hurt by COVID-19, are more vulnerable to minimum wage hikes than bigger companies that are already paying more, Lawson said.
“It’s the Main Street guys who sometimes cannot absorb that kind of cost increase,” he said.
Twenty states set their minimum wage at the federal minimum, Halbert said. Five have no set state minimum. Two have minimums set below the federal level, and the rest all have higher minimum wages than the $7.25 federal limit, she said.
In Ohio, if a minimum-wage employee works full-time all through 2022 – difficult, given the varying schedules of low-wage jobs – their gross pay would be slightly more than $19,000 a year, Halbert said.
“That is still $2,000 and some change less than the poverty rate for a family of three,” she said.
After taxes, but not including health insurance, the net income of a full-time minimum-wage worker in Ohio would be $16,484 a year, according to an online calculator from SmartAsset,
In 2021, the wage needed to afford a two-bedroom apartment in Dayton was $16.64 an hour, Halbert said. “Affordable” is defined as rent and utilities costing no more than 30% of gross income.
Some states are steadily increasing minimum wages, often through ballot initiatives, to approach $15 an hour, Halbert said.
Twenty-one states will raised their minimum wage Jan. 1, and another four will do so later this year, according to Business for a Fair Minimum Wage, a group of business owners and managers that advocates a $15-per-hour minimum wage, saying it will be good for customers and the economy in general and therefore good for business.
More than 1,000 businesses and business groups nationwide, including 10 in Ohio, have signed the Business for a Fair Minimum Wage Statement calling for that increase. One of those is Plaine Products, based in Terrace Park, a village on the eastern edge of Hamilton County.
“As CEO of Plaine Products I support an increase in the minimum wage because I recognize that our employees, and the care they take in their jobs, whether it’s packing boxes or answering questions as part of customer service, is the reason why our company is successful,” Lindsey McCoy said via email. “As a small company, we rely on word of mouth and positive reviews, and having employees invested in our mission and ensuring our customers are happy makes that work.”
She and her sister Alison Delaplaine founded the company, which makes vegan bath and body products in refillable containers.
Ten states have agreed to raise their wages to a minimum of $15 an hour, with some already there and the rest reaching that mark by 2026 at the latest.
In February 2021 the U.S. House of Representatives passed the “Raise the Wage Act,” which would have increased the federal minimum wage to $15 by 2025, but the bill stalled in the U.S. Senate.
Policy Matters urges Ohio to increase its minimum to $15 an hour by 2026, even without federal action. That would help address historic underpayment of women and minorities, and boost workers in jobs such as retail, food service and health care that are at higher risk of COVID-19, according to the group.
In March, the Buckeye Institute released a study that concluded hiking the minimum wage to $15 an hour would cost nearly 116,000 Ohio jobs by the time it was fully implemented in 2025.
Halbert said Policy Matters hoped the attention paid to frontline workers during COVID-19 would result in them getting a bigger share of businesses’ income. Instead, the share of pay going to Ohio CEOs actually increased, rising to 322 times the pay of median workers at their companies, she said.
“There’s certainly growth at the top end of the labor market, but we’re not seeing any sort of commensurate growth at the bottom end,” Halbert said.
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