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Ohio minimum wage to rise on Jan. 1



Published: Tue, December 31, 2013 @ 12:05 a.m.

10-cent increase to add $38M to state economy, nonpartisan group says

By Tom McParland

tmcparland@vindy.com

YOUNGSTOWN

Ohio’s minimum-wage increase for both tipped and nontipped employees, effective New Year’s Day, will boost economic growth by more than $38 million and impact 330,000 workers, according to the nonpartisan Economic Policy Institute.

A 10-cent increase will put Ohio’s minimum wage at $7.95 per hour. Tipped workers — those making more than $30 per month in tips — will see their minimum hourly wage rise 5 cents to $3.98.

Analyzing U.S. Census data, the nonpartisan Economic Policy Institute estimated that the equivalent of 300 new jobs in Ohio will result from the increased economic activity caused by higher wages.

The group expects that 178,000 workers will see their wages increase to meet the new state minimum. An additional 152,000 workers who currently make more than the new minimum wage will receive a raise, as employers adjust their pay scales upward to account for the shift, according to the report.

“Ohio workers and the Ohio economy will both benefit from this raise for our lowest-paid neighbors,” Amy Hanauer, executive director of Policy Matters Ohio, said in a statement. “The employees who benefit will turn around and spend money in our communities, stimulating growth here.”

In 2006, Ohio voters approved a ballot initiative that raised the minimum wage and provided for annual adjustments tied to the rising cost of living.

Back then, the minimum wage increased from $5.15 to $6.85 per hour. In 2013, Ohio’s minimum wage rose 15 cents to $7.85 per hour.

Ohio is one of 13 states that will raise the minimum wage Jan. 1. In total, the Economic Policy Institute projects that wage hikes will affect 2.5 million workers across the country, creating $619 million in new economic activity and 4,600 new jobs to meet growing consumer demand.

Ohio employers who gross more than $292,000 will pay employees the new hourly rate, and employers clearing less than that will pay their employees the current federal minimum of $7.25 per hour.

After President Barack Obama’s call in his 2013 State of the Union address to increase the federal minimum wage, lawmakers from both houses of Congress introduced the Fair Minimum Wage Act of 2013. The bill proposes to raise the federal minimum wage to $10.10 dollars per hour and establish the national minimum for tipped employees at 70 percent of the full minimum wage.

Opponents of raising the minimum wage have traditionally argued that the increasing wages would raise the labor cost of employers, forcing them to scale back and thus increasing unemployment levels.

One study that opponents have cited is an exhaustive 2006 paper by economists David Neumark and William Wascher in which the authors found that low-skilled workers seem to be the ones most adversely impacted by minimum wage hikes.

They go on to refute arguments that increasing the minimum wage leads to higher employment and a better economic climate.

“In contrast, we see very few — if any — cases where a study provides convincing evidence of positive employment effects of minimum wages, especially among the studies that focus on broader groups for which the competitive model predicts disemployment effects,” Nuemark and Wascher wrote in their study’s conclusion.

Meanwhile, Policy Matters Ohio points to a 2013 study by the Center for Economic and Policy Research, which reviewed 20 years of research and found that minimum-wage increases have generally not caused the job losses that opponents invoke.

Rather, the study found that “minimum wage has little or no discernible effect on the employment of low-wage workers,” because the cost shock to most employers is small, and they are able to adjust in a variety of ways.

Ohio is one of 21 states, plus the District of Columbia, that sets its minimum wage above the federal level.


Comments

1Brudog99(14 comments)posted 3 months, 2 weeks ago

Wow. I can't wait to see this big boost in the economy over a whopping dime. I am sure the fast food worker will be able to run right out and buy that new car they always wanted. Anything else they buy with all of that big pay raise will only boost China or Japan's economy, not ours. And you can bet that small businesses will use this wage increase as an excuse to kick up prices, probably more than the $.10 costs them.

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2dblbogey(17 comments)posted 3 months, 2 weeks ago

@Brudog99 "And you can bet that small businesses will use this wage increase as an excuse to kick up prices, probably more than the $.10 costs them."

The $.10 per hour increase cost a business more than $.10. There will be increases to SS, Med, FUTA, SUTA, not to mention workers comp, hospitalization, company insurance etc. So yes, the increase to the consumer will be more than the $.10 per hour the worker is getting. Any business has to cover their cost, otherwise they will go out of business and there won't be any jobs. It's a vicious cycle.

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3123goz(455 comments)posted 3 months, 2 weeks ago

"Opponents of raising the minimum wage have traditionally argued that the increasing wages would raise the labor cost of employers, forcing them to scale back and thus increasing unemployment levels."
So are we to believe that if pay was cut in half, workers would increase? Sure. If they could get away paying 2.00 an hour, they would still cut back employees if they could get the production from fewer.

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4southsidedave(4709 comments)posted 3 months, 2 weeks ago

"10 cent increase to add $38M to state economy"...that is certainly an interesting spin on the paltry raise...however, the raise does nothing to help the poorest workers rise from poverty.

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5Jerry(442 comments)posted 3 months, 2 weeks ago

How does taking money away from one person and giving it to another add money to the economy???????

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6123goz(455 comments)posted 3 months, 2 weeks ago

Because the poor will spend the money, not hoard it.

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7gdog4766(1254 comments)posted 3 months, 2 weeks ago

How big of a dbag do you have to be to begrudge someone a ten cent an hour wage increase. What an ahole.

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8Jerry(442 comments)posted 3 months, 2 weeks ago

123goz - Do you envision Scrooge McDuck rolling around in a vault filled with gold coins? Whoever has the money will spend it or invest it.

A business owner MIGHT spend it on capital equipment to be more productive, or give it as a raise to another employee of his choice who really is more productive, or buy a yacht (which will make some boat builder and their employees happy).

Why do you feel we should use force of law to take it from one person and give it to another?

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9123goz(455 comments)posted 3 months, 2 weeks ago

There is no promise those with money will spend it. The poor will have to spend it. Even you added the word 'MIGHT' to your post. The lower wage people spend all the money they get.

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10YtownParent(250 comments)posted 3 months, 2 weeks ago

"Why do you feel we should use force of law to take it from one person and give it to another?"

That is a great question Jerry. Why are we suing the force of law to take away the right of those who own the goods/service (the employees who own their labor) to charge what they wish for it.

The minimum wage laws protect companies from having to pay free market value for an employee's work because an open wage market favors the employees who have the good the companies need to function more than it does the companies who need to purchase labor to create their wealth.

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