Ohio entered 2013 Tuesday with a 15-cent raise in the state’s minimum wage to $7.85 an hour.
Ohio’s minimum hourly wage for non-tipped employees is linked to inflation under a state constitutional amendment Ohio voters approved in 2006. The new base wage will provide annual earnings of $16,328 — a $340 increase.
Tipped employees will receive a minimum wage of $3.93 plus tips. Employees younger than 16 must be paid no less than the federal minimum wage, which remains $7.25, unchanged since 2009.
Many companies simply accept periodic minimum wage increases as a cost of doing business. A mandatory minimum wage has been in force in the United States since 1938.
“Kroger budgets for expenses such as this,” said Kroger spokeswoman Rachael Betzler. “We will still continue to hire throughout the year as well. It’s a common thing we experience and plan for.”
Union officials and some liberal-leaning organizations welcome the wage increase. Non-profit research organization Policy Matters Ohio says the pay boost will help about 215,000 low-wage workers in Ohio.
According to the left-leaning Economic Policy Institute, nine states joined Ohio in raising mandatory base wages on Tuesday , leading to what the EPI says will be increased consumer spending that will boost gross domestic product by $43 million. Nearly 1 million workers total will benefit, according to Policy Matters Ohio and the EPI.
“This modest annual minimum wage increase will promote economic growth here and protect the real value of wages during the weak post-recession recovery,” Amy Hanauer, Policy Matters Ohio executive director, said in a recent statement. “Raising wages for those paid the least means more money is spent in our communities, and it means low-wage working families have just a little more in their paycheck to make ends meet.”
Ohio is one of about a dozen states that boost minimum wages by linking them to the rate of inflation or some cost-of-living measure. Ohioans seven years ago voted to change the state’s constitution so that the minimum wage moves with the Consumer Price Index, as tracked from August to August every 12 months.
“These rate increases keep the minimum wage in pace with inflation, and that wasn’t always the case when the decision was left to politicians,” Tim Burga, Ohio AFL-CIO president, said in a statement.
Smaller businesses and those on the conservative side tend to be more skeptical of mandatory pay raises. They argue that making the hiring of new employees more expensive may result in fewer new employees being hired, and that anything that hampers business in a soft economy is self-defeating.
“Raising the minimum wage to this high of a level sounds like another good intention, but it can have bad results,” said Greg McAfee, founder and owner of Kettering-based McAfee Heating & Air. “Many companies can’t afford to pay $7.85 to an employee who, because of lack of experience or training, may only be worth $6 per hour.
“I know there are some trying to support families on minimum wages, but I am not for our government mandating what any employer should pay or make, for that matter,” McAfee said.
New workers in the heating, ventilation and air-conditioning industry often see starting wages of $9 to $10 an hour, McAfee added.
Michael Saltsman, a research fellow with the Washington, D.C.-based Employment Policies Institute, warns that minimum wage increases “redistribute” income among low-wage families, with businesses often raising prices, cutting workers’ hours or doing a combination of both.
Low-income families end up worse off, Saltsman said. And businesses making only “a couple of cents on the dollar” profit margin — independent or small grocers, full- or limited-service restaurants and some retailers — will be harmed, he said.
“Essentially, you have some gaining at the expense of others,” he said.
Thomas Gnau - Dayton Daily News, Ohio (MCT)
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