There is good news and bad news for Ohioans working for minimum wage.
First the good news: the rate is going up to $8.70 an hour for non-tipped workers on Jan.1, which is $1.45 an hour better than the federal minimum wage of $7.25. Ohioans working full-time for minimum wage will earn $3,000 more next year than their counterparts making the federal minimum wage.
Now for the bad news: working 40 hours a week at $8.70 for 52 weeks gives you an annual income of $18,096, which still lands a family of three or more below the federal poverty line.
“Putting that inflation index was a really important step because it’s a safeguard,” said Michael Shields, a researcher focused on jobs and the economy for Cleveland-based Policy Matters Ohio. But the minimum wage hikes in Ohio over the past decade have merely allowed workers to keep pace with inflation, he said.
In 2006, Ohioans voted 56.6% to 43.3% for a constitutional amendment to bump the state minimum wage up to $6.85 an hour, up from $5.15, and tie future annual increases to the rate of inflation. The 2007 increase was the first minimum wage boost since 1996.
At the time, organized labor and faith groups cast the campaign as a battle for economic fairness and justice while business groups warned it would hurt the state economy, lead to layoffs and invade people’s privacy.
“Those concerns haven’t come to fruition,” Shields said.
About 20 states match or default to the federal minimum wage of $7.25 an hour and six states, plus the District of Columbia, are phasing in a $15 an hour minimum wage.
Twenty-three states set their minimum wages above Ohio’s upcoming rate of $8.70, according to the National Conference of State Legislatures.
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Shields said the economy has grown by 88 percent since 1968, which marks the high point for the buying power of the minimum wage. If the minimum wage had kept pace with inflation since then, it’d be $12.07 an hour now, he said.
The minimum wage for tipped workers in Ohio will increase to $4.35 an hour, up from $4.30 an hour, on Jan. 1.
The wage increases apply to employees of businesses with annual gross receipts of more than $314,000 per year.
For employees at smaller companies with annual gross receipts of $319,000 or less per year after Jan. 1, 2020, and for 14 and 15-year-olds, the minimum wage is $7.25 per hour.
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