Ohio's minimum wage increase causes debate about job growth

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Ohio’s minimum wage will jump 30 cents to $7.70 an hour on Jan. 1, a move that has reignited debate about whether such automatic wage increases hurt businesses and deter job growth in a weak economy.

A state constitutional amendment passed in 2006 established a formula to adjust the minimum wage in Ohio to keep up with the state consumer price index. Ohio is one of eight states and cities with such laws.

The Ohio AFL-CIO backed the 2006 amendment. On Wednesday, Ohio AFL-CIO President Tim Burga, said “minimum wage keeps things moving in the right direction.

“At (minimum wage), you’re struggling to survive.” Burga said, “By the time you get groceries and gas, you’re already done.”

The state Chamber of Commerce urged voters to reject the amendment five years ago.

And Michael Saltsman, a research fellow with the pro-business Employment Policies Institute in Washington, said this week such laws have created problems.

“The original point was to raise wages gradually and help reduce unemployment. Instead, they’ve had unintended consequences,” Saltsman said.

Some cash-strapped businesses have hired fewer people and given employees fewer hours in lieu of raising prices, Saltsman said, adding that higher wages may have kept as many as 114,000 jobs out of reach for 16- to 19-year-olds nationwide.

Total unemployment in Ohio was at 9 percent in October. But the jobless rate for Ohio teens was at 22.5 percent through September, according to U.S. Bureau of Labor Statistics.

“Instead of helping low-income workers, it’s made it harder for low-skilled workers to get their foot in the door.” Saltsman said. “You see this tension where small businesses are saying, ‘This is crushing us.’ ”

Cory Weaver said when he opened his specialty photography business, he needed every penny he could get.

“At that point, money was so tight just trying to get things up and running” was difficult, said Weaver, owner of Life in Letters at The Greene, “If (minimum wage) had been any higher, I don’t think we would have been able to keep anyone.”

Now that the business is established, its workers are paid above minimum wage. Weaver said.

Stephen Harman, co-founder of FUSIAN, a sushi restaurant in Dayton, said he pays workers above minimum wage because “the higher wages mean we get a higher caliber of employees.”

Harman said the practice has boosted customer service and the restaurant’s bottom line.

Jim Brock, a professor of economics at Miami University, noted the law has been a “double-edged sword.”

“Right now, the timing is not great.” he said. “Right now, we have a fairly slowly recovering economy, and people’s outlooks are uncertain.”

A stronger economic recovery would make the minimum wage increase less of an issue, he said. “If things begin to pick up, it doesn’t matter that much.”