Ohio workers who make minimum wage will see a slight bump in their pay as of Jan. 1, 2024. The Ohio Department of Commerce says the state’s new minimum wage has increased to $10.45 per hour for non-tipped employees, which is 35 cents higher than 2023’s rate. For tipped employees, the minimum wage jumps by 20 cents to $5.25 per hour.
Why the increase?
The increase is based on a constitutional amendment passed by Ohio voters in November of 2006, which says the state’s minimum wage “shall increase on January 1 each year by the rate of inflation.” The state uses the Consumer Price Index (CPI-W) for urban wage earners and clerical workers over the 12-month period prior to September to determine the inflation rate. The CPI-W index increased by 3.7% over the 12-month period from Sept. 1, 2022, to Aug. 31, 2023.
Who is affected?
The state’s minimum wage only applies to employees of businesses with annual gross receipts of more than $385,000 per year. Businesses making less than that amount are permitted to pay the federal minimum wage of $7.25 per hour, which is also the state’s minimum wage for employees ages 14-15.
According to the Ohio Department of Job and Family Services, there were about 1.5 million workers in Ohio earning less than $10.45 per hour in 2023, accounting for 26.4% of the state’s workforce. Of those, about 200,000 were tipped workers earning less than $5.25 per hour.
How does Ohio compare to other states?
Ohio’s minimum wage ranks 18th among the 50 states and the District of Columbia, according to the U.S. Department of Labor. The highest minimum wage in the nation is $16.69 per hour in Washington, followed by $15.00 per hour in California and Massachusetts. The lowest minimum wage is $5.15 per hour in Georgia and Wyoming, but most employers in those states are required to pay the federal minimum wage of $7.25 per hour.
What are the benefits and challenges of raising the minimum wage?
Supporters of raising the minimum wage argue that it helps low-income workers afford basic necessities, reduces poverty and inequality, boosts consumer spending and economic growth, and improves worker productivity and morale. They also claim that it reduces the need for public assistance and subsidies, such as food stamps and Medicaid.
Opponents of raising the minimum wage contend that it hurts small businesses, reduces employment and job opportunities, increases inflation and living costs, and encourages automation and outsourcing. They also argue that it creates a wage gap between workers who receive the increase and those who do not, such as salaried and exempt employees.
Conclusion
The minimum wage in Ohio will increase in 2024, following a constitutional amendment that ties it to the rate of inflation. The increase will affect both non-tipped and tipped workers, but only those who work for businesses with annual gross receipts of more than $385,000 per year. The increase will have both positive and negative impacts on the economy, workers, and employers, depending on the perspective and situation. Ohio’s minimum wage is higher than the federal minimum wage, but lower than some other states. The debate over the optimal level and impact of the minimum wage is likely to continue in the future.