The push to increase the minimum wage is gaining traction across the U.S., but whether the move would help or harm workers is a complicated question area business owners say does not have an easy answer.
The issue is also increasingly tangled in politics, with President Barack Obama promoting a plan to raise the federal minimum wage to $10.10 per hour, compared to the current rate of $7.25.
In Ohio, Sen. Sherrod Brown, a Democrat, has been a strong proponent of increasing the wage as a way to help lift millions of people out of poverty and help generate new jobs as those workers have more money to spend on basic goods and services. Brown also co-sponsored the Fair Minimum Wage Act, which would raise both the regular minimum wage to $10.10 an hour and the federal tipped minimum wage to 70 percent of the regular minimum wage.
But Republicans, including Ohio Sen. Rob Portman, argued the proposal would lead to fewer jobs and be a burden to business owners during a weak economic recovery. He argued a mandatory wage hike could kill as many as 25,800 Ohio jobs.
The issue is a difficult one for area business owners, said Scott Griffith, president and general manager of Springfield-area Lee’s Restaurants. He said his company offers health insurance and a retirement plan for employees, as well as an annual incentive program designed to help boost wages.
At the same time, Griffith said for small business owners, there are concerns that higher labor costs could be passed on to customers, and the wage hike could be a disincentive for some workers who have not spent enough time on the job to improve their skills.
“For particularly small business owners, it’s a rock and a hard place because we too want people to earn a living wage and Ohio has been ahead of the nation with a higher minimum,” Griffith said.
Several other business owners declined to comment for the story.
The issue is increasingly being debated across the U.S. According to information from the National Conference of State Legislatures, 38 states have considered minimum wage legislation as of March 31 this year. By January this year, 21 states, including Ohio, already have minimum wages above the federal minimum wage.
Nationwide, the percent of hourly workers who earn the federal minimum wage or less declined from 4.7 percent in 2012 to 4.3 percent in 2013, according to information from the Bureau of Labor Statistics. In Ohio, about 137,000 workers, or 4.2 percent of hourly workers, were paid at or below the minimum wage, according to the BLS.
In Clark County, workforce development officials are staying on the sidelines regarding the federal minimum wage, said Lehan Peters, deputy director of WorkPlus of Clark County. Instead, she said the agency is trying to help entry-level workers gain certifications and other job skills that would lead to higher wages.
Several county entities recently unveiled a new program to provide training at Springfield City Schools and Clark State Community College to help area employees gain basic entry-level skills in manufacturing, for example. Areas that offer higher wages are generally more attractive to potential employers and residents considering a move to the region, she said.
“We’ve had conversations with our employers just trying to increase the rate of pay across the board for entry-level jobs in Clark County just because it helps us become a more attractive workplace,” Peters said.
But she said she has also heard concerns from area employers that a mandatory hike in the minimum wage could impact hiring.
“Definitely I think the employers are concerned because especially the smaller employers always have to watch the bottom line,” Peters said.
Even if the federal minimum wage were raised to $10.10 over a three-year period, that figure would still be below the $10.80 that Job and Family Services of Clark County considers a sustainable living wage for the area. That figure is based on several factors, including federal poverty guidelines, information from the Greater Springfield Chamber of Commerce and the rate of pay area employers are providing.
The agency also uses 200 percent of the federal poverty level guidelines to determine which residents qualify for free workforce training through programs like Temporary Assistance For Needy Families or the Workforce Investment Act. Other factors and income are evaluated, Peters said, but in general an individual making less than $11.27 per hour would be considered underemployed and could qualify for free workplace training and education.
Overall, Brown argued that increasing the federal minimum wage could benefit communities and add as many as 140,000 jobs nationwide over the next three years.
“If you’re making $9 an hour and you get a raise of $1, you’re not putting that money in a Swiss bank account,” Brown said. “You’re spending it at a restaurant or a grocery store or a hardware store. That money recirculates into the community.”
Portman said he supports Ohio’s minimum wage, which is tied to inflation and is higher than the national average. But he said increasing jobs overall should be a higher priority.
“In this weak economic recovery, we should be focusing on policies that help, not hurt Ohioans who are out of work,” Portman said.
By the numbers
$10.10 – Proposed federal minimum wage
$7.25 – Current federal minimum wage
$7.95 – Current Ohio minimum wage
4.3 percent – Percent of hourly workers in the U.S. earning the federal minimum wage or less in 2013
Sources: Bureau of Labor Statistics, Ohio Department of Commerce