In the pursuit of economic fairness, Ohio finds itself at a crossroads with the One Fair Wage petition (One Fair Wage), a movement aiming to amend Article II, Section 34a of the Ohio State Constitution to increase the minimum wage. As with any significant legislative change, this initiative comes with both promises and challenges. In this article, we will explore what changes One Fair Wage proposes, the potential benefits of One Fair Wage, and the concerns that business operators may face in its wake.
The Proposed Changes
One Fair Wage proposes two set increases to the minimum wage rate in Ohio. On January 1, 2025, the minimum wage would increase to $12.75 per hour. On January 1, 2026, the minimum wage would see an additional increase to $15 per hour, nearly $5 more than the current minimum wage rate. Inflation adjusted increases would then begin again on January 1, 2027.
Beginning on January 1, 2029, an employer would be required to pay an employee who receives tips the full minimum wage rate, with tips on top. This would occur through gradual raises each year beginning on January 1, 2025. The employer would be required to pay no less than the minimum wage rate:
- Minus four dollars beginning January 1, 2025
- Minus three dollars beginning January 1, 2026
- Minus two dollars beginning January 1, 2027
- Minus one dollar beginning January 1, 2028.
One Fair Wage would also repeal the current provisions that: (1) allow the State of Ohio to issue licenses to employers who pay a wage rate below the minimum rate required to individuals with mental or physical disabilities that may otherwise adversely affect their opportunity for employment; and (2) state that employees under the age of 16 shall be paid a wage rate of not less than that established under the Federal Fair Labor Standards Act.
One Fair Wage proposes to change the definition of “employee” to include “every instance in which an employer suffers or permits an individual to work,” except for an individual who is employed in or about the property of the employer or an individual’s residence on a casual basis.
The Benefits of One Fair Wage
1.) Economic Stimulus: Proponents of One Fair Wage argue that increasing the minimum wage injects money directly into the economy. Low-wage workers, when given a raise, are more likely to spend their additional income on goods and services, boosting local businesses and stimulating economic growth.
2.)Poverty Reduction: A higher minimum wage can help lift working families out of poverty. By ensuring that individuals are compensated at a rate commensurate with the cost of living, the petition aims to reduce income inequality and improve overall living standards.
3.) Improved Workforce Productivity: Adequately compensated employees tend to be more motivated and productive. When individuals are paid a fair wage, they are more likely to be satisfied in their roles, leading to higher morale and efficiency in the workplace.
4.) Reduced Reliance on Public Assistance: With an increased minimum wage, some workers might be able to rely less on government-funded social programs, ultimately reducing the burden on taxpayers and public resources.
Concerns of Business Operators
1.) Financial Strain on Small Businesses: One of the primary concerns raised by business operators is the financial strain that a sudden increase in the minimum wage could place on small businesses. Smaller enterprises with limited profit margins might find it challenging to absorb higher labor costs without making significant adjustments, potentially leading to layoffs or business closures.
2.) Potential Price Increases: To compensate for increased labor costs, businesses might raise the prices of their products or services. This, in turn, could lead to inflationary pressures, impacting consumers’ purchasing power and overall economic stability. Workers may find that their new wages do not go as far as they hoped, given the increase of the price of goods.
3.) Impact on Job Opportunities: Some business operators worry that higher labor costs might deter them from hiring new employees, especially entry-level workers. This concern stems from the fear that the return on investment for new hires could be diminished, limiting opportunities for those seeking employment.
4.) Compliance Challenges: Adapting to new wage laws might pose compliance challenges, especially for small businesses without dedicated human resources departments. Navigating the complexities of new regulations, tax implications, and payroll adjustments could be daunting and time-consuming.
5.) Impact on Restaurants: By requiring that restaurants pay their tipped employees the full minimum wage with tips on top by 2029, restaurants could face drastically higher labor costs that could seriously impact Ohio’s restaurant industry. Ohio has a tip credit of 50%. Tipped employees are currently paid $5.05 per hour plus tips. One Fair Wage seeks to change this so that by 2029, employers would be required to pay tipped employees $15 per hour, plus tips (adjusted for inflation). Essentially, Ohio restaurants’ labor costs would triple.
As Ohio’s One Fair Wage petition approaches potential ballot inclusion, Ohio residents must carefully consider the advantages and drawbacks in assessing whether this represents a suitable course of action for both employers and employees in the state. If a sufficient number of valid petition signatures are obtained, Ohioans should anticipate seeing the One Fair Wage as an issue on the November 2024 ballot.