The minimum wage in Ohio will initially see a significant increase. Many states and municipalities are also raising their minimum standards, some of which will take effect later this year.
Raising the minimum wage has traditionally been intended to help low-wage workers afford basic necessities such as food, medicine and housing.
In January, several states will begin a series of minimum wage increases over several years. Others — including Ohio — impose smaller base wage increases tied to annual cost-of-living increases based on the consumer price index.
According to the Ohio Department of Commerce, Ohio voters passed a constitutional amendment in 2006 stating that the minimum wage will increase at the rate of inflation on the first of each year. This is what it looks like this year:
What is the minimum wage in Ohio?
According to the Ohio Department of Commerce, the minimum wage in Ohio will increase from $10.45 to $10.70 per hour for non-tipped workers on January 1, 2025. Tipped employees will start at $5.35 per hour, up from the rate of $5.25 in 2024. These rates apply to employees at companies with annual gross revenues greater than $394,000 per year.
The minimum wage for employees of smaller businesses with annual gross revenues of less than $394,000 and for 14- and 15-year-olds is $7.25, the same as the federal minimum wage, according to the Ohio Department of Commerce.
Does an increase in the minimum wage cause prices to rise?
Economist Dante DeAntonio of Moody’s Analytics said the minimum wage increases have had no noticeable effect on inflation, in part because the share of workers at or below the wage floor is small.
January’s increases in the state minimum wage contributed to sharper inflation at the start of the year but did not affect overall price increases in the months that followed, said Ryan Sweet, chief U.S. economist at Oxford Economics.
Who would benefit from an increase in the minimum wage?
Later in 2025, a handful of states and a few dozen localities will also raise their minimum wages. The result: A total of 23 states and 65 cities and counties – a record 88 jurisdictions – will raise their wage floors sometime next year. According to the left-leaning Economic Policy Institute, the increases will directly impact 3 million workers earning the minimum wage and indirectly raise wages for 6.2 million higher-paid workers due to ripple effects on companies’ wage structures.
What is striking, however, is the growing contingent of states charging $15 per hour or more. New York, California, Massachusetts, Washington, Maryland, New Jersey and Connecticut are already there. And apart from the three joining that faction on New Year’s Day, Oregon will get there in July due to the cost of living increase.
Alaska, Florida, Hawaii, Missouri and Nebraska will reach the $15 benchmark in 2026 or 2027. That means 16 states with nearly half of the U.S. workforce will be in states with wage floors of $15 or higher within the next three years, according to the National Employment Law. Project and the Institute for Economic Policy.
“Fifteen dollars is still the target rate,” Lathrop said. “It is now the competitive rate.”
How will raising the minimum wage help people?
Minimum wage increases in recent years have helped Americans keep pace with annual inflation, which reached a 40-year high of 9.1% in mid-2022 before gradually falling to 2.6% recently.
As a result of the laws, “employees and their families do not have to choose which bills to pay,” Lathrop said.
Still, none of the planned wage floors would meet the “living wage” threshold that would allow workers to afford basic needs like food, child care, health care, housing, transportation, broadband and other necessities, Lathrop said.
In King County, Washington, for example, the minimum wage is about to rise to $20.29 on January 1.
But the living wage for an adult without children in the county is $30.08, according to the MIT Living Wage Calculator.
Michael Saltsman, executive director of the Employment Policies Institute, which is backed by the restaurant industry, noted that at least some minimum wage workers are not financially stressed because they live in households with higher overall incomes.
The $15 threshold was considered a pipe dream when Fight for $15, an alliance of fast-food and other low-wage workers, began demanding it in strikes across the country starting in 2012. However, on April 1, the minimum hourly wage for fast food workers in California jumped from $4 to $20, putting it well above the state’s standard wage threshold of $16.
Meanwhile, the federal minimum wage has been stuck at $7.25 an hour since 2009, with Republicans in Congress repeatedly blocking attempts to increase it. About thirty states with more than 60% of the U.S. workforce have higher wage floors than those of the federal government.
However, Lathrop says the issue transcends politics. This year, Alaska and Missouri, both Republican-dominated states, were the latest states to pass ballot initiatives to raise the minimum wage to $15 in coming years.
What are the consequences of raising the minimum wage for employers?
For his part, Saltsman noted that voters in California and Massachusetts, two predominantly Democratic states, this year rejected proposals to raise the minimum wage for specific groups of workers.
“They are associated with higher prices and job losses,” he said of the wage increases.
Restaurants, he said, have passed on their higher labor costs to consumers by raising food prices. And the wage increases have forced many eateries to close or lay off employees, he said.
Several studies have supported both sides of the debate. Analyzes from the University of California, Berkeley and the National Bureau of Economic Research found that wage increases did not lead to job losses in low-wage sectors, but did lead to reduced employment among teenagers and other low-skilled workers.
In 2021, a report from the Congressional Budget Office concluded that raising the federal minimum wage to $15 per hour would increase the incomes of millions of Americans and lift 900,000 people out of poverty, but would reduce employment by about 1.4 within a few years million employees would be reduced.
Which states will increase the minimum wage to $15?
On New Year’s Day, three states – Illinois, Delaware and Rhode Island – will reach a $15 wage base for the first time, joining seven states that are already there or above. Two states, California and New Jersey, will further raise their pay floors above $17 for some health care workers.
Meanwhile, 47 places will also reach or exceed $15 on January 1, including more than two dozen in California, most of which will continue to rise above $17.
Burien, Washington, already subject to the state’s $16.28 minimum wage, will rise to $21.16 for employers with 500 or more employees in King County, making it the highest wage floor in the country.
“Consider that a full-time worker making $17 an hour earns only $35,360 annually, before taxes,” Yannet Lathrop, a senior researcher and policy analyst at NELP, wrote in an email. “These wage levels won’t make workers rich, but they will help pay for the basics, for a few luxuries (hopefully).”
She added: “Those higher wages can also improve their mental and physical health, their ability to access credit, and lead to better educational outcomes for their children.”
Fast food workers in California hold a rally to celebrate the increase in the minimum wage to $20 per hour during an event in Los Angeles, California, US, on April 5, 2024.
In January, several states will begin a series of minimum wage increases over several years. Of the three hitting $15 for the first time, Illinois and Rhode Island are at $14 and Delaware at $13.25.
Others are increasing their minimums, but staying below $15. Missouri’s base salary increases from $12.30 to $13.75 and Nebraska’s from $12 to $13.50.
Raising Missouri’s minimum wage to $13.75 “would help a little bit,” she said. The family may not have to pay bills as often. Plus, she said, “I could visit my mother more often.” Now she rarely visits her mother, who lives about 25 miles away, because of the cost of gas.
But Hobbs said she hopes for additional increases in the minimum wage. “The cost of living is still going to rise,” she said. “We can’t live on $13.75.”
This article originally appeared in Akron Beacon Journal: What is Ohio’s minimum wage increase for 2025?
