While a coalition of community and union leaders seek to raise Ohio’s minimum wage, small business owners in Guernsey County fear such a move would have a negative impact on local employers and the job market.
The proposal calls for a constitutional amendment seeking to gradually increase the minimum wage by nearly 50% from $8.70 an hour to $13 an hour by 2025 to be placed on the fall ballot in Ohio.
“It’s scary,” said Karen McCoy, owner of Orme Do It Best Hardware in Cambridge. “It’s not that I don’t want to pay those types of wages. I would love to pay everybody more money, but where does that money come from? We have to make money to pay people, so we would have to raise our prices and that’s concerning.”
“It could put us out of business,” added Hallie Ray, co-owner and operator of Lee’s, an American family restaurant on East Wheeling Avenue in Cambridge, along with her family.
Proponents of the amendment, such as Ohioans for Raising the Wage, point out the state’s current minimum wage leaves some full-time workers in poverty.
Ohioans for Raising the Wage targeted a minimum wage at $13 an hour based on polling showing 65% of likely voters would support an hourly wage at that level, spokesperson James Hayes told The Columbus Dispatch.
Petition language for the amendment and the required 1,000 signatures have been submitted to Attorney General Dave Yost for approval, according to The Dispatch. The group would need to gather 422,958 valid signatures from registered Ohio voters by July 1 to make the ballot.
The proposal would increase the minimum wage to $9.60 an hour on Jan. 1, 2021 and then boost it by 85 cents for four years to reach $13 an hour ($27,040 annually) in 2025. Future increases then would be tied to the rate of inflation.
Ohio’s minimum hourly wage of $8.80, which increases annually based on the inflation, ranks 28th among the states, according to the National Conference of State Legislatures.
The average state minimum wage last year was $11.80.
At the same time, President Joe Biden's proposed federal minimum wage increase to $15 per hour is getting drawing lots of attention.
Tipped employees, such as bartenders and servers, would also see yearly increases to as high as $12.95 by 2025. Youth wages would increase from $6 per hour in 2021 to $13 in the same span.
The U.S. Chamber of Commerce reports the loss of nearly 4 million jobs would be the result of a sizable increase in the minimum wage.
That’s a concern for Cambridge Mayor Tom Orr, a small business owner himself.
“You are going to do damage on the bottom rung instead of helping people,” said Orr. "Management will be forced to increase prices, reduce hours of operation or realign employees including not hiring people."
According to a Feb. 2 report by the Economic Policy Institute, a nonprofit, nonpartisan think tank which focuses on the inclusion of the needs of low- and middle-income workers in economic policy discussions, said the passing of the 2021 Raise the Wage Act would drop governmental expenditures between $13.4 and $31 billion by 2025.
That includes earned income tax credits and SNAP benefits, which it says would drop as much $30 billion between them annually. That would be due largely because fewer working citizens would qualify, it said.
The report said that almost 32 million workers would see higher earnings as a result of its passing, adding that a Congressional Budget Office analysis in 2019 found that the policy would raise the earnings of $27 million.
And while a wage increase could boost the city's coffers in the form of income tax, it could hurt the city with the potential loss of jobs.
Orr believes such a wage increase could result in the loss of entry level jobs for young people.
The City of Cambridge employs approximately 180 people with an additional 30 to 40 seasonal employees, many of whom are younger individuals getting their first taste of employment.
Orr agreed such a wage increase could severely limit the city’s ability to hire people.
“A lot of people will get left on the side line and not have a chance to get a start in the workforce,” said Orr. “This will not fix everything they say it will fix, he said. “It’s a vicious cycle.”
The mayor and other business owners are also concerned about the “trickle down” impact a wage increase would have locally.
In the restaurant business especially and other small businesses, each day is different.
“You can’t predict the public, but we have to have the staff available in case people show up,” said Ray.
On a recent day, seven of the 22 employees on the payroll at Lee’s were working while one table was occupied by customers.
“While we will be forced to raise prices to pay wages for employees, our distributors will also have to raise prices in order to pay higher wages," said Ray. "In the end, everything gets raised and that trickles down to us.
“It really could put small business owners like us out of business,” Ray added.
McCoy said she and other small business owners are already struggling to compete with retail giants such as Walmart that buy in bulk.
“Suppliers sell things at different prices,” said McCoy. “I can’t buy merchandise at the same rate as the bigger stores that buy in bulk. We are not that big and we have to pay our bills. Our goal is to keep everybody employed, but raising prices to pay higher wages is a double-edge sword.”
Small business owners are also concerned such an increase could create issues with employees already paid at that level. That includes employees with special training and licenses for which they are paid a higher wage.
“Now that person who is making $13 is upset,” said Orr. “People with a license or a special skill set will be making the same wage as people who don’t have those things.”
“You would have to pay those people more, but you have to have more money coming in the door to do that,” added McCoy.
There is a concern raising prices would prevent people on a fixed income, such as senior citizens, from buying the things they need.
“They are not getting a raise, but they have to cover that increase in the cost of living,” said McCoy. “If we raise our prices, they have to pay the higher prices. We all try to help each other, but we can only afford to do so much.”
The long-time businesswoman also believes many people will simply spend more if they make more money, and they will not be any better in the long run.
“A lot of people don’t have money sense,” she said. “It’s not taught today like it was in the past.”
Orr believes the timing of such an increase could not be worse given the COVID-19 pandemic.
“This country needs a large time-out,” said Orr. “We need to let people do what they do well, and let the local market determine when and what things we need to do. You can’t just pick a number and put a stamp on it.
"This is creating a lot of drama, and right now, we are still trying to save people’s lives.”
The last time Ohioans voted to increase the minimum wage was in 2006 after efforts to raise the wage through the state's GOP-controlled Legislature failed. Issue 2 passed with 56.7 percent of the vote, increasing the state's minimum wage from $5.15 to $6.85 an hour and tying annual increases to inflation.
Ohio Sen. Sherrod Brown (D) is backing the minimum wage proposal.
“For too many people in this country, hard work isn’t paying off,” Brown told The Cincinnati Enquirer. “While costs for Ohio families are rising and workers are more productive than ever, wages aren’t keeping up."
Ohio 97th District Rep. Adam Holmes (R), of Zanesville, told the Times Recorder that he doesn't feel the bill will pass, largely because of the amount of Democrats who oppose the current proposal.
Holmes also feels the increase will cause financial hardships for those unable to handle the extra expense.
Of the 20 states to increase the rate on Jan. 1, only Montana has a lower minimum wage rate than Ohio at $8.75. Sixteen make more than $10, with California being the highest at $14. Five saw increases of at least $1.
Cambridge Area Chamber of Commerce Board of Directors Chairman Jeremy Morrow declined to comment specifically on the proposed minimum wage increase.
Instead, the Chamber of Commerce Board of Directors sent the following statement.
"We do not take a certain position on political and federal issues. However, we do want to educate our membership and try our best to share the pros and cons of each issue that effects our businesses. Our mission is to provide the necessary vehicle through which to combine forces to executing the continuous, year-after-year program of work necessary for positive business development."
Source: https://www.daily-jeff.com/story/news/local/2021/02/21/small-business-owners-fear-significant-minimum-wage-increase-ohio/4493494001/