21 States Raising Pay Floors to Account for Inflation
On January 1st, 2024, Ohio will be among 21 states raising their minimum wage rates to provide better pay for low income workers in the new year. The state’s minimum wage level will increase from $9.30 per hour to $10.10 per hour for non-tipped employees.
This 35 cent raise comes as part of a constitutional amendment passed in 2006 to raise Ohio’s minimum wage and index future increases to inflation. Under the amendment, the wage floor is updated each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers.
While the upcoming boost is not huge, it will still benefit the over 250,000 Ohio workers currently making minimum wage. And many more making slightly above the current level can expect to see pay bumps as well, as employers adjust overall pay scales.
Steady Rise Since Passage of Amendment
Prior to the 2006 amendment, Ohio’s minimum wage was stagnant at the federal level of $5.15 per hour for a decade. The new law put the state on a path to a higher, inflation-adjusted wage floor.
Over the past 15+ years since passage, the gradual increases have raised the state minimum from $6.85 in 2007 up to the current $9.30. So while next year’s addition is modest, it builds upon consistent upward momentum for low pay workers.
| State | 2023 Minimum Wage | 2024 Minimum Wage |
| Ohio | $9.30 | $10.10 |
| Arizona | $13.85 | $14.25 |
| Maryland | $13.25 | $15.00 |
Extra Cash Will Help Offset Living Costs
The 35 cent boost will equate to an extra $728 per year for full-time minimum wage workers. And the increase also has a “spillover effect”, lifting pay for those making up to 150% of the new minimum.
This extra cash comes at a crucial time, as Ohioans struggle with 40-year high inflation driving up costs for gas, food, housing, healthcare and other basic necessities.
While still not enough for a “living wage” in the state, the rising wage floor provides welcome relief. The inflation-tied hikes also prevent the minimum pay from significantly eroding in real terms over time.
Most States Now Exceed Federal Minimum
The federal minimum wage remains stuck at $7.25 per hour, where it has sat unchanged since 2009. With inflation soaring in recent years, its purchasing power has hit the lowest level in decades.
As a result, many states have chosen to take matters into their own hands. 23 states will exceed $10 per hour as of January 1st. By contrast, in 2017 only 12 states were above this marker.
So while Congressional action remains elusive, states across the U.S. are pushing for better compensation at the bottom of the pay scale.
Growing Public Support for $15 National Minimum
While most states still fall short of the $15 per hour goal advocated by prominent Democrats and progressive activists, public support continues to build for a higher federal floor.
Recent polling shows over 60% of Americans back a $15 per hour minimum wage, including 45% of Republicans. And strikes and demonstrations by fast food employees, nurses and other low wage workers continue nationwide calling for better pay and working conditions.
These grassroots actions have led more politicians to back the raise at a national level. While the divided Congress makes near term adoption unlikely, momentum is clearly increasing for an eventual boost to $15 per hour countrywide.
Differing Views on Risks of Wage Hikes
Supporters of minimum wage growth highlight not just moral arguments around fairness and income inequality, but also potential economic benefits. Putting more money in the pockets of lower income consumers could stimulate local spending and business activity.
However, critics argue that excessive wage mandates can reduce overall employment if businesses cut jobs or hours to reduce labor costs. This counterargument does not seem to be borne out by most research though – with studies finding little to no job loss from minimum wage increases within reason.
So most economists actually back the inflation indexed growth adopted in Ohio and 12 other states. Tying wage floors to rising living expenses protects workers without shocking business operations.
Legal Challenge Rejected in 2006
Ohio’s constitutional amendment faced opposition early on, but was decisively validated by the state Supreme Court in 2006. Groups including the Ohio Restaurant Association had brought a legal suit arguing the wage changes violated business contractual rights.
However, the high court ruled 7-0 in favor of the increases. They found that the inflation linkage ensures the real value of the minimum wage keeps pace with economic conditions over time. And this method poses minimal hardship to employers relative to their overall revenues.
So after an initial unsuccessful challenge, Ohio’s steady minimum wage trajectory has remained on track without any serious threat of reversal for nearly 15 years since.
Further Increases on Horizon
While next year’s addition is modest at just 35 cents, the formula dictates ongoing upward movement in years ahead (assuming continued positive inflation). Based on 2022’s CPI rise of about 8%, another sizable boost is probable for 2025.
And eventually the cumulative effects of annual changes will likely lift Ohio’s wage floor over the symbolic $15 threshold, even without another legislated jump.
So low wage workers can expect the state’s minimum pay protections to become progressively more robust. And businesses have time to plan for and adapt to the gradual indexed shifts.
Other Major New Laws Taking Effect
In addition to the minimum wage update, Ohio is ringing in 2024 with 212 other newly passed bills becoming law. Most notably, legalized adult recreational marijuana use is launching barely a month after voters overwhelmingly approved it in November’s election.
So the new year will bring an array of policy changes for Ohio residents and visitors to become familiar with. But the inflation-linked minimum wage increase stands out as one of the most economically impactful shifts on the books.
While the extra cash won’t solve all problems for struggling employees, it does provide a measure of assistance keeping pay closer to pace with living expenses. And it ensures Ohio will continue doing its part to lift the wage floor towards an adequate, livable level over time.
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