Ohio economists split on impact of minimum wage hike

(The Center Square) – A group of Ohio economists is split on whether a rise in the state’s minimum wage would also lead to a rise in unemployment.

While an effort to put a minimum wage increase measure on November’s ballot failed this year, a report from the Columbus-based Scioto Analysis showed a little more than half of 19 economists believe an increase would lead to higher unemployment.

The current Ohio minimum wage for tipped employees is $5.25 per hour, and $10.45 for nontipped workers. Minimum wage for youth workers is $7.25 per hour.

“This would be almost 50% higher than the current minimum wage of $10.45,” said Curtis Reynolds, an economist at Kent State University. “While I would love to see people being paid a higher wage, this almost certainly causes unemployment, at least in the long run. Perhaps that could be offset by phasing it in slowly over time but this is a very large increase. Smaller increases likely would have small unemployment effects and would be justified as research has shown that labor markets are not very competitive (meaning that wages are held below what they would be in a competitive market).”

Overall, 10 of the 19 economists surveyed believed a large wage increase would negatively impact unemployment. At the same time, 11 of the 19 agreed that raising the minimum wage to $15 per hour would significantly improve the well-being of low-income workers.

“Some groups might be hurt due to unemployment, but those that are employed are likely to see an improvement in well-being,” said Faria Huq, of Lake Erie College. "Increased productivity would also benefit employers."

In July, the group One Fair Wage announced its plan to get an increased minimum wage amendment on the state’s ballot this November failed. The proposal did not meet the 44-county requirement of signatures collected.

They are expected to renew efforts next year.

The proposal would raise the state minimum wage to $15 per hour plus tips by 2026. It would also strike language in current law which allows some state-licensed employers to pay disabled workers less than the required wage, if their disabilities negatively affect their employment opportunities.

As previously reported by The Center Square, the Ohio Chamber of Commerce opposes the proposed amendment, saying it will hurt small businesses that continue to struggle.

“The proposed minimum wage amendment to the Ohio Constitution is not only ill-advised and economically detrimental, it would be next to impossible to correct once the unintended consequences transpire,” Chamber CEO Steve Stivers said.