Loose Change

Ohio boosted its minimum wage by 15 cents on Jan. 1, but advocates say it's not enough

click to enlarge Nineteen states are set to have minimum wages higher than Ohio’s $8.10 an hour.
Nineteen states are set to have minimum wages higher than Ohio’s $8.10 an hour.

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orkers making low wages in Ohio got a small raise Jan. 1, as the state automatically raised the minimum companies here must pay workers by 15 cents. But the bump from $7.95 to $8.10 an hour might not be much of a boon to many minimum wage workers. 

Even as pay goes up slightly for more than 277,000 workers in Ohio, many still face challenges related to low wages, underemployment and lack of opportunities to advance. Meanwhile, a battle over President Barack Obama’s proposal last year to alleviate some of those struggles by raising the federal minimum wage — currently set to $7.25 — continues.

La’Randa Jackson, 20, lives in College Hill and works at the Walmart at Ronald Reagan Cross-County Highway and Colerain Avenue. Jackson lives with and helps support her mother and two brothers after a series of family difficulties caused the family to miss rent payments on their former apartment in Price Hill.

Jackson had been working 35 hours a week at the Walmart, though recently her hours were cut to just 18 weekly. She makes slightly above the new minimum wage but says the boost won’t be enough for those who make even less than she does. Walmart won’t increase her wage with the minimum wage increase, something employers will often do to keep pay scales consistent.

“I’m making $8.75 and I’m not making ends meet,” she says. “I have to go to the food pantry and ask for food.”

Jackson’s situation illustrates the multifaceted difficulties many low-wage workers face.

Her working days start at 8:30 a.m., she says, when she makes the 15- to 20-minute walk to the bus stop to catch the number 17. That bus takes her south to Northside, where she then transfers to another bus that takes her up to Walmart. All in all, the route takes an hour. Jackson arrives about 20 minutes before her shift starts, so she usually sits and waits until it’s time to clock in. After her shift, which involves working at the store’s customer service desk as well as rotating through other positions, she typically waits another 20 minutes for the bus to arrive, then takes another hour ride back home. All told, Jackson says she spends more than three hours before and after her eight-hour shift riding the bus or waiting.

What’s more, the bus eats up a big part of Jackson’s check.

“I’m mostly likely to split my check in half and use half for the bus,” she says of her recent checks under her reduced hours.

During good times — when she’s working 35 hours a week — Jackson makes about $300 a week before taxes. Even then, she’s had to rely on food stamps and a local food bank so she and the rest of her family can eat.

A 15 cent per hour boost could help workers who make even less than Jackson, advocates say, but not much.

“The boost is meaningful and will help Ohio workers, but 19 states will soon have minimum wages higher than that in Ohio,” says Amy Hanauer, the executive director of Policy Matters Ohio, a non-partisan think tank that tracks poverty issues like the minimum wage. “It’s time for Ohio to update our policy to better reflect our economic reality. While $8.10 an hour is better than $7.95, people still can’t live on that wage.”

Ohio’s boost comes thanks to a 2006 voter-approved constitutional amendment that sets automatic adjustments based on inflation. The state uses consumer prices to determine how much the rate will be. Meanwhile, other states have set minimum wages higher than Ohio.

In December, the Kentucky legislature approved a measure to raise the state’s minimum wage to $9.00 an hour by 2017. Michigan raised its rate to $8.15 in September of 2014 and will raise the rate to $8.50 Jan. 1 next year.

Currently, 32 states have a minimum wage higher than the federal minimum of $7.25. Twenty raised their rates with the new year, including West Virginia, which raised its rate from the federal minimum to $8.00 an hour.

More than 4 million American workers make the federal minimum wage. More than half of them work less than 30 hours a week. Some are students or teenagers living with their parents, but many more are adults trying to support themselves and families.

And even at 40 hours a week, a worker making $8.15 an hour will bring home only around $1,000 a month after taxes. Even in cities like Cincinnati where cost of living is relatively low, that’s not enough to live on, especially for families.

Driven by an increased demand for housing in the city, the average fair-market rent for an apartment in Cincinnati has risen to $804 a month — almost $200 a month higher than it was in 2004. The federal government defines affordable housing as a rent payment costing less than a third of a person’s overall monthly income. A  minimum wage worker would need to work more than 70 hours a week for the median market rate apartment to count as affordable.

Often, taxpayers end up subsidizing low wages through public assistance programs like housing vouchers and food assistance programs.

A 2013 study by the University of California Berkeley and University of Illinois found that, nationally, taxpayers spend more than $7 billion on assistance programs like Temporary Aid for Needy Families (TANF), the Supplemental Nutrition Assistance Program (SNAP, or food stamps) and other aid for low-wage workers.

Around 1.7 million Ohioans rely on SNAP, and more than 2 million on food banks, according to the Ohio Association of Foodbanks.

Nationally, Democrats have fought to raise the federal minimum wage to $10.10 an hour. President Barack Obama during his State of the Union Address last year made a request to Congress to do so, though conservatives balked at the proposal. Obama is expected to make a similar push to raise the minimum wage at this year’s address Jan. 20.

Opponents of raising the minimum wage say it will curtail job creation as employers have to pay more for labor instead of investing in growing their businesses. There is conflicting data about this claim. Some studies, including a 2012 study by economists at Texas A&M University, seem to bear that idea, suggesting raising the wage to $10.10 would stifle economic growth. Such economists say increasing tax credits for low-income workers would be a better approach instead of boosting wages.

But others studies, including one by Washington-based Center for Economic and Policy Research, claim that there is little evidence that minimum wage levels have an effect on employment levels. Raising the wage could increase consumer spending among low-wage workers, who are more likely to buy necessities and spend a greater portion of their checks, proponents say. Some economists forecast that Ohio’s recent wage increase could create more than $36 million in economic activity in the state.

But aggregate economic impact and academic studies do little for Jackson and other workers who say they’re underpaid and underemployed.

“I feel like it’s a good step working toward fixing the problem,” Jackson says. She notes that a group of Walmart workers she’s active in, called Organization United for Respect at Walmart, is working to get better pay and hours at the stores.

“I’d like to make $10 an hour,” she says. “That way we can get everything our households need. $8.10 an hour won’t make a difference. … It doesn’t work out for us.” ©

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