How will Ohio's minimum wage bump impact businesses and their employees?

A University of Cincinnati economist joined WVXU's daily program “Cincinnati Edition“ to discuss if the bump is enough for employees to combat rising costs. 

Michael Jones, associate professor of economics at UC's Lindner College of Business and academic director for the Kautz-Uible Economics Institute, explained how the increase is a "cost of living adjustment."

Jones explained how Ohio's minimum wage increases at the start of every year by the rate of inflation, a practice that started with a constitutional amendment in 2006. But he also said that only about 2% of Ohio's hourly workforce is at the minimum wage level — about 100,000 people.

"Here in Cincinnati, the average fast food worker is making around $14 an hour," he told WVXU. "So it's really even a fraction of those workers in retail or fast food that are even at that $11 an hour."

He also said many companies forego offering roles at minimum wage and look instead at a state's cost of living when setting a competitive wage. For employers in Kentucky and Indiana, states that use the federal minimum wage of $7.25, that means ignoring the federal minimum wage entirely and instead hovering near Cincinnati's wages. 

Even though the minimum wage doesn't impact the majority of employees in Ohio, the increase still influences business desicions. 

"It's helpful to think about three groups that are affected by the minimum wage: The consumers, the workers and the businesses themselves," Jones said. 

Since Ohio's minimum wage increases with inflation, businesses know what to expect in managing costs for each upcoming year. "In keeping up with inflation, businesses are already anticipating that," Jones said.

Listen to the full "Cincinnati Edition" conversation on WVXU.

Featured image at top of a person putting coins into a piggy bank. Photo/Adobe Stock