Ohio’s coming minimum wage increase still falls far below 1968 state and national peak

December 5, 2019 12:59 am

Chart provided by Policy Matters Ohio.

Everyone who works full time deserves to make enough money to cover the basics. In Ohio, too many people work hard — sometimes in more than one job — but still live in poverty. Because Ohio voters took action, at least those earning the minimum wage won’t get a pay cut from inflation in 2020. 

Next month, Ohio’s minimum wage gets a 15-cent bump to $8.70 to keep pace with rising prices. That adjustment reflects smart foresight on the part of Ohio voters who increased Ohio’s minimum wage and tied it to inflation by ballot initiative in 2006. That change safeguards the state’s poorest workers against further losses. But it shouldn’t make Ohio proud of how our wage stacks up today. 

When voters indexed our minimum wage to inflation, they prevented it from losing value over time, but they didn’t increase it enough to recover ground already lost. The minimum wage in Ohio and nationally peaked in 1968 at just over $12 an hour in today’s dollars. Since then, without action by policymakers, the rising cost of living means minimum wage workers today earn 28 percent less than their grandparents did.

Policymakers understand the effects of inflation. That’s why they use Cost of Living Adjustments (COLAs) to preserve Social Security and military retiree benefits. Neglecting to index wage and other income policies to inflation is a tacit way of devaluing them over time. Not just the minimum wage has been harmed. Policymakers let inflation slash the share of overtime-eligible salaried workers from 61 percent to 8 percent. For the minimum wage, it means today’s low-wage workers lack protections their grandparents enjoyed half a century ago. Ohio voters did well when they said enough of that. Every income threshold policy should include an index. But there’s still work to do to restore Ohio’s minimum wage. 

When we compare apples to apples across time, it’s clear that policymakers don’t value working people as much as they used to. In 2006, Ohio voters raised the minimum wage from $5.15 to $6.85. Indexing means $8.70 in 2020 has the same value as $6.85 in 2006. Essentially, Ohio’s minimum wage workers have gone 14 years without a raise. 

Again, Ohio’s minimum wage was once worth $12 per hour in today’s dollars. That historic peak proves that the economy can and has supported a higher wage floor. Ohio workers are more productive today than ever before. Ohioans last year created 88 percent more wealth than in 1968, but low-wage workers shared none of the growth. Had the minimum wage kept pace with productivity since then, it would be $22.69 today.

Today, six of Ohio’s 10 most common jobs pay too little to support a family of three without food aid — up from four of 10 in 2000. This reflects both a shift away from better-paying manufacturing and public sector jobs, and that some jobs pay less than they once did.  

Ohio’s minimum wage leaves a family of three in poverty. It is lower than our neighbors in West Virginia and Michigan and far below the $15 an hour being passed across the country. Ohio is due for an upgrade. It’s time for a $15 living minimum wage.

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Michael Shields
Michael Shields

Michael Shields is a researcher with Policy Matters Ohio. His work focuses on the labor market and job quality. He writes about wages, overtime, wage theft, workers’ compensation, manufacturing, and collateral sanctions.