Dayton Business Journal

By Suzelle Tempero

Young’s Jersey Dairy Farm in Yellow Springs, known for its ice cream, employs about 300 people during its summer peak. But all of its employees, even the 16-year-olds working their first jobs, earned more than minimum wage this year.

However, spillover from raising the minimum wage would effect his business and drive up labor costs, said Dan Young, owner of the dairy farm and chairman of the Ohio Restaurant Association. That’s because if the minimum wage is boosted, the entire pay scale may shift as well, indirectly raising the wages currently close to the proposed target. Young estimated it could increase his operating expenses as much as 10 percent.

But Young will be voting against Issue 2 on Nov. 7 — which would raise Ohio’s minimum wage from $5.15 per hour to $6.85 — for more reasons than just the potential additional payroll costs. He, and many other Ohio business owners, are unsettled by the proposed constitutional amendment and what they see as potential privacy loopholes. Business owners also cite tight election races as motivation for the proposal.

On one side of the debate, a study by the Employment Policies Institute, a Washington, D.C.-based conservative think tank, says the proposal could result in a double whammy for Ohio’s economy. It projects the state could take a $308 million hit as 12,000 jobs may be lost while labor costs climb.

But Policy Matters Ohio, a liberal think tank based in Columbus, says the proposal will help 6 percent of Ohio’s workforce directly — about 300,000 people — with minimal negative impact on the economy.

The confidentiality issues — centering on who can get access to detailed payroll records — would have a damaging effect on businesses across the state if the proposal is approved, said Chris Kershner, vice president of public policy and economic development at the Dayton Area Chamber of Commerce, which historically has opposed government mandated wages. The chamber has linked with Ohioans to Protect Personal Privacy, a Columbus-based issue group campaigning against the proposed amendment.

But the business community also is aware of the fact that multiple forces are acting on this issue, he said. Election year political jockeying is playing its part, with many chamber members suspecting that the proposal is more about driving “anti-business votes to the ballot box” than actually raising the minimum wage he said, noting that Ohio has hotly contested Senate and gubernatorial races.

“I think you’re going to see the business community standing strong against Issue 2,” Kershner said. “They work hard and are the backbones of our society.”

Supporters of the issue, such as Columbus-based Ohioans for a Fair Minimum Wage, which includes Acorn, a national organization concerned with rights for low- and moderate-income families, and the Ohio AFL-CIO, say the privacy concerns about the proposal are not based in fact. They argue the bill does not say third parties would have access to payroll records and instead says only the employee or someone the employee gives permission can access the records. They also say the amendment is written to allow legislative action to clarify the proposal.

“Nowhere in the amendment does it say third parties will have access to payroll records,” said Keary McCarthy, communications director for Ohioans for a Fair Minimum Wage. “While it might make a successful television commercial, it is devoid of truth.”

Bob Dunlevey, managing partner with local law firm Dunlevey Mahan and Furry, which specializes in employment law, interprets the proposal’s “nebulous” language differently and sees a definite area of concern. He said the privacy aspects of the proposal are of very real concern because employees may not have total control of personal information.

“If they want to raise it, they should just use one line saying it will be raised to ‘X’ dollars on ‘X’ date,” Dunlevey said. “That’s all they need to do. Don’t put all the extra trimmings on the Christmas tree.”

Even if the privacy concerns were addressed, Young said the market should be allowed to set wages and legislating a minimum could have major impacts on the economy. He noted that labor costs often are about a third of a restaurant’s expenses, so linking the rate to inflation could steer employers away from hiring employees that would earn minimum wage.

“Just because I don’t hire anyone at minimum wage, it doesn’t mean I want the floor to go up that much,” Young said. With the wage tied to inflation “we’d have to reflect it in our prices and level of employment and the (employees) left would have to work harder.”

Other things to know about the proposed Ohio Fair Minimum Wage Amendment:
1. It is a proposed constitutional amendment, rather than a legislative bill.
2. The wage rate would be tied to the consumer price index and increase each year, lessening the corrosive effects of inflation on it.
3. Employers would have to retain employment records for three years past the final date an employee worked. The proposal does not distinguish between salaried and wage-earning employees.
4. Information regarding an worker’s employment would be provided without charge to the requesting employee or someone acting on their behalf.
5. Also called Issue 2, the proposal is on the ballot and will be voted upon by Ohio voters on Nov. 7.

Columbus Dispatch

By Alan Johnson

Worker productivity, corporate profits and executive wages have risen in recent years, but Ohio’s lowest-paid workers haven’t shared the benefits.

That is the conclusion of a study released yesterday by the Center for American Progress and Policy Matters Ohio, a nonpartisan but union-affiliated policy group.

The study said Ohio worker productivity increased 2.1 percent annually from 2000 through 2005, but average weekly wages, adjusted for inflation, were up 0.2 percent.

Meanwhile, executive pay grew 3.4 percent on average and U.S. corporate profits jumped 50 percent in the same period, researchers said.

The study was timed to support Ohio’s proposed constitutional amendment to raise the state minimum wage from $5.15 per hour to $6.85.

The organizations said it would impact 700,000 Ohioans.

Opponents charge that the issue would backfire by robbing Ohio of thousands of jobs as employers cut back to meet higher payroll demands.

The amendment will be State Issue 2 on the Nov. 7 ballot.

Discussions in the Cleveland area of a possible agreement against using economic incentives to lure local companies to nearby municipalities prompted Policy Matters Ohio to gather information on other such agreements. Though they are uncommon, we found several, which are described in this September 2006 background memo by Policy Liaison Wendy Patton. The memo includes links to some of the agreements, along with recommendations on what they should include.

Read the memo

Since this memo was produced, the Cuyahoga County (OH) Mayors & City Managers Association has approved a non-binding set of tax-sharing principles. The agreement calls for limits on certain tax abatements covering moves within the county. It also provides for income-tax revenue-sharing between the original city and and the new host city in cases where a company moves from one location in the county to another. Click here for a copy of the principles.

Good jobs First has further information on accountable economic development and anti-poaching practices at the state, local and federal level. 

The Earned Income Tax Credit

The EITC is a refundable tax credit for low-income workers. The EITC is available to single adults earning up to $11,230 through four-person families earning as much as $34,780. The credit can be as large as $4,204 and the average EITC for Cuyahoga County in 2002 was $1,763. It is estimated that between 15 and 20 percent of those eligible for this credit do not claim it. When the credit is claimed, the money not only goes to hard-working families but also goes back into the Cuyahoga community.

The Cuyahoga Earned Income Tax Credit Coalition

The Cuyahoga Earned Income Tax Credit (EITC) Coalition is a group of government, foundation, non-profit, community development agencies, and financial institutions whose goal is to provide and advocate for fair and free tax service for low- and moderate-income workers. The primary mission of the coalition is to help County residents claim the Earned Income Tax Credit (EITC), receive quality and free tax preparation, and work toward financial security.

Cuyahoga EITC Website

Interested in volunteering? Click here for more information

The Cuyahoga EITC Coalition promotes free and fair tax preparation services for middle- and low-income filers. Many filers are subject to filing fees and refund anticipation loans (RALs) sold to them by private for-profit businesses.  These fees and loans are avoidable by using the Coalition’s free tax sites throughout the City of Cleveland and Cuyahoga County. These sites are quick, efficient, high-quality alternatives to paid preparers. The volunteer preparers are certified annually by the IRS and the sites have convenient hours to meet the demands of working families.

List of VITA sites in Cleveland and Cuyahoga County

The Cuyahoga EITC Coalition also encourages financial independence and savings for middle- and low-income families. This platform of wealth-building is an important step toward home ownership, saving for higher education, and day-to-day living.

Click here for information on wealth-building

Wall Street Journal article on free credit reports

Policy Matters Reports on the Earned Income Tax Credit

Fact File: Getting Ohio’s Families the Credit They Deserve: The Earned Income Tax Credit

EITC Gains, RAL Drains
February 2007

Who Takes Credit? Earned Income Tax Recipients in Cleveland, 2006
September 2006

Credit Where it’s Due: The Earned Income Tax Credit in Ohio
March 2006

Who Takes Credit? Earned Income Tax Recipients in Cleveland
November 2005

Taking Credit: Boosting Participation in the Earned Income Tax Credit in Greater Cleveland
September 2004

An Ohio Earned Income Tax Credit: Costs and Benefits
March 2003

Other EITC Links

National Community Tax Coalition

Legal Aid Society of Cleveland for specific case help

Article on the high cost of Tax Refund Loans

The federal Earned Income Tax Credit (EITC) or Earned Income Credit (EIC) is a refundable tax credit available to some working individuals and families who earn less than $38,000. This credit currently does more to bring working families out of poverty than any other government program. An estimated four million families were lifted above the poverty level because of the EITC program in 2004.

Press Release

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Main EITC Page

More working families in Cuyahoga County received free tax preparation at volunteer income tax assistance (VITA) sites in 2006 than in any previous year. The Cuyahoga EITC Coalition filed more than 3,444 tax returns with nearly half qualifying for the Earned Income Tax Credit (EITC). The Coalition returned more than $4.2 million in total refunds to working families, allowing them to keep their tax return dollars rather than losing money to paid preparers. Such fees can cost more than $300 for a $1500 credit according to the Brookings Institution. This is a 50% increase in the number of returns and more than 60% increase in the amount refunded to families from last year.

Policy Matters Ohio surveyed more than 1,000 VITA site filers finding:

- Filers said they would use their refunds toward basic needs purchases in the community such as household bills (47%), savings (22%), housing (19%), food (17%), and clothing (12%).

- More than 20% of filers this year reported getting their taxes done at a paid preparer last year and 45% had done so in previous years.

- Roughly 65% of those who received free tax preparation did not report receiving public assistance like Medicaid (13%) or Unemployment Insurance (2%).

- Most respondents said that the service being free motivated them to use a VITA site.

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Executive Summary

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Main EITC Page

A matter of fairness or a plot against privacy?
By Margo Pierce

Cincinnati City Beat

An increased minimum wage will hurt businesses or help Ohio’s economy and the working poor — it just depends on the speaker and which study you read. Both sides say the other is creating a smoke screen for larger issues.

The Ohio Legislature just raised the state’s minimum wage from $4.25 an hour, where it was set in 1991, to the federal minimum wage of $5.15 an hour. Many speculate that it was an attempt to prevent a ballot initiative this fall. The attempt failed.

A petition drive collected more than 600,000 signatures statewide when only 322,000 were needed to put the constitutional amendment before voters. Raise the Wage: Ohioans for a Fair Minimum Wage provides a list of reasons for casting a “yes” vote on this issues in November.

“After 10 years of Congress ignoring raising the minimum wage to the point where, in real dollars, the purchasing power of the minimum wage rate is at a 50-year low,” says Tim Burga, director of government relations for the AFL-CIO of Ohio (www.ohaflcio.org).

A raise isn’t enough
That seems like a sound reason for the proposed increase to $6.85 per hour effective Jan. 1, 2007 and tying future increases to the rate of inflation, “according to the Consumer Price Index or its successor index for all urban wage earners and clerical workers rounded to nearest five cents.” This wage would apply to small employers, some farms and most restaurants. Workers employed by larger enterprises are generally covered by the federal minimum wage.

Even at $6.85 an hour, a worker will still make only $13,700; the official 2006 federal poverty level for a family of three is $16,600.

“Common sense would tell us that, if someone at the lowest rung of the economic ladder gets a raise, they don’t really have the means or wherewithal to invest it or put it in a (certificate of deposit),” Burga says. “They’re going to spend it on mainstream businesses. That’s just the reality of it, and that’s going to stimulate the economy.”

Does this mean it makes sense to raise the minimum wage?

“The people who are already working tend to be low-wage workers,” says George Vredeveld, director of the Economics Center for Education and Research at the University of Cincinnati. “They are going to favor minimum wages because, by law, they would like to see these wages increase so that they don’t have to compete with lower waged workers. On the other hand, the employer will tend to not to want to pay the higher wages if they don’t have to.”

Payroll increases affect businesses, but quantifying that effect can be difficult. A study done by Florida State University suggests that, by raising the minimum wage, Ohio can expect to lose 12,000 jobs and take a $308 million dollar hit to the state’s economy.

An opposing study by Policy Matters suggests that states with a higher minimum wage experience a growth of small business, and small business payrolls increase faster than businesses in states with a lower minimum wage.

Vredeveld doesn’t believe small business growth is directly linked to the minimum wage because other factors such as inflation, competition and even weather can have an impact on the health of a small business.

“There are some people who will lose their jobs because the employer will say, ‘This person is worth $5.50 an hour, but not $7.00 an hour.’ Logically it makes sense, and in reality it’s borne out,” Vredeveld says. “What you’ve got in a situation like this is the people who keep their jobs … benefit dramatically. Those who don’t keep their jobs go from whatever wage they were earning to zero, and that’s a big hit.”

He doesn’t believe a minimum wage is an effective way to address poverty.

“You’ve got to develop what economists call the human capital,” Vredeveld says. “That is knowledge and skills and attitudes that allow these people to be effective in the work place. Now we’re talking about an education, job-training program.”

Burga agrees, sort of.

“Job skill training is also important, but the two are not mutually exclusive,” he says.

Privacy concerns
But discussion about how to address the needs of the poor pulls attention away from the fine print of the proposed constitutional amendment. The minimum wage isn’t what matters most about this vote, according to an opposition group, Ohioans to Protect Personal Privacy OTPPP.

“Only a small portion of this proposal is related to the minimum wage issue,” says John McGough, campaign manager for OTPPP. “The majority of this proposal relates to record-keeping and access to employee records. Proponents will say it’s just administerial-type language, but it’s a record keeping requirement, regardless of whether you have minimum-wage employees or not.

“It requires an actual name, address, phone number and hours worked each day and it doesn’t exempt out salaried employees. It creates a whole host of questions about where these records end up in the public domain. Part of the problem is what it all means is unclear and will likely lead to years of litigation to figure it out.”

Employers will be required to make this information available on demand at their own expense as many times and to as many people who request it. Who is permitted to have access to this information is also unclear because the language is so vague, McGough says.

“I say, ‘Smoke screen strategy,’ ” Burga counters. “They can’t attack the wage rate, they can’t attack the worker, they don’t want the minimum wage to go up, so they’re trying to fabricate some nonsense.

“The idea here simply is that, if you feel you aren’t being compensated correctly, you don’t have to go through an extensive process to get the records if your employer doesn’t want to cooperate. So this business of going in and getting anyone’s records is nothing more than a smoke screen. If an employee goes to his or her union steward and says, ‘I would like to see my time records, payroll records,’ what’s wrong with that?”

Burga says it’s a simple matter of looking at reality.

“If you look at all of the economic conditions in the state of Ohio — wages down, jobs down, home foreclosures and personal bankruptcies up, young people leaving the state looking for better opportunities — we have got to send the message once again that we value work in Ohio.” ©

The Recovery that Wasn’t - We are now nearly five years into a national economic recovery and some commentators have begun to talk about a potential downturn. For workers in Ohio, this is the recovery that wasn’t. The state has fewer jobs and lower real median wages than it had in 2000, before the most recent recession. Yet in many ways the American and Ohio economies are at heights of productivity and profitability. We have the resources to create a more prosperous and fair Ohio, but most benefits aren’t broadly shared. Read the State of Working Ohio to learn how changes in policy could help workers and their families better gain from the economy to which they contribute so much.

Can we grow our economy by limiting public spending? - The Ohio legislature passed a state spending limitation in May 2006 on the theory that we could. Economic Growth and the Public Sector: Evidence from the States, by Columbus researcher Jon Honeck, sheds serious doubt on the idea. The report finds no evidence that states with relatively large public sectors had slower private sector growth. In fact, higher rates of public sector growth were associated with more rapid economic growth. Policy debates should not imply a tradeoff between private sector economic performance and public goods like education, transportation, health care, and law enforcement. We can, and should, demand a society that provides both.

Minimum Wage - The minimum wage initiative has qualified for the November ballot. The short story: a yes vote would help more than 700,000 Ohio workers better support themselves and their families, and states with higher minimum wages have more job growth. Good for workers, good for the economy. To hear this all first hand, you can bring your brown bag lunch to Guilford House at Case Western Reserve University at noon on October 6, where Amy Hanauer will address the public affairs lunch crowd. 

New Energy for Cities - Cities and counties from across the nation are pioneering new clean energy solutions that could help end our nation’s oil addiction and create good jobs, according to the most recent report from the Apollo Alliance. Four Ohio municipalities — Bowling Green, Canton, Cincinnati, and Cleveland — are highlighted in this national report. As the Ohio Apollo partner, we’re helping Ohio communities learn about the dozens of municipal programs featured here. Ohio Apollo will help Ohio create jobs by promoting renewable power, reducing oil consumption, making buildings more efficient and promoting smart growth. We’re grateful to the Gund Foundation for giving us the resources to spread the word.

Ohio Job Numbers Weaken - Job growth in Ohio has disappeared in recent months. We lost jobs over the last three months, while the country’s jobs grew at a weak pace. Ohio manufacturing jobs in July were at the lowest point in decades, though the rate of loss over the past year was much lower than during the recession. Read JobWatch here.

Investing in Workers - Community Research Partners and the KnowledgeWorks Foundation are hosting  Investing in Workers: Strategies to Grow Ohio’s Economy, a conference at the Columbus Hyatt Regency on October 9-10. We’re proud to partner in this event, where our Executive Director, Amy Hanauer, will moderate a panel on High Road Economic Development, and where gubernatorial candidates Ted Strickland and Ken Blackwell will speak at the October 10th plenary. 

That’s all!
The Policy Matters Ohio Team 

A national commitment to develop clean, renewable energy would not only enhance our security and protect the environment, it could restore American technological leadership, create jobs, protect our living standards, and save consumers money. Under the provisions of the proposed Clean EDGE legislation, Ohio would be one of the biggest winners, garnering more than 25,000 new jobs in manufacturing, construction, trade, transport & warehousing and business services.

A study by Dr. Robert E. Scott of the Economic Policy Institute and Brian A. Siu of the Apollo Alliance tests the economic benefits of a comprehensive clean energy strategy by examining the likely employment impacts of the proposed Clean Energy Development for a Growing Economy (Clean EDGE) Act.

The EPI/Apollo study finds that the Clean EDGE Act would increase public and private investment in clean and renewable energy technologies by as much as $49 billion and create approximately 530,000 US jobs when the program is fully implemented in 2009. The Act’s wind energy provisions would generate nearly half the total or 245,000 jobs. Clean EDGE would generate the majority of new jobs in manufacturing (251,000 jobs, 47.3% of the total) and construction (62,000, 11.7%). Compensation in these sectors is approximately 13% and 10% higher, respectively, than in the rest of the economy, improving the wages and benefits of hundreds of thousands of workers who move into these jobs. Ohio would be one of the big winners because of our existing industrial infrastructure, standing to gain almost 26,000 jobs.

Policy Matters Ohio coordinates Ohio Apollo, the Ohio arm of the National Apollo Alliance. The Apollo Alliance is a coalition of labor, environmental, civil rights and business leaders fighting for energy independence from foreign energy sources.

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Ohio Employment Edges Down Over Summer Months

Employment in Ohio has edged downward slightly since its recent peak in May, according to seasonally adjusted payroll numbers for nonfarm wage and salary jobs released Sept. 19 by the Ohio Department of Jobs and Family Services (ODJFS). The number of jobs in Ohio has declined by 7,000 since May, after increasing last spring.

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