Minimum Wage Set to be Raised

Gongwer News Service - April 27, 2005

Prentiss to raise the standard minimum wage to $6.15 an hour beginning January 1, 2006

Gongwer News Service

Sen. Prentiss said the state minimum hourly wage of $4.25 per hour has not been increased since 1990, making Ohio one of only two states with a minimum wage lower than the federal rate of $5.15 per hour. The state minimum wage would grow to $6.15 on January 1, 2006, and to $7.15 per hour in 2007. The Director of Commerce then would be required to adjust the wage rate annually based on the rate of inflation for the previous 12 months. “This inflationary factor corrects what should have been done in the first place,” Sen. Prentiss said. She said 15 other states already have enacted laws mandating a minimum wage exceeding the federal rate. Sen. Prentiss rejected arguments that boosting the minimum wage costs jobs. “In 1999 the President’s Council of Economic Advisers concluded the modest increases in the minimum wage have had very little or no effect on employment,” she said. Sen. Prentiss contrasted practices of Wal-Mart-“the archetype low-wage employer”-with that of Costco, which starts workers at $10 an hour and pays an average of $15.97. “This big box discount store has lower turnover, higher productivity and less theft than Sam’s Club with its lower average wages,” Sen. Prentiss said.

“It is my belief that in the long run companies who pay a fair wage profit because they have lower turnover rates, decreased absenteeism, improved morale, and greater worker productivity,” Sen. Prentiss said. The comparison prompted a question from Chairman Hottinger: “If that is indeed the case…why does not Wal-Mart on their own raise their wage rate?” Sen. Prentiss said she was unsure, but that government winds up subsidizing low-wage employers because their workers qualify for food stamps, childcare and other assistance. Sen. Armbruster noted there was no provision in the bill to deal with the underground economy in which employers do not pay into Social Security or workers’ compensation. “That second or third job is under the table. These employees and employers skate,” he said. Sen. Prentiss acknowledged the bill does not deal with the matter. “What we’re really talking about is business persons scamming the system. I don’t know how to catch them,” she said. Chairman Hottinger scheduled proponent testimony on the measure for May 17th.

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