$15 minimum wage would benefit one million working Ohioans

A coalition of community groups and organized labor led by One Fair Wage has filed a ballot proposal to raise the Ohio minimum wage to $15 per hour in two steps by 2026, and phase out the sub-minimum wage employers can pay tipped workers by 2029. Ending separate treatment for tipped workers, those with a disability, and youth is a critical part of the policy solution. If the measure passes, tipped workers will earn the full minimum wage with tips on top.

In 2026, the ballot measure would benefit nearly 1 million Ohioans. That year, the $15 minimum wage would be fully effective for most Ohio workers; the minimum for tipped workers would be $12. It would drive economic growth at a time when Ohio’s job recovery is slowing down by generating over $2 billion in new wages for directly impacted workers. Because these are Ohio’s lowest-paid workers, they spend a large portion of any new income to cover basic needs, so raising the minimum wage also drives economic growth.[2]

This year’s ballot measure is not the first time Ohio voters have stepped in to boost languishing wages when state legislators would not. Ohio voters recognize the need for stronger wages. In 2006, voters set Ohio’s minimum wage to $6.85, and indexed it to inflation so it would retain its purchasing power over time.[3] That wise measure anticipated and forestalled the possibility that policymakers would tacitly devalue the wage over time, by neglecting it and letting inflation shrink its buying power, as Congress has done with the federal minimum. The federal minimum wage of $7.25, last increased in 2009, has been effectively cut in half since its historic peak. Ohio’s $10.45 wage is worth the same as $6.85 in 2007.

Nevertheless, Ohio’s wage is too low, even with the inflation index. The state wage peaked in 1968, when the $1.60 federal minimum wage prevailed in Ohio and was worth $14 per hour in today’s terms. Jobs in too many of the state’s most common and fastest-growing industries pay wages at or near the poverty level. Three out of Ohio’s 10 most common jobs pay too little for a working person to support their family of three without needing food assistance.[4] The median worker at all three of those jobs is paid less than $15 per hour and would see a direct benefit from the ballot measure, while two more of those occupations pay just above $15 at the median, and workers there could expect a likely indirect pay raise as employers adjust pay scales. This is known as the “ripple effect”: When the minimum wage rises, employers tend to raise pay for those workers whose pay is a little above the minimum too, in order to maintain positive morale among those workers and retain them, or to compete to hire them.[5]

Raising the state’s minimum to $15 an hour by 2026 will raise pay for nearly 1 million Ohioans, lift thousands out of poverty and make pay more equitable across race and gender. Eliminating the sub-minimum wage for tipped workers, workers with disabilities, and youth will make pay more just, and give tipped workers better working environments with more income security.

Everyone who works deserves the security of knowing they can take care of themselves

Schedule

Under the proposal,[6] the minimum wage would be phased in over two steps for most workers:

• $12.75 by 2025.
• $15 by 2026.
• Indexed to the Consumer Price Index (CPI) after 2026 to protect the value of the wage against inflation.

Employers of tipped workers would get longer to comply with the new wage scale:

• Minimum wage minus $4 in 2025: $8.75 per hour.
• Minimum wage minus $3 in 2026: $12 per hour.
• Minimum wage minus $2 in 2027: likely around $13.30 per hour.
• Minimum wage minus $1 in 2028: likely around $14.60 per hour.
• Full minimum wage in 2029: likely around $15.90 per hour.

The measure covers Ohio employees at companies whose revenue exceeds $385,000 per year, an amount which also indexes to the CPI to rise each year with inflation. The measure covers workers currently excluded based on their membership in certain groups. It would eliminate the loophole that currently allows employers of tipped workers to claim workers’ tips as an offset and pay them as little as half the minimum wage; bar special permits that let employers pay workers with a disability a fraction of the minimum wage; and extend coverage to young workers under age 16 who are currently only guaranteed half the federal minimum wage in accordance with the Fair Labor Standards Act.

Without the ballot initiative, Ohio’s minimum wage would reach an estimated $11.00 per hour by 2026, based on Congressional Budget Office forecasts of inflation of 2.5% in 2024 and another 2.5% in 2025. This means the ballot measure would raise Ohio’s wage by 36.4%, compared with its expected level under current law.[7] This is a similar rate to the 33.0% increase from the 2006 ballot initiative, which raised Ohio’s minimum wage to $6.85 from the federal wage of $5.15 that covered most workers. For those workers exempt from federal minimum wage but covered by the state’s $4.25 wage, the increase was 61.2%. This time businesses will get more time to adjust: The 2007 minimum wage went into effect just two months after passage, but the current measure will give companies an extra year to fully raise wages for most workers, and an extra four years for tipped workers.

In today’s dollars, Ohio’s minimum wage was worth over $14 per hour at its peak in 1968.[8] Since then, the minimum wage has lost 28% of its buying power. Yet Ohio workers’ productivity-per-worker has risen 76% since 1979. Low-paid workers have shared none of that growth. Ohio voters in 2006 passed the $6.85 wage (worth $10.45 today), and pegged it to inflation, but they never restored the wage to its full value.

That means low-wage workers today have less robust wage protections than their grandparents did half a century ago. This decline means low-wage workers have to work more hours just to achieve the minimum standard of living of their grandparents’ generation. Raising the wage to $15 through this initiative would restore the state to its historic level.[9] Restoring the value of minimum wage to what it was half a century ago should be uncontroversial.

If the ballot measure succeeds, Ohio will join 14 states plus D.C. that have set a minimum wage of $15 or more.[10] They are home to 42% of Americans. Raising the minimum wage to $15 by 2025 would benefit more than 1 million Ohio workers. This report shows who they are.

Impact

A $15 minimum wage by 2026 would benefit nearly 1 million workers, giving them on average an additional $2,128 in their pockets each year for full-time work, and bringing over $2 billion in additional wages to low-paid workers in Ohio. Because lower-paid workers and families spend much of their income just buying the basics, this injection of wages would ripple out, helping to stimulate local economies. The policy would improve race and gender equity, reduce poverty, and improve health. Women represent three in five beneficiaries. Discrimination in the labor market disproportionately keeps Black workers in lower-wage jobs, regardless of educational attainment.[11] Because Black workers are more likely to be paid low wages, they are more likely than their white counterparts to benefit (30% would). Raising Ohio’s minimum wage would benefit working people no matter what they look like or where they come from.

This report presents data from the Economic Policy Institute, drawn from the Census Bureau’s American Community Survey and Current Population Survey. Tables describe directly affected workers: those whose projected hourly wage by 2026 would be less than $15 if the ballot proposal were not passed (or less than $12 for tipped workers). We also note indirectly affected workers: those paid up to 15% more than the new $15 minimum. Workers in that income band are projected to see a raise as employers adjust pay scales. In practice, some workers counted in this analysis as indirectly affected will not get a raise — no law says they must — but some workers paid even slightly higher will benefit, so the model provides a good estimate overall.

Raising the minimum wage to $15 would benefit both men and women, and make important progress in overcoming gender pay inequality in Ohio. Women make up three in five of the people who would be helped.

Though women have gained significant ground in employment and earnings over recent decades, Ohio women were still paid just 84 cents on the dollar compared with their male counterparts as of 2022 (up from 59 cents in 1979).[12] Women face lower pay both because low wages prevail in many of Ohio’s female dominated occupations, and because — even within occupations — men are paid more. In Ohio’s 20 occupations most dominated by women, employers pay men more for the same job.[13] These factors combine to cost a typical woman hundreds of thousands of dollars in foregone lifetime earnings compared with her male counterparts.

Such low wages are a likely factor keeping women out of work. Women’s participation in paid work in Ohio lags men’s by 10 points and the gap stopped narrowing in the Great Recession around 2009. Since then, more women are opting out of work: Women’s workforce participation reached a 34-year low in 2022 at 56.1%.[14] While this state figure accounts for all Ohio women, Black women nationally have had the highest workforce participation rates among all women since 1880 when data were first kept — just 15 years after the end of slavery.[15] Yet their contributions have been consistently undervalued. A livable minimum wage would go a long way to improving that: the Center for American Progress found that, had Congress passed a $15 minimum wage, it would have led to the largest reduction to date in the pay gap Black women face.[16]

Many are finding that wages don’t cover the costs associated with working. For parents of young children, childcare is the most expensive and challenging of these. The annual cost of childcare in Ohio is $9,000 for a single infant and takes 15.1% of the budget of a median family ($59,491).[17] Yet the median childcare worker is paid just $13.15 per hour, resulting in shortages of childcare workers that contribute to the childcare deserts faced by many Ohio families. Deeper investment is clearly needed in Ohio’s childcare infrastructure, along with livable wages for women in and beyond that industry.

Men also stand to gain important wage protections from the ballot measure. From 1979 to 2022, Ohio employers pushed men’s pay down by $2.54 per hour accounting for inflation, a loss of 9.8%. Black men were especially harmed, with their pay falling by $3.92 per hour since 1979, down 16.4%.[18]

Ohio workers affected by the ballot initiative would earn an average raise of $1.54 per hour, with women gaining $1.56 and men gaining $1.51, a boost worth $2,166 per year for affected women and $2,067 for men. Nearly 600,000 Ohio women would receive a raise, along with almost 370,000 Ohio men. The measure would benefit 24% of working Ohio women and 14% of men.

Table 1 shows the breakdown. Directly affected workers are those paid less than $15 per hour, while indirectly affected workers are those paid up to 15% more (up to $17.25). These workers are included in the estimate of workers who will benefit from the minimum wage increase because we know employers adjust pay scales to entice more experienced workers and reward those already on staff. No law says they must, so in reality, we know that some of these workers will not be affected, but some workers paid more than $17.25 will. Our numbers come from the Economic Policy Institute.[19]

Table 1

Raising the wage would bring women’s wages in closer alignment with men’s, and raise pay for the growing share of men working for low wages.

Raising Ohio’s minimum wage would improve the lives of Ohioans of all races. Most of those workers are white, but because disproportionately large shares of Black and Latine workers are employed in low-paying jobs, a larger share would benefit. The same is true for the diverse category of people grouped together as “other races.” More than 30% of each of these groups would benefit from this ballot measure. Similar shares of Asian Ohioans (16%) and white Ohioans (17%) would benefit. Table 2 gives the breakout of Ohioans who would get a raise from the $15 minimum wage.

Table 2

The fact that Ohioans in racial minority groups continue to face low wages at highly disproportionate levels is evidence of ongoing structural racism in our job market. It plays out in distinct ways for different people.

Black Ohioans contend with a long legacy of structural racism both specifically embedded in the labor market and stemming from other factors. For instance, the deindustrialization which has cut Ohio’s manufacturing jobs in half since the 1970’s disproportionately harmed Black workers. Policy Matters Ohio found that deindustrialization reduced manufacturing employment among white workers by 28.5%, but for Black workers the reduction was 46.0%. That discrepancy was largely because deindustrialization most heavily affected urban cores where Black Ohioans lived.[20] But a history of redlining and the implementation of policies such as the GI Bill in a way that almost wholly cut out Black service members are reasons Black Ohioans were so concentrated in crowded urban neighborhoods in the first place.[21] Ohio lost some 700,000 manufacturing jobs from our peak of 1.4 million in the 1970’s to just 700,000 today.[22] When Ohio lawmakers made our criminal legal system more punitive and tripled our prison population since the 1970’s, they also created a web of laws and administrative rules barring Ohioans with a conviction from one in four Ohio jobs.[23] Because our criminal legal system treats Black Ohioans more harshly than their white counterparts at every level of interaction — from police stopping a person through the severity of a conviction and sentence — those restrictions hit Black workers much harder.[24]

Latine workers in Ohio include many agricultural and migrant workers. Some have limited English language fluency and may struggle to access better-paid job opportunities. As with their Black counterparts, some face outright discrimination in hiring and promotion.

Taken together, these factors mean raising the minimum wage is a necessary step to building an equitable economy. Doing so would mean an additional $2,100 per year for affected white Ohioans on average, $2,200 for Black workers, and $2,300 for working Ohioans who are Latine, Asian or members of other races.

The ballot measure would end the provision that allows employers of workers with a disability to receive a special exemption to pay those workers less than the minimum wage. Thus far, 14 states have eliminated sub-minimum wages for workers with a disability.[25] These policies reflect a growing recognition that the well-intentioned 1938 policy which sought to enable workers with disabilities to access work by exempting them from standard wage protections was discriminatory. A bill before Congress would allocate money to phase out “sheltered workshops,” where people with an intellectual disability are routinely paid wages below the minimum wage and enable states to craft new workforce development strategies that help disabled individuals to gain a foothold in the regular labor market.[26] Some 120,000 Americans work in sheltered workshops, with about half paid less than $3.50 per hour.[27] The number has declined substantially in recent years as employers seeking to support workforce development for workers with a physical or intellectual disability increasingly include them in mainstream workplace arrangements paying regular wages.[28] Ohio’s bill would ensure that working Ohioans who have a disability would be protected by the same minimum wage as everyone else.

Though most young workers under 20 would benefit from the minimum wage increase, 80% of those affected are adults aged 20+. The same share, 80%, have already finished high school. Some 211,000 parents would benefit from the raise. Their number exceeds that of affected teens. Table 3 provides the age and family status of affected workers.

Table 3

Although most Ohio workers who would benefit from raising the minimum wage are adults who have already finished high school, among those young people who work, raising the minimum wage would deliver substantial benefits.

The federal law that first established a minimum wage — the New Deal-era Fair Labor Standards Act — also created protections for children against unsafe and exploitive labor practices.[29] A slate of efforts to roll back those protections has gained ground in Ohio and other states. Ohio Senate Bill 30 would allow employers to schedule children ages 14 and 15 for work as late as 9:00PM on school nights, beyond the 7:00PM limit maintained by federal law.[30] Thirty states have introduced laws that would reduce child labor protections since 2021. These attacks on child labor law go hand in hand with the carveouts that exclude youth workers from the minimum wage. They include measures to remove prohibitions against hazardous work, reduce the age of child workers to as young as 12, or introduce a sub-minimum wage as a “training wage” or for students.[31]

In the low-paid sectors where young people typically work (largely leisure, hospitality, wholesale, and retail), they are performing the same work as adults, with some exceptions based on federal child labor protections from excessive or hazardous work. Efforts to both suppress the minimum wage paid to young workers and weaken child labor laws have a straightforward goal: expanding employer access to cheap labor and reducing employer liability to keep children and young workers safe.[32]

One of the most active lobbies fighting to block a livable minimum wage, the National Restaurant Association, explicitly favors rolling back child labor protections to expand access to cheap teen labor instead of raising wages to attract adult workers.[33] Though the Ohio labor market recovered the jobs lost to COVID-19 by May 2023, the food service and accommodation industry was still missing 11,500 jobs as compared with its pre-COVID level as of February 2024.[34] Instead of seeking to roll back child labor protections to gain access to a new pool of more easily exploited workers, some restaurants are raising wages to attract workers who want to work there. And they have said that raising the wage floor would help them to stay competitive while they do it.[35]

Though low wages are found across industries in Ohio, in some industries they predominate. Nearly three quarters of restaurant workers would get a raise from the ballot measure, along with nearly half of all accommodation workers and 44% of arts and entertainment workers. The largest share of low-paid workers are in the private for-profit sector where 21% would be affected by the ballot measure, followed by 14% of nonprofit workers and 8% of government workers. Table 4 provides an industry breakout of affected workers.

Table 4

People sometimes wonder if raising the minimum wage will have an impact on the number of jobs available to low-wage workers. A comprehensive study of 138 state level minimum wage increases from 1979 to 2016 found that raising the minimum wage does not affect the number of jobs available either overall, or in lower paying sectors.[36]

The proposed ballot measure would not only raise Ohio’s minimum wage to $15 per hour; for the first time it would also require that workers who receive tips are paid the same minimum wage as all other workers, with tips on top of their regular wage. While 90% of the Ohioans whose wages will rise if the ballot measure passes do not earn tips, tipped workers are four times as likely to be affected. Nine percent of non-tipped workers would benefit, along with 37% of tipped workers.

Ohio allows employers of tipped workers to claim a credit against their tips as a partial offset to their wages, paying tipped workers as little as half the minimum wage (just $5.25 in 2024). This practice dates to the aftermath of the Civil War, when restaurants and railroads hired formerly enslaved people to work as servers and porters but paid them such low wages they were forced to rely on customer tips for the bulk of their pay. The Pullman Porters in 1925 formed the Brotherhood of Sleeping Car Porters union and by 1937 won substantial pay raises and limited working hours to 260 in a month in their first-in-the-nation contract between an all-Black union and a major corporation, the Pullman Company. [37] Yet for restaurant workers, many of them Black women, dependence on tips remained a central facet of their working lives. People of color are both overrepresented in restaurant server jobs and concentrated in the lowest-paying jobs in that occupation.[38]

Their dependence on tips means that tipped workers are among the lowest-paid in the state. Out of all 789 occupations that exist in Ohio, 12 of the 30 lowest-paid are tipped workers and 10 are in restaurants. All these jobs pay less than $14 per hour, including tips. Data are from 2023, when the minimum wage was $10.10 per hour. That year, the median Ohio wage was $22.45.[39] As of March 2024, Ohio was still missing 13,200 jobs in the Accommodation and Food Services Industry; a signal that those who could find better jobs left the industry.[40]

Table 5

For tipped workers this measure could help to make sure they are paid all the wages they’re already owed. In Ohio, if a tipped worker’s wage and tips combined fall short of the minimum wage, the employer is required by law to make up the difference. Yet the system opens the door to labor abuses including sexual harassment and wage theft. The Restaurant Opportunities Center found that women in the leisure and hospitality industry face double the rate of workplace sexual harassment as their peers in other industries, both from the customers whose tips they rely on directly and from managers who control whether they work busy shifts.[41] Policy Matters Ohio found that half of wage theft cases from nonpayment of the minimum wage occurred in the leisure and hospitality industry, where roughly 100,000 workers are victims every year.[42] For these reasons, eight states have done away with the subminimum wage for tipped workers, providing for “equal treatment.”

Eliminating the so-called “tip credit” does not take away workers’ tips; rather it prohibits their bosses from taking their tips as a partial offset to reduce their wages. The proposal language is clear on this: it states that tipped workers are “entitled to the amount of the tips in full or in accordance with a pooled tip policy for non-management employees in compliance with federal law.”[43] If the ballot measure passes, tipped workers will be covered by the same minimum wage as all other workers, with tips on top.

Recent academic research looking at how minimum wage increases affect restaurants found mixed results contingent on restaurant productivity: Restaurants enjoyed better staff retention, and many increased their profits, while less productive restaurants closed, and overall employment levels were unchanged.[44] The lesson here is that businesses can succeed while paying a living wage, but that a business model based on low wages doesn’t work when the wage floor goes up and must be changed. The reason restaurants can readily adjust to a higher minimum wage is that they pass most of the cost on to consumers, but since wages are only a fraction of their operating costs, even a substantial increase in the wage floor translates into relatively low consumer price increases. A study of 75 restaurant menus before and after a San Jose minimum wage increase found that the 25% increase in the minimum wage led to a boost in average menu prices of 1.45%.[45] Applying the same relative change to Ohio’s 33.4% proposed wage increase, we could expect restaurant prices to rise by about 2.1%; for a $20 meal, that’s an expected increase of 42 cents. While Ohioans still reeling from the price surges of COVID-19 are weary of any price inflation, it’s important to note that corporate profits have been the bigger driver of inflation: By the third quarter of 2023, corporate profits accounted for 83% of price inflation, while labor costs contributed 50%, and were largely offset by a reduction in firms’ other costs of 33%.[46] This is the breakdown as inflation has eased to levels in the three percent range following the spikes caused by pandemic supply chain disruptions and new consumer preferences. From 2020 to Q4 of 2021, when we experienced 40-year inflation highs around ten percent, corporate profits comprised 54% of the price rise, while wages made up just 8%.[47] Corporations have demonstrated that they will raise prices any time consumers will tolerate it, regardless of whether wages are changing. Other policy tools should be used to address this, while long-suppressed wages for low-paid workers should be boosted.

More than 13% of Ohioans live in poverty.[48] Some 447,000 of them are children. Among adults, many live in poverty despite working. These workers cope daily with an acute lack of sufficient material resources that causes lasting harm. Poverty exposes poor people to more traumatic life events, while stripping them of the resources to overcome them. A broken-down car can mean a job loss, that turns into an eviction. The combination of more stresses and fewer resources leaves poor people in a state of chronic stress: the kind where life’s demands exceed the person’s ability to cope. The consequences range from higher rates of infant mortality, to shorter life expectancy, to increased chance of death from disease. Poverty is literally killing people: Research published by the National Institutes of Health found that men in the top 1 percent of income get 15 more years of life than men in the bottom 1 percent. Women in the top 1 percent live 10 years longer.[49]

No one should live — and die — under these circumstances, and no business model should depend on a workforce that does. Raising Ohio’s minimum wage to $15 per hour would lift wages for 262,000 Ohio workers and their families now living in poverty. Another 248,000 have family incomes at the margin: above the official poverty line but below twice the threshold. The earnings cutoffs for both vary by family size, but for a family of three the poverty line is $25,820 a year, putting such families with incomes up to $51,640 on the margin below 200% of poverty.[50] Together these workers comprise more than half of the beneficiaries of a $15 minimum wage.

Not all workers who would benefit from raising the minimum wage live in or near poverty, but the fact that some are fortunate enough to have access to other income or share their homes with other earners does not change the responsibility employers have to pay a wage that meets the cost of living. The cost of living in a person’s community is a real cost: It’s the one working people take on to subsist where they live, and to supply their work to their employer. That makes it an operating expense that every successful business model must account for. Providing for a livable wage has long been the intent of the minimum wage: President Franklin Delano Roosevelt said in 1933 when he signed the National Industrial Recovery Act that “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.”[51]

Conclusion

It’s time to raise Ohio’s minimum wage. The inflation index protects our wage from losing value, but it has been seventeen years since minimum wage workers got a true raise. Policymakers let the wage devalue for decades before voters intervened in 2006, leaving it 28% below its peak still today. Meanwhile, with Ohio workers’ productivity, the state has grown wealthier than ever.

Raising the minimum wage is overdue. Ohio voters have an opportunity to sign a petition now to put the measure on the November 2024 ballot. Should this measure pass, nearly 1 million Ohioans would get a raise. The typical directly affected worker would take home almost $2,100 in additional pay each year. For decades, Ohio workers have steadily increased productivity, but low-paid workers take home less for their efforts than their grandparents two generations ago. This initiative is one step toward balancing the scales.

This work was made possible in part by The Economic Policy Institute.

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