Sides Weigh Merits of Minimum Wage Hike

Dayton Business Journal - September 29, 2006

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.

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