US could learn from Ohioans

Cincinnati Enquirer - February 11, 2013

This op-ed by Amy Hanauer ran in the Cincinnati Enquirer.

In this weak recovery, here’s some rare good news: approximately 215,000 of the state’s lowest-paid workers got a small raise on Jan 1, as the state’s minimum wage increased by 15 cents to $7.85.

Thanks to a ballot initiative passed by Ohio voters in 2006, the state’s minimum wage automatically adjusts every year to keep pace with the rising cost of living – this key policy reform, known as “indexing,” has also been adopted by nine other states. As a result, Ohioans who wake up each morning to clean office buildings, serve food, and provide care for our elderly will come a little closer to having their wages keep up with the rising cost of basic expenses.

As the country debates how best to create jobs and accelerate the economic recovery, elected officials in Washington could learn one thing from Ohio – that putting a little more into the pockets of the poorest workers can help the economy. When wages are stagnant, particularly wages at the bottom, workers with less disposable income hold back on spending, which hurts local stores, restaurants, and service providers. In a country where consumer spending makes up 70 percent of the total economy, stagnant wages spell limited growth and a continued weak recovery.

By contrast, the modestly higher wages received by low-paid workers in Ohio this year will go right back into the economy, generating economic growth as these workers buy groceries, pay the babysitter, and replace worn-out shoes. According to an analysis from the nonpartisan Economic Policy Institute, Ohio’s minimum wage increase this year will boost the average affected worker’s pay by a small but important $340 per year, generating over $43 million in new consumer spending.

The beauty is that these increased wages help the workers themselves, help families and communities, and help the local economy. Even better, paying well can help employers. Businesses that pay fair wages to their employees ultimately benefit from reduced turnover and higher worker productivity, as their workers are spared from the struggle of balancing two jobs in order to make ends meet.

In fact, the real strain in today’s economy stems from the decision made by many national fast food chains and big box retailers to pay rock-bottom wages. This siphons money out of our communities and impoverishes the customer base needed to sustain economic growth. Some of these same employers are driving down global standards too, made tragically clear by the factory fire in Bangladesh that killed 112 garment workers who were sewing clothing for Wal-Mart and other American retailers. We need worker protections here and abroad, to generate an economy that works for everyone.

This year’s 15-cent minimum wage increase will mean a lot to workers who are struggling just to get by. But of course $7.85 an hour – just $16,000 for a year of full-time work – is not enough. The truth is that Ohio’s minimum wage remains well below the level needed to ensure that full-time work provides a path out of poverty. Contrary to myth, more than 73 percent of workers benefiting from Ohio’s minimum wage increase are adults over the age of 20. Sixty-six percent of these workers are putting in more than 20 hours per week, and over 39 percent have at least some college education.

We’re glad that Ohio’s lowest-paid workers – young or old, full or part-time, more or less educated – will be taking home a bit more. But if we want to reduce poverty among working people and to stabilize the first rung on our career ladder, we need a national response. Congress has only acted three times in the last 30 years to raise the federal minimum wage, and that federal wage is not indexed.

We don’t think Ohio always provides the best example for the nation. But we do know a thing or two about respect for work and opportunity. So here’s a tip for Congress from the heartland: Raise the federal minimum wage and index it to inflation. Workers, smart employers, local businesses, and communities will all win if parents, customers, and community members have a little more in their pocket in 2013.

US could learn from Ohioans
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