Your Guide to Ohio’s Minimum Wage

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Ohio’s minimum wage was recently adjusted to keep up with inflation. This article tells you everything you need to know about the current status of minimum wage, and what you can do to prepare for any changes.

What is the minimum wage in Ohio?

As of January 1, 2017, the minimum wage in Ohio is $8.15 per hour for non-tipped workers and $4.08 (tip amount plus this must equal $8.15) for tipped workers. This new wage only applies to companies with annual gross receipts over $299,000. The minimum wage for employees at smaller companies and for 14- and 15-year-old workers is at least $7.25—the federal minimum wage standard.

Are there plans to change the state’s minimum wage?

A 2006 voter-approved amendment to the Ohio Constitution ties minimum wage to inflation. So each year, the wage increases by a small amount to reflect the increase in the Consumer Price Index (which is used to calculate inflation). In 2017, the increase was five cents per hour; in 2016, it was 15 cents per hour.

While there are no proposed laws to change the state’s minimum wage, there are people pushing for an increase. Ohio Democrats, union leaders, and activists want to increase the state’s minimum wage to $15.

Are there plans to change the minimum wage in any cities in Ohio?

Last year, there was a campaign to raise the minimum wage in Cleveland to $15. Legislation was introduced by the Cleveland City Council last year that proposed a phased approach to reaching $15, starting with a minimum wage of $12 in 2018.

There was massive debate around the issue with unions and activists on the “for” side and prominent officials — like Cleveland Mayor Frank Jackson and Council President Kevin Kelley — against it. Jackson and Kelley worry that a hike in Cleveland’s minimum wage would cause businesses to leave the city; they both support a higher minimum wage if it is instituted statewide.

That legislation was defeated in the City Council, which would have put the proposal to a vote during the May 2 special election. At the end of the year, however, Ohio Governor John Kasich signed a bill that would prohibit communities from raising the minimum wage above that of the state.

How should small business owners prepare for minimum wage increases?

Every business is different, so there isn’t one right way to prepare. Here are a few options you may want to consider:

  • Audit your expenses: Check your cash flow in detail and create a hiring plan you can afford. In some cases, you may find that hiring temporary workers or contract workers as needed is less expensive than taking on full-time staff.
  • Make sure you hire and keep the right employees: Replacing an employee costs a lot. You decrease the total cost associated with recruiting and training when you hire (and then retain) the right people. Look for candidates with good track records, who come recommended, and who fit in with the company culture. Once they’re onboarded, make sure you build a relationship and provide paths for growth; it makes it more likely that they will stay in their role.
  • Increase prices: This is a great way to increase cash flow. Customers are rarely happy with a price hike, but keep in mind that your competitors will be forced to do the same. Just make sure you keep track of trends, and don’t raise prices too high.
  • Update tech: Consider automating certain aspects of the work (like payroll), and find ways to reduce production costs.

As always, to make sure your business is prepared and stays in compliance, we recommend that you discuss these upcoming changes to the minimum wage with your accountant and lawyer.

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