Small business owners would struggle with minimum wage increase
NFIB, the state’s leading small business association, completed a survey of the 21,000 members across the state of Ohio on minimum wage. Nationally, NFIB has opposed current efforts at the state and federal levels to impose a $15 minimum wage, saying one-size-fits-all mandates are always bad for small businesses, and a nationwide $15 per hour minimum wage is no exception. Throughout the state of Ohio, members of NFIB echo this national concern and the impacts it will have on their businesses.
Larger corporations tend to support a higher minimum wage as it would give them a competitive advantage over their Main Street counterparts, to the point where some would not even continue to exist. In the NFIB Ohio survey, one in 10 Ohio small businesses indicated a $15 minimum wage would prompt them to either consider closing or selling their business.
The United States Congress passed the Fair Labor Standards Act in 1938, setting a federal minimum wage of 25 cents, which is equivalent to $4.66 today, and asserting those under the law were entitled to a certain amount of pay for their work. Based on legislation passed in 2007, the current federal minimum wage stands at $7.25.
Currently, the minimum wage in Ohio is $8.80 for non-tipped employees, which ranks in the middle of the pack compared to the rest of the states. The 2021 wage is up ten cents from 2020 due to the fact in 2006, Ohioans voted for a constitutional amendment to bump the state minimum wage up to $6.85 an hour and tie future annual increases to the rate of inflation. Tipped employees saw their minimum wage increase from $4.35 to $4.40 an hour.
Legislation has been introduced in the Ohio Senate to eventually raise Ohio’s minimum wage to $15 per hour. Senate Bill 51 proposes to increase the state minimum wage and to allow municipalities, townships, and counties to establish higher minimum wage requirements. The minimum wage for Ohio would incrementally increase to $15 per hour by 2025 and continue to adjust annually for inflation.
Annually NFIB surveys the membership at both the state and federal levels on several issues that may be on the legislative horizon. Additionally, special surveys are conducted throughout the year on timely topics. The most recent of these surveys in Ohio dealt with the impacts on the small business community on a minimum wage increase to $15. The results of the survey indicate some devastating results for Ohio’s economy.
NFIB Ohio Minimum Wage Survey Findings:
- A $15 minimum wage would force 75% of small businesses to eliminate jobs (either full-time or part-time), with the greatest impact on part-time employment;
- 65% of Ohio small businesses are currently paying some of their employees between the current minimum wage and $15;
- 58% would hire fewer employees or put into place a hiring freeze;
- A $15 minimum wage would cause these immediate business impacts in rank order:
1) increase prices (23%)
2) eliminate or reduce the hiring of entry-level or teenage labor (17%)
3) decrease the work hours of current hourly employees (14%)
4) eliminate or slow business expansion plans (13%);
- 1 in 5 small business owners will have their total payroll costs go up $50,000 or greater
“NFIB members in Ohio get very concerned when they hear ideas like a $15 minimum wage floated. In our recent survey 87% of Ohio small business owners indicated they are opposed to raising the minimum wage to $15 per hour,” said Roger Geiger, Executive Director for NFIB in Ohio.
“Ohio entrepreneurs were decimated by the pandemic, many seeing revenue losses of 25% year-over-year, and some even over 50%. As we work our way back to a solid economic footing, a hike in the minimum wage would be an additional obstacle for small businesses to try and overcome,” Geiger continued.
“Fundamentally, small business owners believe that wages and benefits should be agreed upon by an employee and their employer, not a one size fits all edict from Washington, DC or Columbus,” he concluded.
Nationally, the NFIB Research Center shows the extraordinary damage a $15 per hour federal minimum wage would do:
- 6 million jobs lost – 57% at small businesses
- 700,000 jobs lost at the smallest firms
- 165,000 jobs lost in the restaurant industry
- 162,000 jobs lost in the retail trade industry
- 85,000 jobs lost in the administrative and support services industries
- $2 trillion reduction in real economic output
- Nearly $1 trillion reduction in real GDP
- $103 billion reduction in personal disposable income
