On Monday evening Cleveland City Council introduced legislation to increase the minimum wage in Cleveland, Ohio from the current State of Ohio rate of $8.10 to $15.00. The ordinance is being introduced due to the successful efforts of a citizen's petition drive.
Council by law must either approve the petitioned ordinance, amend it or reject it. If the ordinance is amended or rejected, petitioners can call for the original or Council amended version to be put on the ballot for a vote by Cleveland residents in November.
A copy of the ordinance is provided below, along with additional information.
Cleveland City Council begins hearings on the legislation tomorrow at 1:30 pm. The hearing can be viewed live on Cleveland Channel 20 that is also streamed at this link. It is expected that there will be a minimum of two hearings on the ordinance.
My position on the issue - I support an amendment to the Ordinance that would incrementally raise the minimum wage in Cleveland from the current State of Ohio rate of $8.10 to $15 by 2022. A preliminary example of how an incremental increase could be scheduled is as follows:
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UPDATED - 12:45, 05.17.16
I support an amendment to the Ordinance that would incrementally raise the minimum wage in Cleveland from the current State of Ohio rate of $8.10 to an hourly rate of between 50 & 60% of the City's median hourly wage (approximately $10 - $12/hour) by 2022.
This change in position reflects a better understanding of an overarching issue of what is being proposed for a very small, economically distressed geographic area and two additional primary economic issues and an:
- The minimum wage as a percentage of median income above 50-60% can a detrimental impact the broader economy. Ref below "Proposal 13: Designing Thoughtful Minimum Wage Policy at the State and Local Levels".
- An annual increase of more than 10% of a minimum wage can also have a detrimental impact the broader economy.
A preliminary example of how an incremental increase could be scheduled is as follows:
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The rationale for my position is that although I agree the minimum wage should be increased, as the Federal government and the State of Ohio has failed to adequately adjust the national minimum wage to keep pace with inflation and to provide for adequate minimum wage - a large adjustment made in one-year could have significant impact on employees, employers and the economy (prices, competitiveness of Cleveland businesses, etc.).
An incremental increase could provide increased income to low-wage workers while at the same time help businesses that would need to comply with the law (those with more than 25 employees with several other exceptions) to adjust wages and payrolls and to phase in the increases with less adverse impacts. A six-year incremental scheduled would see the minimum wage increase a total of 85% at 10.82% on average per year.
There are many studies on the topic of minimum wage. Generally there appears to be agreement on what the Congressional Budget Office stated in 2012 -
"Raising the minimum wage would increase family income for many low-wage workers, moving some of them out of poverty. But some jobs for low-wage workers would probably be eliminated and the income of those workers would fall substantially."
Although in the case of Ordinance 621-16, it appears that what is being proposed, an increase by January 2017 to $15.00 would represent the highest increase in the shortest period of time as anywhere in the country, See "Politifact Ohio - $15-per-hour proposal in Cleveland 'most aggressive' increase in US?", 04.25.2016
REF: CBO, The Effects of a Minimum-Wage Increase on Employment and Family Income, .02.18.2014.
Additional resources to review the issue of raising the minimum wage are provided below. Please share other resources you find helpful by commenting on this article below.
Issues that I hope we can cover in our council hearings include:
- the level and concentration of poverty in the City of Cleveland;
- income and wealth inequality;
- importance of local small businesses;
- incomes and wealth of low income families, such as free tax preparation services that help generate returns using the Federal Earned Income Tax Credit; and,
- other efforts we have been making to improve: incomes and wealth of low income families, such as free tax preparation services that help generate returns using the Federal Earned Income Tax Credit; literacy rates and education of workers; employment inclusion and local hiring initiatives such as Community Benefit Agreements.
- need for state and federal actions for raising the minimum wage; the political realities of local laws being the first movers in affecting changes at the State and Federal level.
Who would be impacted by the new law?
Workers -
For an accounting of low-income workers and families in Cleveland and what their expenditures and cost of living are like as compared to others around the country see the Policy Matters' "Getting by in Ohio: The 2013 Basic Family Budget" (07.10.13); "$10.10 minimum wage would help Ohio" (03.25.12) and, "Left behind: State of Working Ohio 2015" (09.06.15).
[click on images for enlarged view]
Employers -
A"Covered Employer" per the Ordinance "means any person or entity employing 25 or more employees in the United States during the previous calendar year and who otherwise meets the definition of "employer" under Section 34a of Article II of the Ohio Constitution." REF: Proposed Ord. 621-16 New Section 174.01 c.
An exemption is also made for employers licensed to make payment of a wage rate below that required by the State to employ individual employees with mental or physical disabilities that may otherwise adversely affect their employment, or the Employer can demonstrate an employee receives tips that combined with wages are equal or greater to the minimum wage rate for all hours worked. In such cases the wage rate required to be paid is not less than half, the minimum wage required by the Ordinance REF: Proposed Ord. 621-16 New Section 174.02 b.1&2.
Employment and the economy -
[to be added]
Employment and the economy -
[to be added]
Other Resources
Cleveland City Council research on national policy and recent changes to the minimum wage. click on the link for a larger formatted view:
Proposal 13: Designing Thoughtful Minimum Wage Policy at the State and Local Levels, by Arindrajit Dube, University of Massachusetts Amherst, 06.16.14, an economic policy initiative at the Brookings Institution.
A copy of Proposal 13 is provided below. The study is very detailed and comprehensive and covers the following summarized issues:
- The Challenge - Rising Equality and stagnant wages; decline in the minimum wage.
- A New Approach - State & City level policies; costs and benefits; impact on wages, employment, poverty and prices.
- Is there enough empirical evidence to support increasing the minimum wage to half the full-time median wage?
Considering the study's suggested approach of utilizing the "median" wage of a geographic area (50-60%), the following table provides a cursory look at our metro area's median and mean hourly wages and what a $10, $12, or $15 increase would look like in terms of a percentage of the median income.
Note that a median wage is suggested as using a mean wage would pick up very high, i.e. top 1-5% salaries that would not be impacted by changes in employment, pricing and the economy.
Note that a median wage is suggested as using a mean wage would pick up very high, i.e. top 1-5% salaries that would not be impacted by changes in employment, pricing and the economy.
In addition, the metro area is not representative of the specific geography of only the City of Cleveland. Ideally we need to obtain median hourly wage data for just the City of Cleveland to understand more specifically what the percentages would look like for a maximum minimum wage increase.
Using the measure of a percentage of median hourly wages, a maximum rate of a $10 to $12 minimum wage seems possible without seeing significant negative impacts to workers, businesses, prices and the economy. A $15 minimum wage, even projected out through an incremental increase to 2022 is questionable in terms of the high percentage rate as compared to the current and potential future median wage.
More data is needed on the City of Cleveland's historical and project median hourly wage.
Using the measure of a percentage of median hourly wages, a maximum rate of a $10 to $12 minimum wage seems possible without seeing significant negative impacts to workers, businesses, prices and the economy. A $15 minimum wage, even projected out through an incremental increase to 2022 is questionable in terms of the high percentage rate as compared to the current and potential future median wage.
More data is needed on the City of Cleveland's historical and project median hourly wage.
by: Arindrajit Dube, University of Massachusetts Amherst
Economic Policy Institute Wage page; articles and resources.
Minimum Wage Mythbusters. Department of Labor
Effects of raising the minimum wage: Research and key lessons. Journalists Resources, 10.19.2015, A project of the Harvard Kennedy School's Shorenstein Center and the Carnegie-Knight Initiative.
Are Wages Flat or Falling? Decomposing Recent Changes in the Average Wage Provides an Answer. Federal Reserve Bank of Cleveland, 03.27.15
New York Economists Support a Statewide $15 Minimum Wage; Recent academic research shows it’s good for workers, businesses and the economy. Fiscal Policy Institute, 03.14.16
State of Working Ohio 2014. Policy Matters Ohio, 08.31.14
A $15 US Minimum Wage: How the Fast-Food Industry Could Adjust Without Shedding Jobs by Brian Cummins
