Ohio’s minimum wage will increase to $10.45 on Jan. 1, giving these workers an hourly raise of 35 cents.

The tipped minimum wage, paid to workers such as restaurant servers, is also going up. These workers will see their hourly wage rise to $5.25, an increase of 20 cents. Employers are required to make up the difference if workers’ wages and tips don’t equal an hourly rate of $10.45.

Low-wage workers are getting a raise because voters approved a state constitutional amendment in 2006 that ties Ohio’s minimum-wage increases to inflation. The state uses the Consumer Price Index for urban wage earners and clerical workers. It is based on what consumers pay for a selection of goods and services, including food and gas. The 35-cent increase reflects how this CPI increased by 3.7% between Sept. 1, 2022, and Aug. 31, 2023, according to the Ohio Department of Commerce.

Michael Shields, an economist with Policy Matters Ohio, a progressive nonpartisan state policy research institute, said the minimum wage increase “protects Ohio’s lowest-paid workers from losing buying power.” He said this is especially important in a period of still high, but declining, inflation.

Lower inflation means that the 2024 Ohio minimum wage increase is less than the one that took effect in 2023. Because of an 8.7% CPI between  Sept. 1, 2021, and Aug. 31, 2022, the minimum wage rose by 80 cents to $10.10. It was the largest increase since the state constitutional amendment passed.

The Ohio minimum wage applies to employees of businesses with annual gross receipts of more than $385,000. For workers at companies below this threshold, the minimum wage is $7.25. The minimum wage is also $7.25 for 14- and 15-year-olds. In both cases, their minimum wage is tied to the federal minimum wage. Congress hasn’t raised the $7.25 federal minimum wage since 2009.

“If Congress had placed a similar inflation safeguard when it passed the highest minimum wage on record, way back in 1968, the federal minimum wage would be worth over $14 per hour today,” Shields said in a news release.

An estimated 388,800 people, or 7.6% of Ohio’s workforce, will be affected by the minimum wage increase, according to data released Dec. 21 by a progressive Washington, D.C.-based think tank. The Economic Policy Institute report said that Ohio is among 22 states increasing minimum wages on Jan. 1.

Policy Matters Ohio said this data shows how families will benefit. The organization said that that two-thirds of workers in Ohio getting a raise are older than 20. Most of these workers – 269,200 – live in households with children.

Strongest wage growth in decades

“The minimum wage continues to be a vital policy for creating a more equitable economy,” the report states.

The EPI report said that 57.9% of those benefitting from minimum wage hikes will be women. Black and Latino workers will also benefit. The report said Black workers comprise a combined 9% of the wage-earning workforce in the states with increases. However, they are 11.1% of the minimum wage workers. Latino workers are 19.6% of the workforce in these states, but 37.9% of the workers receiving this raise.

Because of a tight post-pandemic labor market, many employers have had to raise wages to remain competitive, which has led to the strongest wage growth for low-wage workers in decades, according to EPI. As a result, fewer workers than usual will be affected by the minimum wage increases, the report said.

“Low unemployment has meant that employers have had to pay higher wages to attract and retain workers,” the report stated. “Nevertheless, higher state minimum wages are still important for securing the gains low-wage workers are attaining during this remarkable period of wage growth.”