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Ohio Minimum Wage Chump Change Raise vs. the Maximum Pay Jackpot

Ohio raised the minimum wage 15¢ an hour to a whopping $7.85 per hour for 2013.

Making minimum wage gives you annual earnings of $16,328 — a $340 increase.

Tipped employees will receive a minimum wage of $3.93 plus tips. Employees younger than 16 must be paid no less than the federal minimum wage, which remains $7.25, unchanged since 2009.


A local “business leader” weighs in with his opinion:

“Raising the minimum wage to this high of a level sounds like another good intention, but it can have bad results,” said Greg McAfee, founder and owner of Kettering-based McAfee Heating & Air. “Many companies can’t afford to pay $7.85 to an employee who, because of lack of experience or training, may only be worth $6 per hour.

“I know there are some trying to support families on minimum wages, but I am not for our government mandating what any employer should pay or make, for that matter,” McAfee said.

New workers in the heating, ventilation and air-conditioning industry often see starting wages of $9 to $10 an hour, McAfee added.

Michael Saltsman, a research fellow with the Washington, D.C.-based Employment Policies Institute, warns that minimum wage increases “redistribute” income among low-wage families, with businesses often raising prices, cutting workers’ hours or doing a combination of both.

Low-income families end up worse off, Saltsman said. And businesses making only “a couple of cents on the dollar” profit margin — independent or small grocers, full- or limited-service restaurants and some retailers — will be harmed, he said.

“Essentially, you have some gaining at the expense of others,” he said.

via Minimum wage in Ohio rises to $7.85 an hour [1].

As a small business owner, I can tell you that the most expensive part of hiring anyone is the first 3-6 months, where you are training and evaluating performance. Getting people up to speed- even if it’s “flipping burgers” ends up costing more like $15 an hour, with the supervisor, the mistakes, and of course the time spent filling out all the government forms and getting them into your payroll. If the government really wanted to help small businesses with hiring low-skill people and getting them up to speed- they would give small businesses a payroll credit for the first three months for anyone who stays longer than 9 months total.

However, in the same day’s paper, there is an article about the skyrocketing costs of medicine being purchased by the Pentagon.

Department of Defense drug spending has ballooned by more than 123 percent since 2002, from $3 billion to $6.8 billion in 2011, according to Tricare officials. That outpaces by nearly double the overall pharmaceutical sales in the United States, which grew about 67 percent over that time, according to annual reports from IMS Health, which tracks sales for drug companies.

via Pentagon drug budget soaring [2].

Sure, the cost of treating so many more disabled vets due to the never ending wars in Iraq and Afghanistan is part of the reason for the increase in costs- but, if we look at what drug company top management is making, it’s a lot more than minimum wage.

They were led by giant Pfizer, with more than $8 billion in sales from the Department of Defense since 2002.

via Pentagon drug budget soaring [2].

Pfizer CEO Ian Reed has done OK by jacking up sales to the Pentagon which is protecting his company from harm- he tripled his pay in one year:

Pfizer Inc. nearly tripled CEO Ian Read’s compensation in 2011, his first full year as top executive of the world’s largest drugmaker, which has been cutting costs and making other moves to compensate for generic competition hurting sales of top medicines.

Read, 58, received compensation worth a total of $18.12 million in 2011, up from $6.42 million in 2010, according to an Associated Press analysis of a regulatory filing Thursday by the maker of Viagra and cholesterol fighter Lipitor.

via Ian Read, Pfizer CEO, Sees Pay Nearly Triple In First Year On Job [3].

Who pays his salary? Why, the taxpayers of course, including those making minimum wage. While it’s almost impossible to live on $16,328 a year- it’s really easy to live on $18.2 million. In fact, I’m pretty sure that poor Ian, would have to hire people just to help him spend his money- if he even could find things to buy (other than investments, stocks, bonds etc). Here’s the math:

A salary of $1.82E7 equates to a monthly pay of $1,516,667, weekly pay of $350,000, and an hourly wage of $8,750.00.

via Convert my salary to an equivalent hourly wage | Calculators by CalcXML [4].

Just as a note, the first calculator I found wouldn’t even take that many zeros in the annual pay field.

Just suppose, the United States government, the largest purchaser of goods and services, all of a sudden stopped buying products from companies that pay their executives more than, say, 40x their average employees’ salary? Either the minimum wage would go up, the company would go broke without being able to sell to Uncle Sam or, we’d actually start seeing some of the real controls in spending that the Republicans in Congress keep calling for (as long as we don’t cut spending to either their local pork projects or with their campaign donors).

It’s time for a maximum wage policy in the United States so that the people at the bottom aren’t subsidizing those at the top who are raping our country’s coffers to pay for their extravagant salaries.

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Nice to know Mr. McAfee’s real thoughts on being “forced” to pay a subminimum wage to employees. I’ll keep it in mind when I’m looking for companies to service my home’s HVAC system.

John Ise

Great post David.  Your blog is the BEST internet thing coming out of Dayton.  Cheers in 2013. 

Dr. Funkenstein

Let’s get the whole story here.  When you add in the food stamps, rent and utility subsidies, free cell phones and all the other stuff that comes with living on the democrat plantation minimum wage is generous. 

Ice Bandit

Ohio raised the minimum wage 15¢ an hour to a whopping $7.85 per hour for 2013. (David Esrati)
…contraire mon frere. The real minimum wage is what you convince someone to accept. And roofing companies, drywall installers and Chinese restauranteurs have known for 25 years that that guy may be named Miguel or Joaquin. Labor, dear David, is just another commodity and is subordinate to the laws of supply and demand. And Uncle Sam has looked the other way while a tidal wave of low skilled hit the labor market. So it’s no surprise that market pressures rewarded those who are willing to work for less than what the state arbitrarily thinks one should offer their labor. But in true David Esrati fashion, a statement about the job and opportunity killing minimum wage inevitably evolved into a rant against the salary of a CEO. Of course, the CEO is of a major pharmaceutical company who makes less annually than probably 20 Major League baseball players. This obsession, dear David, is reaching panic-button proportions. Perhaps Pfizer makes a strong med that can be of help…

Tom McMasters

Here is an article that was meant to have the same theme as David’s current article
Concerning Ice Bandit’s comment
Here is a quote from the front page of my old website tfm4senate.com (circa 2008)
Ford Executives vs. ball players
I fully agree that executives should not be making so much more than those that actually produce products.However, if you think about it, professional baseball players make their money from TV commercials, car companies are one of the biggest TV advertisers therefore Ford is probably paying Alex Rodriquez more each year than it’s new CEO. 
Also concerning Ice Bandit’s comment is a current article I titled “Payroll Tax Fraud and the Economy”
I thought I could make a point about how we all seem to have a similar fact base and a general idea of what direction to head.  Not sure why there isn’t a big enough coalition to actually affect the local political climate?

Ice Bandit

…Tom McMasters. A salute and a tip of the Old Bandito’s sombrero for the impressive and honorable resume posted on you blog. However, the words “fiscal conservative” and “Democrat” appear in a sentence as often as the words “Blessed Sisters of Charity” and “whorehouse”…..


Ice Bandit, you just made me burst out laughing at work! Not cool. ;-) 

Tom McMasters

So Ice Bandit, how do we get people to be more contemplative so those of us at our level have productive conversations that can contribute to responsible government?