Even with a raise, earners struggle

About 14 percent of Ohio's work force get a raise Jan. 1.
COLUMBUS (AP) -- Doing the math, Lisa Seelye expects to see about 70 more a month in her paycheck after an increase in Ohio's minimum wage takes effect Jan. 1.
Seelye, 40, a recently divorced mother of two young girls who makes 5.50 an hour working at a Cleveland fast-food restaurant, said the raise won't do much to improve her financial struggles, but it will help her save money for emergencies or defray the high cost of gas.
Evaluating the difference that a minimum wage increase will make in the lives of low-income workers is hard to do, economists said. Ohioans voted in November to raise the state's wage floor from 5.15 an hour to 6.85, and the new law includes an annual cost-of-living wage adjustment.
Circumstances are different for everyone, and the buying power of someone making 6.85 an hour is still less than it was 20 years ago, when adjusted for inflation, said Jared Bernstein, a researcher with the nonpartisan Economic Policy Institute in Washington.
"It's not nearly enough money. If I didn't have food stamps, I don't know what I'd do," said Seelye, a former stay-at-home mom who has a master's degree in library science and took the restaurant job three months ago while she looks for a better-paying job at a public library.
About 719,000 Ohioans -- 14 percent of the state's work force -- are expected to get a raise under the new law, according to Policy Matters Ohio, a Cleveland-based economic research organization.
What this means
Of those, 297,000 are workers who currently earn less than 6.85. They would get an average wage increase of about 80 cents, the group said in a study released this year. An additional 423,000 workers who already earn at least 6.85 also are likely to get a modest wage increase -- about 26 cents -- as employers adjust pay scales to accommodate raises for minimum wage employees.
"For someone getting an 80-cent raise, that's an extra 30 to 35 bucks in their pocket at the end of the week," said Amy Hanauer, director of Policy Matters Ohio. "That could go toward a new pair of sneakers for a child, or it could be used to pay for groceries outright instead of putting it on a credit card."
That's important for low-wage earners trying to stay out of debt, Hanauer said. Another benefit of raising the minimum wage is that it may also reduce "payday" loans -- short-term, unsecured loans that borrowers promise to repay using their next paycheck, she said. Critics say the loans trap borrowers in a deepening cycle of debt.
The impact of the new law is expected to vary widely across Ohio, benefiting mostly urban and rural areas where poverty levels are higher and low-income jobs are more common.
The largest concentration of workers who will be affected are in 13 of the state's Appalachian counties, Hanauer said. About 20 percent of workers there are likely to get a modest raise, followed by central-eastern counties clustered around Tuscarawas and the city of Cleveland.
Widespread effect
But even in the least-affected regions of the state -- Butler and Warren counties north of Cincinnati, and the parts of Franklin County that don't include Columbus -- about 10 percent of workers will see a raise when the minimum wage goes up, she said.
Gordon Gough, director of legislative affairs for the Ohio Council of Retail Merchants, who opposed the November ballot issue, said he doesn't see how raising the minimum wage will significantly increase the buying power for those workers. Retailers operate on small profit margins, so when expenses go up, prices will go up, he said.
Even so, Seelye said she's grateful to have any extra money to help make ends meet.
"I'm hanging in there," she said. "I'm grateful to have any job right now, and I keep telling myself that life will get better."