Duvall & Associates, Inc.
BUSINESS ADVISOR NEWSLETTER
 

Searching for the solution to a decent wage

- by Alan Duvall 

Published in Dayton Daily News June 25, 2006 

Poverty.  America is in the throes of grappling with this supremely complex issue on multiple fronts.  Immigration, health care, welfare, education. 

Tax cuts an answer?  Hardly.  Consider a family of four, living in an apartment and earning $40,000 a year (poverty level estimated at $20,000).  The family pays no federal taxes on income.    

Tax reality established, legislators have turned their attention to minimum wage laws.  Surprisingly, changes in this arena have remained dormant for years.   

The federal minimum wage has languished at $5.15 per hour for nearly a decade.  Although a House panel voted to raise the limit to $7.25 an hour, the issue seems to be festering in a swamp of legislative bureaucracy.

The federal minimum standards are not universal – many exceptions exist.  Employers with less than $500,000 gross sales are generally exempt.  Many employees are exempt as well or subject to reduced minimums – tipped employees, farm laborers, students and workers under the age of 20 are so afflicted. 

Proponents of higher, more inclusive minimums argue the ordinary person cannot adequately live on a $5.15 an hour salary.  Opponents retort companies should pay wages dictated by market forces not government mandate, and minimum wage increases will only serve to increase inflation and reduce employment opportunities for population segments such as students. 

Impatient with the Feds, many states have decided to take local control of the issue passing “living wage” laws that increase minimum wage requirements within their respective borders.  Such laws tend to either increase overall minimum wages or fortify minimums for areas not addressed by federal law. 

Activist residents are attempting to place such a measure on Ohio ballets this autumn.  With a rate of $4.25 per hour, purportedly Ohio is one of only two states with minimum wage requirements less than the federal standard.  Republicans in the General Assembly passed legislation this year that increased the state minimum wage to $5.15, the same as the federal rate.

Even cities are becoming involved.  Dayton has enacted a living wage law mandating a $9.30 per hour wage (with benefits) for city employees as well as designated independent employers that are contractors to the city. 

Lawmakers static for years are steadfastly resurrecting arguments for change.

Alan Duvall is a certified public accountant in Dayton.  Contact him at Alan@Duvallcpa.com.