Pay Raises in 2027: What Ohio Employers Need to Know

As businesses plan for 2027, many employers are balancing employee expectations with rising operating costs. National compensation forecasts suggest pay increases will remain relatively steady, making thoughtful planning important for the year ahead.

What Can Employers Expect in 2027?

According to SHRM's report on 2027 salary increase projections, employers are anticipating modest pay increases as they manage budgets and compete for talent.

Rather than giving every employee the same raise, businesses may focus on performance, retention, market competitiveness and hard-to-fill positions when allocating compensation budgets.

What Ohio Employers Should Know

There is no general federal requirement to give employees an annual raise. However, employers must comply with applicable minimum-wage laws and other wage requirements. The U.S. Department of Labor's guidance on when pay raises are required provides additional information.

Effective January 1, 2027, Ohio's minimum wage will increase to $11.40 per hour for eligible non-tipped employees and $5.70 per hour for eligible tipped employees. According to the Ohio Department of Commerce, the annual gross-receipts threshold for businesses covered by the state's minimum-wage rates will also increase.

Beginning January 1, 2027, the state minimum wage will apply to businesses with annual gross receipts over $419,000, up from the current $405,000 threshold. For businesses with annual gross receipts of $419,000 or less, as well as workers ages 14 and 15, the minimum wage remains tied to the federal rate of $7.25 per hour.

Ohio employers are also required to display the official 2027 minimum-wage poster. Visit the Ohio Department of Commerce's minimum-wage poster page to access the updated poster.

Planning Ahead for Pay Decisions

As you prepare your 2027 compensation plan, consider these steps:

• Review current pay rates. Identify any employees whose wages may need to change to meet new minimum-wage requirements.
• Evaluate market competitiveness. Consider local pay trends, job responsibilities and the skills needed to attract and retain employees.
• Establish consistent criteria. Determine how performance, promotions, experience and market adjustments factor into pay decisions.
• Communicate clearly. Help employees understand how compensation decisions are made.

Pay increases are only one part of employee retention. A thoughtful approach to compensation can help businesses balance budgets, meet wage requirements and support their workforce.

Have more questions about compensation? Contact us today!