Hiking the minimum wage in PA

Posted 8/21/12

On January 1, the minimum wage was increased in 20 states—but Pennsylvania was not one of them. The minimum wage in Pennsylvania is still the same as the federal minimum wage, which has been stuck …

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Hiking the minimum wage in PA

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On January 1, the minimum wage was increased in 20 states—but Pennsylvania was not one of them. The minimum wage in Pennsylvania is still the same as the federal minimum wage, which has been stuck at $7.25 an hour since 2009.

A majority of states now have minimum wage rates that are higher than that of the federal government. Of the states that have increased or will increase them later this year, about half are doing so because of previous legislation with built-in increases; the rest are acting because of ballot initiatives or legislative agendas. In New York State, the minimum wage was raised to $9 per hour on December 31, 2014.

The argument put forward for not raising the minimum typically is that the hike would cause jobs to be lost. Pennsylvania Rep. John McGinnis has expressed the view that it is a good thing that the state has a lower minimum wage than surrounding states, because it could give the state an edge in attracting new businesses.

So far, however, the policy has not helped the employment situation in the Keystone State, which has repeatedly come in near last place in job creation over the past several years, according to the Keystone Research Center.

State Sen. Tina Tartaglione disagrees with McGinnis. In a 2014 press release in support of minimum wage increase legislation, she said, “To the critics who say an increase in the minimum wage will hurt the economy: you are wrong. Studies and history show that increases in the minimum have very little to no impact on the economy.”

The release continued, “Referencing a study released last week by the University of California-Berkeley, Tartaglione said increases in the base hourly wage could drive up prices, but it also increases productivity and worker satisfaction.”

The debate is also still playing out in academia. Arin Dube, an economist with the University of Massachusetts at Amherst, published a study in January 2014 in which he wrote, “I use data from the March Current Population Survey between 1990 and 2012 to evaluate the effect of minimum wages on the distribution of family incomes for non-elderly individuals. I find robust evidence that higher minimum wages moderately reduce the share of individuals with incomes below 50%, 75% and 100% of the federal poverty line.”

On the other hand, economist David Neumark with the University of California Irvine published a study in October 2014 in which he wrote, the “best evidence still points to job loss from minimum wages for very low-skilled workers—in particular, for teens.”

The debate has been going on for a long time, but in 2014, developments seemed to favor those who back an increase. In the beginning of 2014, President Barack Obama called for raising the federal minimum wage from $7.25 to $10.10 by 2016. The federal Congressional Budget Office (CBO) issued a study in February 2014 and wrote, “Once fully implemented in the second half of 2016, the $10.10 option would reduce total employment by about 500,000 workers, or 0.3%, CBO projects.” The study said the job loss could be more or less, but an increase would likely lead to job loss.

In the real world however, the states that raised their minimum did better in the area of job creation than the states that did not. Statistics released by the Department of Labor in June 2014 showed that the 13 states that increased their minimums on January 1, 2014 had job growth that was more than 20% higher than the states that did not increase their minimums.

A post on the Department of Labor website says, “A review of 64 studies on minimum wage increases found no discernable effect on employment. Additionally, more than 600 economists, seven of them Nobel Prize winners in economics, have signed onto a letter in support of raising the minimum wage to $10.10 by 2016.”

Pennsylvania Governor-Elect Tom Wolf, a Democrat, campaigned on a promise to increase the minimum wage in the state. He said, “It is clear that Tom Corbett does not have a real plan to get our economy back on track, and all of his efforts are focused on helping his donors rather than Pennsylvania workers. I believe we need to raise the minimum wage to help Pennsylvania’s workers and strengthen the economy.”

The voters handed Wolf a decisive victory and, at the same time, they handed the Republicans expanded majorities in the state Senate and House. We would urge Pennsylvania Republicans to join Wolf and the 29 states that have raised the minimum wage in the face of inaction at the federal level.

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