Time for the Pennsylvania legislature to act on the minimum wage

Date of Press Release: 
May 30, 2014

To: Editorial Page Editors, Editorial Board Members, Reporters & Columnists

From: Mark Price (717-255-7158 | price@keystoneresearch.org), Natalie Sabadish and Stephen Herzenberg

Date: May 30, 2014

Re: Time for the Pennsylvania Legislature To Act

Public support for an increase in the state minimum wage is building across Pennsylvania. On May 8th in communities across the state, Pennsylvanians participated in rallies for an increase. On Tuesday June 3rd low-wage workers and a coalition of labor, religious, community, and women’s groups will come together on the steps of the Capitol in Harrisburg at 1 PM to urge lawmakers to raise the state minimum wage to at least $10.10 an hour.

The inflation-adjusted wages of the bottom 20% of Pennsylvania workers are actually lower today than they were in 1979. In stark contrast, since the late 1970s average CEO pay in the United States, adjusted for inflation, has risen $12.6 million, or 876%.[1]

These two trends help explain why, since the late 1970s, the top 1% of Pennsylvania earners have captured half (51 cents) of every dollar of income growth in the Commonwealth.[2]

The single most important cause of the drop in wages for low-wage workers is the decline in the purchasing power of the minimum wage, which has plunged 16% since 1979.[3]

For decades now, policymakers in Washington D.C. have failed to raise the federal minimum wage sufficiently to counter the effect of rising prices, leaving more low-wage workers – people who work hard and play by the rules – in poverty or below a family sustaining income (the latter estimated by economists at 200% of poverty). In response, state and local governments, including Pennsylvania in 2006, have moved to set a higher minimum wage. Today, every state that borders Pennsylvania has or will shortly have a minimum wage higher than the federal minimum wage.  

Bills to raise the minimum wage have recently been introduced in the Pennsylvania legislature in the Senate by Senator Christine Tartaglione (SB1300) and Senator Daylin Leach (SB1317) and in the House by Representative Patty Kim (HB1896) and Representative Mark Cohen (HB1942). 

We urge the full Senate and House to send to Governor Corbett a bill that raises the minimum wage to at least $10.10 an hour, eliminates the tipped minimum wage, and, in the future, automatically increases the minimum wage with inflation (as is done with lawmakers’ salaries). The Governor has signaled that he is opposed to a minimum wage increase; but given the popularity of an increase among Republican, Independent and Democratic voters in Pennsylvania and given the gubernatorial election, Governor Corbett seems likely to sign an increase that gets to his desk.[4] On Tuesday, in another state with a Republican legislature and Governor, Michigan’s Governor Rick Snyder signed a bill to raise the state’s minimum wage. Legislative action in Michigan aimed to preempt a ballot initiative that would have set a higher minimum wage than approved by Governor Snyder. In Pennsylvania, which has no initiative and referendum process, to eliminate the minimum wage as an electoral issue lawmakers should enact an increase to $10.10 per hour.

Over a million Pennsylvania workers would benefit from a minimum wage increase to $10.10 an hour:[5]

  • 84% of the workers who would benefit are adults (age 20 and older).
  • 81% of the workers who would benefit work 20 or more hours per week.
  • A quarter of the workers who would benefit are parents with children.
  • Those parents earn just over half of their family’s income. 
  • Half a million PA children live in households that would get a boost.
  • In 52 of Pennsylvania’s 67 counties, more than one fifth of workers (21% or more) would benefit from an increase in the minimum wage.[6]

Research shows that a higher minimum wage reduces poverty.[7] Indeed, a minimum wage that increased steadily over a longer period – not just with inflation, but also with productivity growth – underpinned a period in which living standards of low-income families doubled from the 1940s to the 1970s.[8] Far from leading to job loss, these robust increases put money in the pockets of low-income families, helping to create robust demand that sustained our nation’s longest period of very low unemployment. Steady and predictable minimum-wage increases also encouraged business to find ways to become more efficient, sustaining productivity growth. This virtuous cycle has in the last several decades given way among some businesses to its opposite – a vicious cycle of falling wages at the bottom, high turnover and low productivity growth, leading to further wage stagnation.

The most rigorous economic research also shows that the many state-level minimum-wage hikes in the last 20 years boosted worker pay without causing job losses – even in regions where the economy was weak and  unemployment high.[9] One last reassuring fact on job growth: In the 14 states that have raised the minimum wage (that have at least 12 months of data on jobs since that increase), job growth since raising the wage was faster than the pace of job growth in Pennsylvania since the start of the recovery.[10] A minimum wage increase would not hurt job growth but would strike a significant blow to the state’s runaway income inequality, lifting the wages of workers who live and work in every corner of the Commonwealth of Pennsylvania.

See http://raisethewagepa.org/ for more information the Raise the Wage PA Coalition and Tuesday’s rally.

The Keystone Research Center is an independent, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania and U.S. economy. Learn more athttp://keystoneresearch.org.

[1] Lawrence Mishel and Natalie Sabadish, CEO Pay in 2012 Was Extraordinarily High Relative to Typical Workers and Other Higher Earners, Economic Policy Institute, Issue Brief #367. Available at http://s4.epi.org/files/2013/ceo-pay-2012-extraordinarily-high.pdf

[2] Mark Price, Increasingly Unequal in Pennsylvania: Income Inequality, 1917 to 2011, Keystone Research Center, February, 2014. Available at http://keystoneresearch.org/publications/research/UnequalStates

[3] Since its peak in 1968 the minimum wage is down 23%.

[5] David Cooper, Raising The Federal Minimum Wage to $10.10 Would Lift Wages for Millions and Provide A Modest Economic Boost, Economic Policy Institute, Briefing Paper #371, December 2013. Available at http://s2.epi.org/files/2013/minimum-wage-state-tables.pdf

[6] Mark Price and David Cooper, Living on the edge: Where very low wage workers live in Pennsylvania, Keystone Research Center, May 2014. Available at http://keystoneresearch.org/publications/research/ontheedge

[7] Mike Konczal, Economists agree: Raising the minimum wage reduces poverty, The Washington Post, January 4th 2014. Available at http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/04/economists-agree-raising-the-minimum-wage-reduces-poverty/

[8] Colin Gordon, Growing Together, Growing Apart. Center for Economic and Policy Research, September 14th, 2012. Available at http://www.cepr.net/index.php/blogs/cepr-blog/growing-together-growing-apart    

[9] For a complete and readable review of the economic literature on the employment impact of minimum wage increases see John Schmitt, Why Does the Minimum Wage Have No Discernible Effect on Employment?, Center for Economic and Policy Research, February 2013. Available at http://www.cepr.net/index.php/publications/reports/why-does-the-minimum-wage-have-no-discernible-effect-on-employment   

[10] We are measuring average annual job growth in Pennsylvania since January 2010 the start of the employment recovery.

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