THE STATE OF WORKING PENNSYLVANIA 2005: WAGES STAGNATE OR DECLINE FOR MOST PENNSYLVANIA WORKERS

Low Wage PA Workers Earn 2 Percent Less Than In 2001 

Low Wage Breadwinners Need A Raise in Pennsylvania’s Minimum Wage  

Harrisburg – Wage stagnation spread throughout most of the Pennsylvania wage distribution in 2003, with the lowest-paid workers losing ground for the third year in a row according to the State of Working Pennsylvania 2005 released today by the Harrisburg-based Keystone Research Center.

In spite of three years of over-all economic recovery, the inflation-adjusted hourly earnings of typical low-wage Pennsylvania workers fell 10 cents per hour between 2003 and 2004 and 15 cents per hour since 2001, to $7.16 per hour.  Falling wages contributed to a rise in Pennsylvania poverty rates by 20 percent since 1999-2000.

According to the KRC report, low-wage Pennsylvania workers earn less in inflation-adjusted terms than they did in 1979 as well as in 2001 and 2003. Their current wage level amounts to about $15,000 per year if these workers are employed full-time, full-year.

“What the wage data suggest,” says Stephen Herzenberg, an economist and executive director of the Keystone Research Center, “is that Pennsylvania’s half-million lowest-paid workers will be hard hit by rising energy costs. A dramatic energy price spike could push many low-wage families over the edge.”

Herzenberg notes that the Pennsylvania wage pinch is not limited to low-wage workers.

“The data also show that most wage earners lost ground in 2004, including typical high-wage workers.  This leads to the current near-zero household savings rate and means that rising energy costs may well force a reduction in consumer spending.”

It is the possibility of a decline in consumer spending that has led some Wall Street economists, even before Hurricane Katrina struck the Gulf coast, to express concern about the possibility of a general economic slowdown.

“Given the current economic context and wage performance over the last year, the Pennsylvania General Assembly should raise Pennsylvania’s minimum wage above the federal level this year, as 17 other states have already done,” said Herzenberg.

A rise in the state’s minimum wage would stabilize the state’s economy in a moment of uncertainty by enabling those who are working hardest to make ends meet maintain their consumer spending.

According to the report, a large body of economic research examining the real-world performance of state economies after minimum wage hikes shows that these do not lead to job loss.

“Our estimate is that about 510,000 Pennsylvania low-wage workers would benefit from a minimum wage increase. 71 percent of these are over the age of 20 and two-thirds are women.  We also estimate that nearly a third of the benefit of a minimum wage rise would go to the poorest fifth of Pennsylvania households,” said Herzenberg.

He adds that another 350,000 Pennsylvanians would benefit indirectly as a result of minimum wage increase.

According to Herzenberg, “the minimum wage has lost 41 percent of its inflation-adjusted value since 1968, and more than two-thirds of its value relative to the value of what the average worker produces in an hour. Pennsylvania’s low-wage workers are at least as deserving of a pay raise as Pennsylvania’s legislators.”

The State of Working Pennsylvania 2004 is available free of charge from The State of Working Pennsylvania Web site: http://www.stateofworkingpa.com. The report is KRC’s tenth annual assessment of the condition of Pennsylvania’s working families.

-30-