NEW ESTIMATES BY KEYSTONE RESEARCH SHOW THAT THREE-QUARTERS OF A MILLION PA WORKERS WOULD BENEFIT FROM $7.15/HOUR MINIMUM WAGE

Harrisburg, PA – Approximately 754,000 Pennsylvania workers would see pay increases if the state’s minimum wage is raised to $7.15 per hour, according to new projections released today by the Keystone Research Center (KRC).

KRC’s new estimates rely on new data for 2005 released this month by the Bureau of Labor Statistics.  The estimates also take into account the fact that some workers with wages below $7.15 today won’t benefit directly, because wage inflation will push their hourly earnings above $7.15 before 2007.

“We want Pennsylvania lawmakers to have the best information possible as they consider the minimum wage issue,” said KRC economist Mark Price, a co-author of the Briefing Paper.  “We also want to clear up the confusion that has resulted from all the different numbers floating around.  The bottom line: policymakers and the public can have confidence that hundreds of thousands of workers would receive a much-needed raise from a minimum wage increase to $7.15.”

KRC estimates that 427,000 Pennsylvania workers would benefit directly from an increase in the state’s minimum hourly wage from the current $5.15 to $7.15 by January 2007. 

KRC’s estimate of the direct effect is almost exactly the same as the Pennsylvania Department of Labor and Industry’s estimate (423,000).  It is higher than the Commonwealth Foundation’s (CF’s) estimate of 320,000.  The CF number, however, has not been updated with full-year 2005 data.  It also over-estimates the shrinkage by 2007 in the number of workers earning $5.15 to $7.14.

KRC estimates that another 327,000 workers whose wages are projected to fall between $7.15 and $8.14 per hour on January 1, 2007 – within a dollar of the new minimum wage – would benefit indirectly from a minimum wage hike to $7.15.  While the new minimum will not mandate raises for these workers, they are likely to receive a “ripple effect” increase as employers seek to maintain wage differentials between different groups of workers.

KRC’s estimates are the only ones that tally the number of indirectly affected workers above $7.15 who would receive a raise.  The reality of this ripple effect, however, is not a subject of controversy.

Opponents of a minimum wage hike regularly acknowledge the effect when they note that employers’ wage costs will rise even above the new minimum wage. Just last week, for example, opponents of a minimum wage hike told Harrisburg’s Patriot-News that a minimum wage of $7.15 will require businesses that pay $8 to $9 an hour to adjust their pay scales.

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