State of Working PA: Wages in Neighboring States Outpacing Pennsylvania’s Because Their Lawmakers Have Acted and Ours Haven’t

Despite continuing economic growth and falling unemployment, more aggressive policies to increase wages are needed for low-to-middle income Pennsylvania families

HARRISBURG, PA – The Keystone Research Center today released the 22nd edition of its report “The State of Working Pennsylvania.” The report finds that low-to-middle income Pennsylvanians are not sharing in the spoils of an economy that by many indications is healthy. This continues a decades-long trend of wages for those at the very top of the income scale growing disproportionately when compared to all other workers. Lawmakers in surrounding states have acted to lift the pay of lower-wage workers but Pennsylvania’s lawmakers have not. Pennsylvania lawmakers need to rectify that and to partner with Gov. Wolf on a more comprehensive strategy to lift pay for all of Pennsylvania’s middle class.

“A year ago, The State of Working Pennsylvania 2016 presented data showing little wage growth, and in some cases wage declines, for virtually every group of Pennsylvania workers over the preceding 15 or 35 years, regardless of race, gender, and education level. We argued that when our political leaders fail to offer workers hurt by a restructuring economy a realistic promise of better days, anger and despair can spread, fueling divisiveness and fraying our social fabric. The events of the last year in America have borne out this warning,” said report co-author and KRC labor economist Mark Price, Ph.D.

This year’s report shows continued wage stagnation for all but high-paid Pennsylvania workers. The report also shows that policymakers in our neighboring states have all taken at least one step towards an economy that more fairly rewards work – by raising their state minimum wage. Pennsylvania lawmakers have not taken this step, ignoring Gov. Wolf’s call for a $12 per hour minimum wage despite overwhelming support for a higher minimum wage among state voters from both parties.

  • In the six states surrounding Pennsylvania and the District of Columbia, hourly pay of low-wage (10th percentile) workers rose $1.02 in the last four years (through the first six months of 2017), to $9.73 per hour. That increase amounts to $2,104 per year for a full-time, full-year worker.
  • In Pennsylvania, the rise in the pay of low-wage (10th percentile) workers has been only a third as large, 33 cents per hour. If Pennsylvania low-wage workers had seen an increase as large as neighboring states, those working full-time, full year would have another $1,435 in annual income.
  • At higher wage levels (the 20th percentile and 30th percentiles) where research suggests the minimum wage still has some impact, our neighboring states have seen wages increases of about a dollar per hour, while Pennsylvania wages have increased by only 40-45 cents per hour.
  • Counting just those in the 10th percentile and below, Pennsylvania workers received $362 million less in their paychecks in the 12 months spanning the second half of 2016 and first half of 2017 than if lawmakers had increase the minimum wage like their peers in neighboring states.

The report also shows that more aggressive policies to increase wages are also needed for Pennsylvania workers in the broad middle of the wage distribution (from the 40th to the 80th percentile). In the last 12 months (ending June 30), wages in this broad range have mostly fallen and no group has seen more than a small raise. With wages for most workers stagnant, the top 1% garnered even more of the total increase in Pennsylvania income in this recovery than any other in the past 70 years – 42.9%.

“The failure of the broad middle class in Pennsylvania to benefit from an economic recovery now in its ninth year suggests that Gov. Wolf’s creation of a Middle Class Task Force, announced in his February budget address, could not be more timely. As this task force undertakes its work, we encourage it to give all Pennsylvanians an opportunity to offer their suggestions for how to lift our state’s middle class,” said report co-author and Keystone Research Center Executive Director Stephen Herzenberg, Ph.D.

Alongside its “State of Working Pennsylvania” KRC released an updated “Agenda to Raise Pennsylvania’s Pay” outlining policies that would raise wages across the board and that the Middle Class Task Force should therefore consider. For workers in the middle third of the wage distribution, Gov. Wolf could implement through executive action a rule that makes all salaried workers earning less than 47,000 – an estimated 459,000 Pennsylvanians – eligible for overtime pay.

“The broader point illustrated by the impact of minimum wage increases or a change in the overtime rule,” said Price, “is that new policies could restore an economy that lifts all boats instead of one rigged to benefit the 1%. By driving home this message, Gov. Wolf’s Middle Class Task Force has a chance to restore faith that there is a future for working Pennsylvania and to reduce the anger and frustration tearing apart our social fabric.”