During the Jan. 18 legislators’ breakfast hosted by the Harrisburg Regional Chamber & CREDC, Rep. Patty Kim – the panel’s only Democratic official – said that Harrisburg needs to toward a major bipartisan initiative to get things moving.
“Another big ticket item that we can all agree on...maybe minimum wage,” Kim hinted.
The minimum wage debate in PA has dragged on for years. But a recent study by the Keystone Research Institute, an admittedly liberal-leaning organization, suggests that some of the roadblocks to raising the state’s minimum pay are being overstated.
Pennsylvania’s minimum wage is currently mapped to the federal minimum of $7.25 per hour. But most of the states surrounding Pa. — its immediate competitors for business attraction — have enacted their own legislation to raise that dollar figure higher. Gov. Tom Wolf has included a minimum wage increase in several of his budget proposals since taking office, and garnered widespread support from fellow Democrats on the issue.
Aside from a better quality of life for low-income workers, a minimum wage hike is attractive for the state’s budget. Raising Pa.’s minimum wage to $12 would save the state $50 million in Medicaid cost-sharing, as more workers would make enough to not need the program.
More importantly, a $12 minimum would bring in $33.9 million in additional income tax per year and $61.4 million in new sales tax, according to budget figures.
Republicans have been less enthusiastic, although State Sen. Scott Wagner — a hopeful GOP contender against Wolf in November — had introduced a bill to raise the wage 50 cents per year for three years, to $8.75.
The objection by conservatives and business groups is that raising the wage will force employers to cut back hours, and slow job growth, since they are being forced to pay above what would otherwise make economic sense.
Pennsylvania’s Independent Fiscal Office found that, under this model, raising the minimum wage to $12 would eliminate the equivalent of 54,000 full-time jobs in the state.
But others, including the KRC, submit that this model isn’t accurate, given the concentration of capital within a limited number of corporate interests.
To illustrate this, the KRC recently compared the employment and wage growth of the food service industry — one that has a high proportion of minimum wage and non-full time jobs compared to other sectors — between Pennsylvania and surrounding states that have higher minimum wages.
The KRC found that, contrary to the usual model, surrounding states that raised wages for food workers also were able to add more jobs, with the exception of West Virginia.
The future of this model may change, KRC Executive Director Stephen Herzenberg noted, as Gov. Wolf has proposed to extend overtime protection for salaried workers, a move that would not require legislative approval – unless Republicans successfully change the promulgation threshold, as discussed in HB 1237.
Wolf desires to raise the level below which salaried worker must receive time-and-a-half for more than 40 hours per week of work. The current level is $23,660 annually, with Wolf proposing to raise it incrementally to $47,892 in 2022, making roughly 460,000 more salaried workers eligible for overtime.
“PA has lagged behind other states when it comes to legislative initiatives on pay increases, but when it comes to executive initiatives, Wolf has been more aggressive than governors in other states,” Herzenberg said. “You have an interesting geographic contrast to work with.”