It looks like Pennsylvania Republicans are Ready to Move on the Minimum Wage. But is $8.50 enough? [Hint: No, it is not!]

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State Senators Michele Brooks (R – Mercer County) and Dan Laughlin (R – Erie County) told the Manufacturer and Business Association that with consensus building in Harrisburg, this will be the year to raise the minimum wage.

That’s very good news.

But the senators said that the wage being discussed (among Republicans) is an increase to $8 or $8.50 “if it had to be tied to inflation.” While I applaud the senators for being willing to move on this issue—for the first time in over a decade—raising the minimum wage $.75 cents or $1.25 is wholly inadequate.The senators are right that we should be adjusting the minimum wage for inflation. But they are in error about what that means for today.

In 1968, the minimum wage was $1.60. If this wage was set to adjust for inflation, today it would be $10/hour (a full $2/$1.50 above what Republicans are proposing). A more accurate measure to consider is the minimum wage relative to the median wage in Pennsylvania. In 1968, the minimum wage was 51% of the median wage of $3.15/hour. But after that time, minimum wage increases became less frequent. Today, Pennsylvania’s minimum wage ($7.25/hour) is only 30% of the state’s median wage for 2019 (which is $24.44/hour) and without further action will continue to decline.

And this decreasing value of the minimum wage is not due to stalled productivity. In fact, productivity has grown 77.6% since 1979, while median hourly compensation (wages plus benefits) has grown only 10.1%. This means someone is benefiting from the increased productivity, and it isn’t the worker. This is why we’ve seen the overwhelming and undeniable ballooning of income for the top 1%.

 

Workers can, and should, share in this growing prosperity. Keeping the minimum wage below $15/hour not only denies workers the ability to share in the prosperity they helped to create, but it also denies residents across our state the ability to live with dignity and to afford the most basic necessities of life.

Let’s look at how low-wage residents of Senator Laughlin’s district in Erie would fare under a raise in the minimum wage to (his proposed) $8.50/hour. As the chart below shows, the average monthly expenses for a single person with no children in Erie is $2,669 a month. Raising the minimum wage to $15/hour would nearly allow this person to afford the bare necessities including housing, food, healthcare, transportation, and other needed provisions (think toilet paper, shoes, laundry detergent, etc.). A wage of $8.50/hour would bring in about $1,473 a month, which is only 55% of what a single person would need for a bare bones budget.

I can hear the feedback already—but before you say that those benefiting from a minimum wage hike are all teenagers, anyway, let me dispel the myth. Of those workers in Pennsylvania that would benefit from a minimum wage hike to $12/hour (the governor’s proposal), 88% are adults, aged 20 and older.

And one-quarter of those who would benefit are parents. Even $15 an hour would not allow a single parent with two kids to afford even half of her expenses, although a two-parent working family would get close. However, at $8.50 an hour, a single mom would only make 27% of her monthly expenses working full-time. A two-parent working household, both making minimum wage of $8.50/hour, would make less than half (49%) of their monthly expenses. [READ: Not making it.]

 

Now one concern often cited by Republicans around raising the minimum wage is that it will be a job-killer. In fact, at the event for the Manufacturer and Business Association Senator Laughlin said, “I think trying to go to $12 right out of the gate would probably kill about 50,000 jobs across the state.” Let’s examine the senator’s claim.

The Pennsylvania legislature’s own Independent Fiscal Office (IFO), a nonpartisan body, projects some job loss associated with a minimum wage increase. The IFO estimates 34,000 workers would lose employment as a result of a minimum wage increase to $12 this July.

Before getting into the weeds of the job-loss debate, it’s important to register the size of the IFO estimates of who benefits versus job losses: i.e., according to the IFO, more than 50 times as many people would benefit from a minimum wage increase as would lose a job. Moreover, because there is significant churn in the low-wage labor market, and especially in today’s low unemployment economy, those that do lose a job should be able to find a new job at a higher wage.

In addition, there are questions about the reliability of the IFO’s estimate that 34,000 workers would lose employment as a result of a minimum wage increase to $12 this July. As with five previous IFO reports, this estimate is derived from a study of a minimum wage increase’s effect on teen employment; the results are then applied to a group that is nearly 90% adults. An expanded literature review in the most recent IFO report acknowledges that some research finds that minimum wage increases have not had negative employment effects—yet the IFO does not factor this research into its job estimates. The IFO assumption of a small amount of employment loss is out of step with the most current and sophisticated research (i.e., the research designs that control best for other variables that impact employment, thereby estimating more precisely employment effects of minimum wage increases). Using the strongest research designs, this research finds no employment effects of state minimum wage increases over the past three decades.

So, while we applaud Senators Laughlin and Brooks for discussing (and potentially acting to implement) a much-needed legislated increase to the minimum wage, they should reconsider what a truly adequate minimum wage would be today. And to be adequate, workers should not have to make the difficult choice of cutting housing, food, health care or other basic and essential costs. #WeCantWait

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