Pennsylvania Governor Tom Wolf has repeatedly called to raise the state’s minimum wage – every year for the last seven years.
Yet bills proposing minimum wage increases have continually failed in the state legislature. The most recent bill, which would have raised the state’s minimum from the current federal hourly rate of $7.25 per hour to $15 per hour by 2024, has been stuck in the House labor committee since the spring, but is likely to fail due to the Republican majority’s opposition. The bill’s sponsor State Rep. Patty Kim previously introduced minimum wage hike legislation in 2015 and 2017, both of which failed to gain enough support.
This week, Governor Wolf announced he might circumvent the legislative process completely on minimum wage, issuing an executive order to require any business getting state incentives (tax breaks, loans, or grants) must pay a minimum wage of $13.50 per hour immediately, and $15 per hour by 2024.
With the announcement, Gov. Wolf urged the state legislature to raise the minimum wage for all employees. But economists have already determined a $15 minimum wage would have significant job-killing effects for Pennsylvania’s employees.
While Gov. Wolf has repeatedly used the pandemic as a reason to raise the state’s minimum wage, doing so would exacerbate the current pandemic unemployment gap. According to Bureau of Labor Statistics employment data, Pennsylvania still has a gap of nearly 318,000 lost jobs since February 2020, before the onset of the pandemic.
But the added job loss resulting from a $15 wage hike would expand the current pandemic job loss gap by more than 45%.
Economists from Miami and Trinity Universities used nonpartisan Congressional Budget Office methods to estimate a $15 minimum wage would cost Pennsylvania more than 143,000 jobs, nearly half of which are in the state’s hospitality and restaurant industries.
They estimate this loss figure assuming the $15 per hour target would be reached by 2027. Accelerating that timeline to 2024, per the governor’s plan, means even more drastic annual increases that businesses must absorb, and could dramatically increase the job loss consequences caused by this steep increase.
The effects of a $15 minimum wage would be acutely painful for the state’s tipped restaurant workers – spurring a 430% increase in Pennsylvania’s tipped minimum wage. As a result, the economists estimated nearly 42,000 jobs lost would belong to tipped employees.
While the governor’s current order applies to companies seeking government funds and tax incentives, it is clear Gov. Wolf is putting the pressure on legislators and businesses to comply with this push for a state $15 minimum wage. Even without a feasibility study, the evidence is clear: a mandate of such drastic proportions will have disastrous effects on Pennsylvania jobs and will only add to the state’s pandemic unemployment woes.