With the upcoming close to the fiscal year and the 2018 midterms, Governor Wolf and some legislators in the Pennsylvania General Assembly are pushing for a reckless increase in the state minimum wage.
In a February speech, Governor Wolf proposed increasing the state minimum wage to $12, from $7.25 (currently equal to the federal minimum wage).
Governor Wolf and legislators are comparing Pennsylvania to surrounding states that have raised the minimum wage laws, as if that is an argument.
Drastic minimum wage increases in New York and Maryland are not examples to follow, and the full damage of the policy in these states is not clear yet, but it’s already concerning.
In New York, for example, the wage is increasing to $15 downstate and $12.50 an hour upstate over a period of a few years. The damage will be notable, added costs on the healthcare sector (much of which would get passed to taxpayers) were predicted to be nearly $3 billion annually with a $15-per-hour minimum wage. The cost to school districts from a $15 wage were estimated to be $275 million-per-year. Then add hundreds of thousands of lost jobs and you start to get the picture.
Just because your neighbors light their house on fire doesn’t make it a good idea to copy.
Gov. Wolf believes increasing the minimum wage would reduce welfare program participation and spark job growth. Yet, there is no correlation between higher minimum wage and welfare participation decline, according to the Employment Policies Institute.
There would be little benefit, and big job losses.
If the minimum wage is increased to Wolf’s $12, between 46,000 to 119,000 Pennsylvanians would lose their jobs according to the National Federation of Independent Business (NFIB). Even with an increase to $10.10, 31,000 jobs would be lost. The largest increase in minimum wage was from $5.15 to $6.25 starting in 2016.
Twenty-nine states and DC have recently raised the minimum wage, including Washington State at $11.50, and the District of Columbia at $12.50 growing to $15 by 2020.
Reform, like lowering the state’s 44th-ranked corporate income tax rate, or 50th ranked unemployment insurance taxes, could boost wages and employment. Federal tax reform has shown this by boosting wages and take-home pay across the country. That’s the better path to follow, rather than a radical minimum wage increase that will hurt the very people it is supposed to help.