In May, Philadelphians overwhelmingly voted yes on a ballot question to amend the city’s Home Rule Charter to either increase the Pennsylvania minimum wage, in stages, to reach $15 an hour, or allow the city to do so itself. Though this measure passed with support from voters, it was a largely symbolic gesture, meant to apply pressure to Governor Tom Wolf and other legislators in Harrisburg when the time came to pass the state’s yearly budget. Currently, Pennsylvania’s minimum wage is $7.25 an hour, the lowest wage allowed in the United States by law.
Wolf has been calling for lawmakers to increase the minimum wage since he took office in 2015, proposing an incremental increase beginning at $12 an hour and then an additional 50 cents each year to reach a $15 per hour minimum wage by 2025. However, when Wolf signed Pennsylvania’s $34 billion budget on June 28, a minimum-wage increase was not part of the package.
The debate over how much to pay workers stretches beyond our commonwealth. Last week, the U.S. House of Representatives passed the Raise the Wage Act, designed to raise the federal minimum wage to $15 an hour by 2024. If this legislation becomes law, it would be the first increase to the rate in more than a decade and the highest increase ever.
Supporters of an increased minimum wage argue that the current economic reality demands that workers be paid more, specifically helping historically underpaid workers, including people of color and women, build more financially stable lives. Critics worry that the toll on small businesses would be enormous, leading to layoffs and fewer overall jobs on the market.
The Inquirer tapped local business owners to debate: Should Pennsylvania raise the minimum wage to $15?
There’s some good news buried in Pennsylvania’s budget, which passed through the state legislature late last month. Governor Tom Wolf originally wanted to raise the state’s minimum wage to $12, though that did not come to fruition in this budget. Pennsylvania’s Independent Fiscal Office estimates that a higher minimum wage would mean Pennsylvania could lose around 33,000 job opportunities. As a small-business owner based just north of Philadelphia, I too know that a government-mandated minimum wage increase comes with real costs.
However, Pennsylvania dodged a bullet — only to find a ticking time bomb.
At the national level, Pennsylvania representatives like Rep. Chrissy Houlahan supported increasing the federal minimum wage not to $12, but to $15 via the so-called Raise the Wage Act — legislation that passed in the House of Representatives on Thursday. This would more than double the nationwide minimum wage if it becomes law.
This could lead to tens of thousands of lost jobs in the Keystone State — not to mention all the entrepreneurs who would be priced out of starting a business. No Pennsylvania representatives should vote for this bill.
Throughout the United States, adopting a higher minimum wage will have negative effects — notably impacting youth.
Here’s an example: Americans like to think of summer as a good time for teenagers to get some professional experience in seasonal roles. In 2000, more than half of all American teenagers were seeking or had a summer job. But last year, that number tumbled down to 35 percent.
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That’s a big drop. So what happened?
The Mercatus Center studied this phenomenon and found that higher minimum wages at the state and local level were the “predominant factor” in the declining rate of teen labor force participation. And it’s not because teenagers refuse to be paid $15 per hour — it’s because employers are choosing more experienced employees to fill a higher-paying role.
In other words, higher minimum wage mandates are chipping away at entry-level employment opportunities, ensuring that countless Americans are left out of — or delay their involvement in — the labor force.
My career would be very different today if my clients had to pay me $15 an hour when I started mowing lawns when I was a teenager. I’m not sure anybody would want to pay that much to a high school student with no resume who’s running his own landscaping business. But because I had the opportunity to gain job experience working at an entry-level wage, I was able to pursue the American dream, eventually founding a tree removal service more than a decade ago. I’d like to expand, but a higher minimum wage will make that difficult, if not impossible.
It all comes down to basic economics. When the cost of doing business goes up, that business has to raise prices to continue making a profit. In other words, customers are ultimately the ones who pay the cost of a higher minimum wage — but when the cost of a good or service goes up, people buy less of it. In turn, fewer customers means fewer employees, fewer hours, less wage growth, and less expansion.
It took some convincing, but Gov. Wolf came to understand that raising the minimum wage hurts small businesses, employees, and customers in Pennsylvania. Now we just need our representatives in Washington to come to the same conclusion.
Josh Skolnick is the CEO of Monster Tree Service in Pennsylvania and a member of the Job Creators Network.
If Pennsylvania lawmakers refuse to raise the minimum wage to at least $15 an hour, they should call it what it is: a guarantee that full-time employment won’t deliver you from poverty.
The gap between our minimum wage and a living wage continues to widen. Pennsylvania’s current minimum wage of $7.25 an hour is far from a living wage for working adults with or without children, and sadly, even a living wage still only promises subsistence-level living.
Massachusetts Institute of Technology’s living wage calculator estimates the average hourly living wage for a childless adult in Pennsylvania is $11.45 an hour. For a family with two working adults and two children, the average jumps to $15.75 an hour.
Imagine: You show up to your full-time job every day and you still have to make the choice whether to pay your rent, clothe your children, or put food on your table. The National Low Income Housing Coalition found that the average worker making minimum wage in the U.S. has to work 2.5 full-time jobs in order to afford a one-bedroom apartment.
During hearings on Governor Wolf’s budget proposal, House Appropriations Committee Chair Stan Saylor (R., York) argued that a “minimum wage job is not a real job to sustain a family … it is not a place we expect American citizens or Pennsylvania citizens to be sitting at for the rest of their life.” Those like Rep. Saylor who propagate the myth that these jobs are “starter jobs” are oblivious to Pennsylvania’s current economic reality.
The National Employment Law Project notes that workers in skilled jobs that many consider middle-class, such as manufacturing, construction, education, health care, and child care, struggle to get by on less than $15 an hour today. Additionally, a recent report from the Keystone Research Center (KRC) notes that people of color and women would benefit the most from raising the minimum wage to $15 per hour by 2025, with 58% Latinx workers, 47% of black workers, and 35% of Asian workers in the state seeing a raise by that year. Over 60% of workers who would see a raise are women.
A 2016 poll by Manta found that small business owners with experience paying above minimum wage said they have seen better attraction of employees, lower turnover, and better performance and customer service as a result.
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In 2004, the U.S. Department of Labor reviewed 64 studies on the effects of minimum wage increases and unemployment and found no correlation between the two.
Solar States has paid a living wage to all employees since becoming a certified benefit corporation. Seeing the difference that $15 per hour makes in employees’ lives is extremely satisfying and has led to better employee retention. [Solar States] hired people who were making $8 to $10 per hour prior to working with the company and you can see the positive changes in their attitude, lifestyle, and productivity in as little as two months. As one employee recently said, “I did not get a job working at Solar States, I got a career.”
Raising the minimum wage will no doubt come with its difficulties, but it is a necessary change if Pennsylvania wants a thriving equitable economy and prosperity for all. That is a worthy promise for lawmakers to make.
Anna Shipp is the executive director of the Sustainable Business Network of Greater Philadelphia. Micah Gold-Markel is the owner of Solar States, a solar installation benefit corporation in Philadelphia, and an SBN member.