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Business fights boost to Pa. minimum wage

But low-wage workers should get big tax credits, says Chamber chief Barr

Despite increases in neighboring states, Pennsylvania's main Chamber of Commerce group opposes a boost in the state minimum wage.

"You accurately summarize the use of minimum wage as 'brute force,'" writes Gene Barr, president and CEO of the Pennsylvania Chamber of Business and Industry, re my pre-Christmas column weighing the chances of a raise in Pennsylvania's minimum wage, now that Maryland, New York, New Jersey and other adjoining states are boosting pay above the federal $7.25 an hour minimum in this state election year.

Yes, readers, the Chamber is against a higher government-mandated wage that its members would have to pay low-skilled labor. To Barr, higher-wage advocates like State Rep. Mark Cohen, D-Phila, "seem all too easily to overlook the impact of government mandated wage increases on those in unskilled jobs or those still looking for that entry level job." (A higher wage also costs state taxpayers a bit, Barr adds, noting that state Rep. Dwight Evans had to scrounge state dollars to boost summer job spending last time the wage went up, under ex-Gov. Ed Rendell.)

Barr listed the familiar arguments against hiking the base wage: Some employers will cut staff or hours; a majority of minimum-wage workers are young people (below age 25) who aren't supporting families; many are part of middle-income households that don't need special help. "Half," Barr says, "work for small businesses less than 100 employees; two-thirds work for businesses that employ less than a thousand people."

While opposing higher wages, Barr says the Chamber supports at least one national program that amounts to public assistance for low-wage workers: the Earned Income Tax Credit, a program supported by some conservative economists (and President Richard Nixon, back in the day), which is designed to encourage work by giving low-income federal taxpayers who are supporting families reduced taxes and, in some cases, a net government payment to supplement their low wages.

"Our goal should be to target those who truly need assistance and not force a small business person, perhaps making only $50,000 per year, to give a raise to a teen living in a household with an income of $75,000," says Barr.

"Bottom line is, with a minimum wage increase it is true that some people will get a raise. However, others will lose their job or see their hours cut, and many more will never get the opportunity to acquire the work skills they need to be successful."

Does the minimum wage do more good than harm? When it's gone up in the past, workers earned more from higher wages than they lose from reductions in hours, according to the studies I reviewed for this Labor Day column. Workers will have more to spend, even if there are not quite so many low-wage jobs to go around.

Simple supply and demand: If more employers make fewer entry-level jobs available as a result, entry-level workers will suffer. But if (and where) there are more fast-food jobs and other low-wage jobs than there are workers willing to work those jobs -- say in the fast-food and retail belt along suburban US 202, or in the non-union Wild West labor conditions that prevail in the apartment construction business around Temple U, or in the warehouse zone that stretches from the Lehigh Valley down to Chambersburg, all of which have been drawing foreign and out-of-state workers to low-wage jobs -- minimum-wage displacement doesn't look like a big problem.