MINIMUM WAGE

The PA Chamber is a leading voice against government mandated minimum wage increases. Nonpartisan studies have shown and businesses have reported that these “feel good” policies often lead to reduced employee hours, job loss and a higher cost for goods and services. Our organization supports more targeted approaches to helping low wage earners’ upward mobility in the workforce, such as implementing a state Earned Income Tax Credit and strengthening workforce development programs.

Mandated wage increases hurt businesses and low-wage earners

Despite insight from experts and myths we’ve debunked over time that show the negative impact of mandated wage hikes on employers, consumers and even the low-wage workers that proponents claim to support, some elected officials and the Wolf administration continue to ignore these facts even though the legislation does nothing to address the income and skills gaps that are causing real problems for the Commonwealth.

Minimum Wage: Myths and Facts | PDF

Organized labor and other left-leaning organizations are once again pushing for mandatory wage increases and, as usual, the success of their campaign will depend on policymakers, the media and general public believing several well-trodden myths:

Myth

Employers exaggerate when they say mandatory wage increases will harm business and employment prospects.

Fact

Minimum wage advocates shrug off concerns raised by the business community but the impacts of mandatory government-imposed wage increases are real. According to a 2021 report from the nonpartisan Congressional Budget Office, raising the minimum wage to $15 would lead to an estimated 1.4 million lost jobs nationwide, around 500,000 more than the number of people the CBO projects will be helped out of poverty by a government mandated wage increase. A Pennsylvania specific study by the state’s Independent Fiscal Office, found that an increase to $12 could lead to the loss of 27,000 jobs throughout the Commonwealth. Other states that have mandated increases have seen a negative impact on employment. A recent study from the University of Washington found that Seattle’s $13 an hour minimum wage rate – which went into effect in 2016 – has led to employee hours dropping by 9 percent and has actually lowered the average monthly income for low wage workers by $125. Here in Pennsylvania, many employers reported adverse impacts in the months following the minimum wage increase in 2006, such as Kennywood Park outside Pittsburgh, which had to lay off 70 employees; or a chain of fitness stores in the Lehigh Valley, which had to lay off 100 workers. Ignoring concerns raised by employers who will face increased labor costs of anywhere from 40 to 107 percent (as various proposals aim to do) is shortsighted and unfair to the employers and employees who will be impacted.

Myth

Increasing the minimum wage is the best way to fight poverty.

Fact

This common rationale for mandating wage increases is a myth for multiple reasons. The majority of those living at or below the poverty line cannot benefit from a mandatory wage increase because, according to the U.S. Census Bureau, they don’t have a job in the first place. A University of California at Irvine economist concluded that 85 percent of major academic studies on the minimum wage found a negative employment effect on low-skilled workers. Moreover, most minimum wage earners do not fit the demographic description that supporters use in their narrative. For example, according to the 2021 Pennsylvania Department of Labor and Industry’s Minimum Wage report: 84 percent of minimum wage earners have no children; nearly 70 percent are under 25. Additionally, the report shows that a third of minimum wage earners live in households with income exceeding $100,000. The best way for government to truly help low-wage workers is to strengthen workforce development programs to provide necessary skills-training for in demand jobs in the Commonwealth. Additionally, more targeted approaches – such as a state Earned Income Tax Credit – will better help low-wage earners as they move upward through the workforce.

Myth

Most minimum wage earners work for large national corporations who can afford to pay their workers more.

Myth

The legislature should at least raise the minimum wage to $12 because that’s around what it would be if it had been increased based on the rate of inflation since 1968.

Fact

Advocates of a higher minimum wage consistently use 1968 as a historical reference point because that is the year in which the minimum wage hit its inflation-adjusted high point. Anyone can pick an arbitrary year: had minimum wage tracked inflation from, say, 1948, today it would be a little over $4; or from 1988, it would be around $7.50. The federal government first set a minimum wage in 1938 at 25 cents, which means that, based on the logic employed by advocates, the minimum wage should be about $4.59 today, according to the state’s Minimum Wage report.

Myth

Minimum wage will help the economy because people will have more money to spend.

Fact

Government-mandated raises will indeed put more money in some people’s pockets; but that money comes from someone else’s pocket, most likely a small business owner. Therefore, while some people will benefit, others will lose their job or employers will not be able to expand, add new positions or hire back workers who had been laid off. Even more likely is that workers will see hours reduced, considering around three quarters of minimum wage earners work hourly part-time jobs. Advocates who claim artificially raising wages would significantly boost the economy seem to forget that the federal minimum wage was increased in 2007, 2008 and 2009 – years in which the country suffered through a debilitating recession and historically sluggish recovery.

Myth

Workers deserve a raise which is why we have to increase the minimum wage.

Fact

Standard rhetoric from minimum wage advocates implies that, unless the government takes action, those earning the minimum wage will never experience a wage increase. In reality, minimum wage is typically a starting or training wage for employees entering the workforce who usually earn commensurate wage increases as they gain experience and skills. Overall, the number of minimum wage earners has generally declined as the size of the workforce has increased and the age of minimum wage earners is getting younger. These facts indicate that people usually do not get “stuck” at minimum wage.

PA Chamber Urges Thoughtful, Inclusive Process for Developing Far Reaching Workplace Proposal

October 22, 2021 | Leslie Gervasio

PA Chamber President and CEO Gene Barr issued the following statement in response to Gov. Tom Wolf announcing a series of executive orders impacting employers and the workplace. “We appreciate the governor’s intent and urge his administration to solicit input from employers to help avoid unintended consequences. For example, requiring strict wage and benefit standards […]

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State & Federal Political Recap

July 12, 2021

Gov. Wolf Holds News Conference in Support of Minimum Wage Increase On Friday, Governor Tom Wolf joined Democratic members of the House and Senate, including House Democratic Leader Joanna McClinton, in Philadelphia to again call for a raise in Pennsylvania’s minimum wage.  Without regard for the economic consequences of this proposal, Gov. Wolf has repeatedly […]

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Gov. Tom Wolf, top Dems push for hourly wage increase

July 12, 2021 | Pittsburgh Post-Gazette
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PA Chamber: State Minimum Wage Report Highlights Actual Demographics of Minimum Wage Earners

March 04, 2021 | Tricia Harris

Pennsylvania Chamber of Business and Industry President and CEO Gene Barr issued the following statement regarding the recent publication of the PA Department of Labor and Industry’s “2021 Minimum Wage Report.” “For years, advocates have politicized the minimum wage issue, touting it as the panacea to helping low-income Pennsylvania families out of poverty.  However, the […]

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PA Chamber: Pro-Growth Policies are the Answer to Moving Pennsylvania’s Economy Forward

February 03, 2021 | Tricia Harris

Pennsylvania Chamber of Business and Industry President and CEO Gene Barr issued the following statement in response to Gov. Tom Wolf’s 2021-22 budget proposal: “The governor’s budget proposal this year comes at a hard time for everyone. The pandemic has brought the Commonwealth to a crossroads.  For months, job creators have been forced to adapt […]

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Proposed minimum wage hike draws mixed reaction

January 31, 2021 | Citizens' Voice
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PA Chamber: Policies That Increase Cost of Doing Business in PA Will Slow Economic Recovery

January 28, 2021 | Tricia Harris

Pennsylvania Chamber of Business and Industry President and CEO Gene Barr issued the following statement regarding Gov. Tom Wolf’s announced priorities for the 2021-22 legislative session – which include enacting an additional tax on the energy industry and a government mandated wage increase: “There’s no question that the COVID-19 pandemic has created numerous challenges for […]

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