Article Highlights Economic Fallacies in Minimum Wage Proponents’ Push for Higher Pay

From PA Chamber of Business & Industry

Two weeks ago, a column in the online media outlet Capitolwire responded to ongoing efforts by some policymakers to enact a higher statewide minimum wage by sharing facts about the real impact these mandates have on the private sector and the number of people who would actually benefit from them.

The piece points out that the vast majority of workers statewide already make more than the state minimum of $7.25 an hour.  According to the Pennsylvania Department of Labor and Industry, only 1.2 percent of Pennsylvanians are making that hourly wage. In addition to more than doubling the minimum wage, the Wolf administration also wants to eliminate Pennsylvania’s $2.83 tipped wage, which would force employers at restaurants to pay their workers up to 500 times more than is currently required. “An important note: a significant portion of tipped employees oppose a change of the tipped rate since they claim it will result in lower tips from patrons and, consequently, lower take-home pay,” the article states.

Employers are generally paying their workers well above the statewide minimum, which shows the strength of the economy.  However, the article notes that government-forced increases don’t work well for the private sector because so many businesses operate on razor-thin profit margins, a reality often cited by the PA Chamber and others concerned with the unintended consequences of minimum wage hikes.  The article echoes another fact the PA Chamber often raises – that minimum wage increases reduce employment opportunities for young, lower-skilled workers seeking to gain workforce experience and learn the “soft skills” necessary to excel in their future careers.  “That’s something to seriously consider because while Pennsylvania’s overall unemployment rate has improved, those age 16 through 19 had an unemployment rate of 11.5 percent in 2018, with those age 20 through 24, having a rate of 7 percent, according to the U.S. Bureau of Labor Statistics,” the article states.

The PA Chamber continues to be a leading voice against the proposal to increase Pennsylvania’s minimum wage to $15.  On our website and, most recently, in a letter to the editor that appeared in the Carlisle Sentinel, we highlight various independent studies – including a recent report from the state’s Independent Fiscal Office that shows increasing the Commonwealth’s rate to $12 an hour could lead to the loss of 34,000 Pennsylvania jobs; and another Congressional Budget Office report showing that raising the minimum wage to $15 an hour would lead to an estimated 1.3 million jobs lost, with that number possibly being as high as 3.7 million.