IFO Report Shows Negative Impact of Mandated Wage Hikes on Businesses, Lesser-Skilled Workers

From PA Chamber of Business & Industry

Pennsylvania’s Independent Fiscal Office recently unveiled an analysis of revenue proposals in Gov. Tom Wolf’s 2019-20 state budget plan, including an immediate increase in the minimum wage to $12 an hour and ultimately to $15 and elimination of the tipped wage.  The report includes a look at findings from prominent minimum wage studies over the last several years, including from the Congressional Budget Office which found that an increase in the minimum wage to $10.10 an hour would result in the loss of 500,000 jobs nationwide, and possibly up to 1 million.  In summary, the IFO found that a $12 hourly rate would lead to 34,000 fewer jobs throughout the Commonwealth.  It also found that some employees would see a reduction in hours; consumers would see some price increases; and businesses would have less money to reinvest into their operations. 

PA Chamber President Gene Barr issued a statement last week after the release of the report that focused on the negative consequences the proposed minimum wage mandate would have on employers and low-wage workers.  He also pointed out that the IFO report concludes the proposal will make it more difficult for inexperienced workers – namely part-time high school and college students – to enter jobs where they often learn critical workplace and employability skills.

“We continually hear from small businesses that these ‘feel good’ mandates have real-world consequences for both the employer and their workforce.  Once again, their anecdotal insight is backed by independent, nonpartisan analysts – in this case the IFO, but previously by countless other independent studies,” Barr said.  “Obviously some individuals benefit from minimum wage increases; but the fact is, many others would be harmed – including some of the very low-income, lesser-skilled workers whom advocates claim they want to help.  We urge lawmakers and advocates to work in a bipartisan way to advance policies that help low-income families without risking jobs.”