Let’s hope Gov. Tom Wolf was just setting up a position to bargain from when he proposed raising Pennsylvania’s minimum wage from the current $7.25 an hour to $12 an hour in one big jump on July 1 of this year.
The governor’s office is touting this as a way to save the state $120 million a year in public assistance. As the governor’s office put it, “The boost in pay for one million workers would enable tens of thousands of people to work their way off of public assistance, reducing the burden on taxpayers who are subsidizing low wages.”
In fairness, it’s true that low wages cause the working poor to be on public assistance. The governor has a point.
But a wage increase of more than 65 percent all at once will be a huge burden on employers’ payrolls. If the wage increase isphased in gradually, employers will be able to adjust — for example, by having a modest increase in prices they charge their customers. We don’t know exactly what a giant jolt in wages will do, but it certainly has the potential to put a number of marginally profitable businesses in the red.
A better idea is to both phase this in more gradually and to make it only apply to certain businesses — ones that can’t move out of state. For example, big retail stores, chain restaurants and big hotels need to be where their customers are. These businesses are large enough that they can absorb the impact of a wage increase. And once people working there get higher pay, most smaller employers will match it in order to attract and retain good workers.
A factory that’s providing hundreds of much-needed jobs to a small, isolated town, though, might need to continue paying its workers less than $12 an hour to remain competitive. In an isolated town, there aren’t enough other jobs out there for the higher minimum wage in selected businesses to drive up wages.
Also it is worth noting that when President Franklin D. Roosevelt signed the first national minimum wage law in 1933, he said “no business which depends for existence on paying less than living wages to its workers has any right to continue in this country.” The purpose of a minimum wage is to ensure that the household’s breadwinner earns enough to support a family. Therefore, a lower minimum wage for young people (say, under age 20) makes sense — it will encourage employers to hire teenagers for entry-level jobs. Employers know that many teenagers will quit jobs once they’ve earned enough to pay for whatever they were saving up for. Employers prefer to hire adults, since they need permanent incomes and are less likely to quit. A lower minimum wage for teens gives employers the incentive they need to give teenage workers a shot.
The Pennsylvania Legislature ought to take a good look at Mr. Wolf ’s proposal. The concept of a higher minimum wage to reduce the use of public assistance is a good one. Mr. Wolf ’s specific plan is not.The Legislature should come up with an alternative.
The preceding editorial is the opinion of The Elizabethtown Advocate. Other opinions on this page are those of individual contributors. The Advocate aims to give its readers a wide variety of opinions.