When jobs don’t pay enough for our neighbors to afford the basics—things like food, car repairs and eyeglasses—it hurts the local economy. Wages are so low now that they don’t even cover rent and the cost of getting around, forcing working people to rely on the local food bank to help make ends meet. Raising the minimum wage can help restore spending on the basics and, in the process, boost the local economy.
Due to the Pennsylvania legislature’s failure to raise our state minimum wage, Pennsylvania’s low-wage workers have lost ground relative to their counterparts in surrounding states, especially in rural areas.
Minimum-wage workers in Pennsylvania have also lost ground relative to workers in the middle of the wage distribution, that is, relative to the median wage. The Pennsylvania General Assembly last raised the minimum wage in July 2007 to $7.15 per hour or about two fifths (39%) of the then-median wage for full-time, full-year workers in Pennsylvania ($18.23). With the Pennsylvania minimum wage now fixed at the federal minimum of $7.25, Pennsylvania’s minimum-wage earners will earn less than a third (29.7%) of what the typical Pennsylvania worker earns ($24.44 in 2019). Back in 1968, Pennsylvania minimum-wage workers earned over half (51%) of what the typical Pennsylvania worker made ($1.60 compared to $3.15).
Twenty-four states have increased their minimum wage since January 2014. In our region, the minimum wage has gone up in surrounding states but not in Pennsylvania. As of January 2019, Pennsylvania’s minimum wage remains at $7.25 and stands 21% below the minimum wage in Delaware (where the minimum wage is $8.75), 18% below the wage in Ohio ($8.55), 22% below New Jersey’s minimum ($8.85), 21% below the minimum in West Virginia ($8.75), 39% below Maryland’s wage ($10.10), 53% below the minimum wage in most of New York state ($11.10; the minimum wage in New York City is $15 and the minimum wage is $12 in Nassau, Suffolk, and Westchester counties), and 83% below the minimum wage in the District of Columbia ($13.25).
Corporations have used their power to weaken the minimum wage and feed the growth of inequality. We recommend that policymakers restore the purchasing power of the minimum wage by returning it to roughly half of the median wage for full-time full-year workers. Current proposals to raise the minimum wage in Pennsylvania to $15 by the middle of the next decade are consistent with this goal. Enabling working class families to better afford the basics boosts family incomes for white, black, and brown families in every part of Pennsylvania and, in the process, boosts spending in the broader economy.
Pennsylvania’s minimum wage remains the lowest of all the surrounding states.
Each new generation of minimum workers has been able to afford fewer goods and services while working. In 1968, a full time, full-year worker receiving the minimum wage earned about half the median wage in Pennsylvania. That has shrunk to 29.7%. Putting the minimum wage on a path to $15 per hour would increase its value relative to the median wage. The minimum wage increase to $15 by the middle of the next decade would put the minimum wage at 53% of the median wage.
When the minimum wage goes up, employers will raise wages for those several dollars above the new minimum as well. And because people who earn at or near the minimum wage spend what they earn, raising their wages boosts the local economy. Across the country wages at the bottom have been growing faster for the bottom 10% of workers in states that have raised the minimum wage; likewise in our region wage growth has been stronger at the bottom where minimum wages have increased.
A body of credible research from across the country finds that as the minimum wage rises, it as intended raises wages with little to no impact on employment in sectors employing large number of low-wage workers. Looking across our region a higher minimum wage has been associated with faster growth in wages and employment in food service and drinking places.
The success the rich and powerful have had in rigging the economy so income flows up means that today low-wage workers look a lot like all of us. The majority of workers who would get a raise as a result of a statewide minimum wage increase to $15 are adults working full-time. On average, the workers here that would benefit from a minimum wage increase earn almost half of their family’s income.
Over 80% of the beneficiaries of an increase in the minimum wage are over 20 and 60% are women. Less than 20% are people who have not graduated from high school.
But, in our advocacy to raise the minimum wage over the past few years, we’ve heard a number of...