Just the Facts: Sen. Wagner’s Proposal Is Not a Real Increase in Minimum Wage

Stephen Herzenberg |

There are two fresh proposals circulating in the Pennsylvania State Senate this week which seek to raise the minimum wage in Pennsylvania. The first is Democratic senator Tina Tartaglione’s Senate Bill 195, which would raise the minimum wage to $10.10 an hour by July 2016. 

The second proposal, from Republican senator Scott Wagner, doesn’t have an implementation date but would raise the minimum wage for workers 18 and older to $8.75 over three years—by 2017 if the Senator’s bill went into effect this July. Senator Wagner also includes a proposed “training wage” that remains at $7.25 per hour for those under 18.

Senator Wagner’s recognition of the need to raise the minimum wage is very welcome. One question that has been raised about his proposal, however, is whether it is big enough.

One way to evaluate the adequacy of these minimum wage proposals is to look at their impact on the inflation-adjusted—or “real”—value of the minimum wage. The chart below contains such an analysis, using, for future years, projections of inflation published by the Congressional Budget Office (CBO).

Here is what the chart reveals:  For adults 18 and over, Senator Wagner’s proposal barely restores the purchasing power lost since the last Pennsylvania minimum wage increase in 2007, which was to $7.15 per hour. Within months after enactment, Senator Wagner’s proposal would lead to a Pennsylvania minimum wage below its inflation-adjusted value in July 2007.

Senator Wagner’s proposal would leave the U.S. (and Pennsylvania) minimum wage roughly 13% below its peak level reached in 1968.

The average minimum wage counting those receiving the $7.25 training wage would be lower still.

Senator Tartaglione’s proposal, on the other hand, restores all the purchasing power the minimum wage has lost since 1968.

The fact that the real minimum wage in Pennsylvania remains today close to its level in the late 1990s is part of why the bottom fifth of Pennsylvania workers have seen their wages decline by roughly 6% since 2001. In the current recovery (since 2009) the bottom fifth of the Pennsylvania workforce has seen their wages fall by 4% to 6%. This is one reason why the top 1% have taken ALL of the increase in income in Pennsylvania in this recovery.

Summing up, the numbers show that Senator Wagner’s proposal would not be a real (or “inflation-adjusted”) minimum wage increase. It would not be sufficient to reverse the long-term stagnation of earnings for one million-plus workers at the low end of the Pennsylvania job market. It would not create more economy-boosting jobs or put enough additional money in the pockets of low-income families to begin to generate more robust job growth in Pennsylvania.