In his state budget address Tuesday, Gov. Tom Wolf reiterated his intention to pursue a raise in the state’s minimum wage, hoping that an increased minimum wage would mean more money coming in from earned income tax.
Wolf told legislators in the address that it would create a “more robust workforce and save tax dollars,” and that fewer low-wage earners would need Medicaid health insurance and subsidized child care.
As part of Wolf’s proposal, he hopes to raise the state’s $7.25 minimum wage to $12 July 1, the start of the 2019-20 fiscal year. Another $.50 would be added annually until the rate hits $15 in 2025.
But, local lawmakers are skeptical of the proposal.
State Rep. Rich Irvin said as part of the state House Labor and Industry committee, he took part in hearings held this week about the issue, and concerns were raised.
I’ve always stated I think there could be a minimum wage increase, but I feel it should be kept at the federal level,” said Irvin. “Locally, a lot of minimum wage earners are just getting a start in the workforce, so they’re younger individuals,” he added. “If we would raise minimum wage, we could look at losing 33,000 jobs in the entire state. As of right now, only 2.3 percent of the workforce in the state earns minimum wage, so the majority of workers are already above it.”
Irvin also noted that people who have worked at a business for a period of time may just be getting to the $12 wage.
“So, if you have someone coming in and starting at $12 an hour, what will you do for current workers,” asked Irvin. “This won’t give them any incentive. The incentive is to eventually make more, so they could go out, get an education or on-the-job training to better themselves, so they can be positioned in a higher-wage earning job.
“The majority of low-wage earners are teenagers, or someone just getting started in the workforce,” he added. “They’re just getting the taste of the workforce, so , and this job is giving them the opportunity to make sure they know they need to show up for work on time and learn to take orders from their boss.”
By moving minimum wage up to $12 an hour, Irvin there will be fewer jobs and opportunities for young people to get into the workforce.”
“If you bump it up, businesses will have to look at technology as an option to replace workers,” he said. “For example, McDonald’s already has a kiosk where people can order. Companies will look at the cost of technology versus the cost of an employee, and they may decide on technology, and it may eliminate a position.”
He also added that while some may be taken off of SNAP benefits if minimum wage increases, there could be overall job losses, and the earned income tax would be less than Wolf anticipates.
“If there aren’t as many employees, you may not see that big jump in earned income taxes, because not as many people are paying into it,” said Irvin. “If you look at other states where they’ve increased minimum wage, you can see where there’s actually been a net drop in wage earnings after a minimum wage increase.”
State Sen. Judy Ward noted the impact it would have on small businesses.
“Small businesses, like restuarants and small shops, would not be able to afford that, especially to pay someone who’s typically unskilled an inexperienced up to $15 an hour,” she said. “Businesses would not be able to raise their prices (to compensate for wage increases), and customers won’t be able to pay the higher prices, they’ll be forced to reduce jobs or eliminate jobs.”
Ward said minimum wage jobs aren’t meant to be family-sustaining jobs.
“A lot of times, minimum wage jobs are filled by students or, as an example, a mother who has gone back to work part time while her kids are in school to add additional income to the family,” she said. “Our state is so diverse, and so what may be fair in Philadelphia wouldn’t be the same as Huntingdon County, where the cost of living is much lower. Something like this not only raises the salary of the low-income worker, but that would raise the salaries of everyone.
“I think it’s well-intentioned, but it will have the opposite effect,” Ward added, noting that it’s important for those who are looking for better-paying jobs to have opportunities for training or money to improve their station in life.
“I think maybe another avenue could be possibly grant money for folks to attend training at a career and technical school,” she said. “I think that’s money better spent. We need so many skilled workers in so many different areas. There’s such a demand for that.”