The fight against a $15 minimum wage in Pennsylvania

Date: September 05, 2017

Published editorial: an appeal to lawmakers

The Pennsylvania General Assembly will soon be considering House Bill 1520, sponsored by Rep. Patti Kim (D-Dauphin), that would raise the state’s minimum wage to $15 in several increments and go up even higher in future years based on inflation. NFIB is opposing this bill and is reaching out to state lawmakers to explain why Rep. Kim’s bill would actually hurt workers.

Small businesses, especially in the retail, hotel and food services sectors, may be forced to eliminate jobs if HB 1520 passes. The NFIB Research Foundation has determined this bill would result in hundreds of thousands of lost jobs. NFIB PA is working to inform the public about the unintended consequences of such misguided public policy. Here is an editorial that was recently published in the Harrisburg Patriot News by NFIB Pennsylvania Legislative Director, Rebecca Oyler.

 

Labor Day 2017 – Will Jobless in Seattle be playing soon in Pennsylvania?

Each year, our nation reserves the first Monday in September to celebrate the contributions and achievements of the American worker. Across Pennsylvania, civic, political and academic leaders will gather in town squares for speeches and presentations paying tribute to workers for their efforts, which helped build our nation and create economic freedom.

It’s troubling that while Pennsylvanians are celebrating the achievements of our workers, some lawmakers in Harrisburg are working hard to pass a measure that could force low wage employees onto the unemployment line.

State Rep. Patty Kim (D-Dauphin) is seeking legislative passage of her bill that raises the state’s minimum wage to $12 an hour by January, with incremental increases to $15 an hour. Rep. Kim says she wants to help those in low wage jobs.  

To see just how destructive such a mandate can be to low-wage workers, one needs only look at the recent experiment in Seattle, Washington. Politicians in that city were hailed when they raised the local minimum wage to $13, the second of three incremental increases to take that city’s wage to $15.

A recent study sponsored by the city and conducted by the University of Washington found that, nine months after the wage went to $13, about 5,000 low-wage jobs disappeared, the number of hours worked by low-wage workers dropped by 3.5 million hours, and the average low-wage employee saw their paycheck drop by $125 a month. If Hollywood were writing this drama, it would be titled Jobless in Seattle.

The dramatic economic results observed in Seattle are similar to those forecast for Pennsylvania by the National Federation of Independent Business (NFIB) Research Foundation. The NFIB Foundation used Regional Economic Models, Inc. (REMI), which evaluates data based on regional and economic statistics. REMI is also used by universities, federal and state governments, both political parties, and private companies to weigh the potential impact of public policies.

If Rep. Kim’s bill passes, the modeling predicts it would mean as many as 403,000 jobs would be lost by 2026, depending on the rate of inflation. Retail, hotels, and food service sectors would be hardest hit. Real output in Pennsylvania would decrease by between $45-48 billion over the same time frame.

When private employers face a mandated wage increase, raising the pay of employees who fall below the new minimum isn’t the only cost they face. There are additional payroll taxes to be paid. If the wages of workers making above the new minimum aren’t also bumped up, productivity is likely to suffer.  The business owner may not be able to afford these added costs, and the marketplace might not tolerate higher prices for the goods they sell. That leaves hard choices. Jobs can be eliminated, hours cut, and remaining employees asked to take on more duties. The latest Seattle study appears to confirm those were the choices employers made.   

Employers also can invest in automation to replace lower wage workers. News stories this summer reported on fast food chains installing ordering kiosks where customers use a touchscreen and pay by swiping their cards. Other businesses have launched apps to take orders by cell phone electronically. 

When Pennsylvania policymakers consider raising the minimum wage in Pennsylvania, it is crucial that they consider the unintended consequences. The data shows that people they want to help would actually be hurt.  Raising the minimum wage was a bust for Seattle. Let’s not let the sequel play out here.     

Rebecca Oyler is the legislative director for NFIB Pennsylvania, which represents 14,000 privately owned, primarily small-businesses in Pennsylvania.

Related Content: Small Business News | Pennsylvania

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