NFIB Study Warns of Cost to Main Street Jobs and Income if PA House Passed Minimum Wage Hike Becomes Law

July 18, 2023

Small businesses would suffer disproportionately, forecast shows.

NFIB Study Warns of Cost to Main Street Jobs and Income if PA House Passed Minimum Wage Hike Becomes Law

A recently issued NFIB economic study warns that the Pennsylvania House’s party-line vote to drastically hike the state minimum wage could lead to significant job losses, income reductions, and closures for small businesses across the Commonwealth. The economic impact study specifically examined the proposed Pennsylvania minimum wage increase mandated in House Bill 1500, which had been referred to the Committee on Labor and Industry last month and subsequently passed out of the full House. The bill would raise the state minimum wage from the current rate of $7.25 per hour to $15.00 per hour by 2026. Additionally, under this legislation, future, annual minimum wage hikes would be automatic and tied to inflation data reported by the Pennsylvania Secretary of Labor and Industry. The study finds that if the bill in question becomes law and the minimum wage increased to $15 per hour, more than 101,000 jobs would be lost over the next ten years. 57,000, or 56%, of these jobs would come from small businesses. Additionally, the cumulative real economic output loss would exceed $13 billion by 2033. Nearly $7 billion, or 51.2, of this output loss would have been produced by small businesses. “The new study makes clear that the negative impact of this extreme, one-size-fits-all wage hike bill would fall disproportionately on Pennsylvania’s small employers, who are less able to plan for and absorb the aggressive increase in labor costs than larger corporate employers,” stated NFIB State Director Greg Moreland. “If the minimum wage is more than doubled to $15 an hour as this bill requires, over 101,000 jobs would be lost over the next ten years. Pennsylvania’s small businesses are dealing with multiple financial hardships since the pandemic and state-mandated restrictions and lockdowns. Inflation, labor shortages, supply chain disruptions, high fuel prices, spiking utility rates, and crushing taxes are dragging down Main Streets across Pennsylvania. Small business owners simply cannot afford Harrisburg politicians saddling them with such drastic labor cost increases.” Many small businesses will not be able to afford these higher wages and the payroll taxes that accompany them, and there will also be immense pressure on labor costs up the pay scale. NFIB argues that Pennsylvania should be providing financial relief to small, independent businesses, and not continuing to saddle Main Street with higher costs and mandates. NFIB commissioned this study (“Economic Impacts of a Proposed Minimum Wage Increase in Pennsylvania,” June 2023) by Regional Economic Models, Inc. (REMI), after indications that the new, one-vote majority in the state House planned to advance the most aggressive hike ever to the Commonwealth’s minimum wage, more than doubling the rate to $15 per hour.

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