HARRISBURG — With the annual budget address on the horizon and myriad complexities involved in creating and delivering his latest spending proposal for Pennsylvania, Gov. Josh Shapiro shared a simple message on a big topic.
“Let’s increase the minimum wage,” Shapiro posted late Sunday on the social media platform, X.
It’s a familiar rallying cry for the first-term governor.
Shapiro campaigned, in part, on raising the minimum wage. Last year in his first budget address he formally proposed an increase from the current $7.25 hourly rate to a $15 wage.
It hasn’t paid off, yet, but it’s a theme he’s called “unfinished business” and one he’s expected to champion when he gives the first-ever budget address Tuesday inside the Capitol Rotunda. (House chambers are closed for repairs due to a water leak.)
Rep. Jason Dawkins, D-Philadelphia, offered a bill last year that called for a three-step increase: $11 in year one, $13 in year two, $15 in year three. Each year after, wage increases would be tied to the rate of inflation.
The wage for tipped workers is currently set at $2.83. Under Dawkins’ proposal, it would increase to $9 across three years.
The bill passed the House last June on a near party-line vote but hasn’t been taken up by the state Senate. Republican Joe Pittman, the Senate majority leader, has repeatedly said his caucus is open to negotiating a raise but is consistent in dismissing a $15 rate.
But, there is a bill introduced in the Senate with a $15 target. And, it was put forward by a Republican. The language in the bill from Sen. Dan Laughlin mirrors the incremental proposal from House Democrats including the inflationary adjustments. If either were enacted last year, the target would have been reached in 2026.
This bill also hasn’t been considered in the upper chamber.
However, Claire Kovach of the Keystone Research Center, a progressive policy group, said the Republican-sponsored bill is the latest sign that momentum is building for change.
Kovach authored a report this month on the potential impact of an increase, estimating 1.34 million Pennsylvanians would benefit directly or indirectly. The result, Kovach found, would be a collective $5 billion increase in yearly wages for workers including those earning just above the proposed new maximum whose wages, she said, would be adjusted upward.
“I really think that constituents are being a little bit louder. They see every state on Pennsylvania’s border has raised it,” Kovach said.
According to Kovach, research historically shows employers save money when wage minimums rise. She said it results in less turnover which means fewer resources devoted to hiring and training. With higher wages comes more spending, too, by workers who otherwise couldn’t spend as freely.
The six states bordering Pennsylvania all have higher minimums by at least $1.50 than the Keystone State. Twenty-two states raised their respective minimum wages entering 2024.
Pennsylvania’s minimum wage hasn’t budged since 2009 when it grew by 10 cents to match the federal minimum. That was the result of a 2006 law passed by the state General Assembly, the last time a bill proposing a wage hike succeeded.
According to an annual report by the Pennsylvania Department of Labor and Industry, an estimated 63,500 workers earned minimum wage or less in 2022, about 1% of all workers. They’re largely part-time workers in the food and drink industry along with educational services and retail.
The total is the lowest number on record, according to L&I.
An estimated 417,800 workers earned up to $12 hourly and another 509,700 earned from $12.01 to $15 hourly, the report found. Each of these categories shrunk, too, the report found.
Elizabeth Stelle, director of policy analysis with the Commonwealth Foundation, a conservative policy group, pointed to a report by the state’s Independent Fiscal Office that found roughly 99% of non-tipped workers earn more than $10 hourly and that while a $15 minimum would result in higher income it could also result in the loss of 30,000 jobs.
Also lost, Stelle said, is workplace flexibility — that is, fewer hours, lost overtime opportunities or tuition assistance along with other intangibles that workers value.
Stelle cited a 2018 study by researchers from the University of California, Irvine, that found that poverty rates and the reliance on public assistance grew by 3% in disadvantaged neighborhoods for each $1 a minimum wage is increased.
She suggested the Shapiro administration consider alternatives to boosting the workforce such as cutting the personal income tax or streamlining licensing.
“Those are the type of things that are more effective at attracting people and keeping people here,” Stelle said. “The minimum wage is not the best answer.”