Amid inflation and staffing shortages, is now the time for Pa.’s minimum wage to increase?

The push for an increased minimum wage this summer comes against the backdrop of a faltering economic recovery from the COVID-19 pandemic.

By: - August 4, 2021 6:30 am

Stock photo by Juanmonino/Getty Images

Despite years of lobbying by low-wage workers and their advocates, Pennsylvania’s minimum wage has stalled at the federal level, $7.25 an hour, for over a decade.

But with a faltering economic recovery caused by the surge of COVID-19 delta variant cases, ongoing labor shortages across Pennsylvania and troubling signs of inflation, is now finally the time for the state legislature to act?

Lawmakers, Republican and Democrat alike, say yes.

State Sen. Dan Laughlin, R-Erie, said that raising the minimum wage is “the right thing to do right now.” Laughlin and Sen. Pat Browne, R-Lehigh, are co-sponsors of a bill that would bring Pennsylvania’s minimum wage up to $10 an hour and tie future wage increases to the rate of inflation.

Laughlin said that he is confident the bill has the support to pass the House and Senate this fall, and that he hopes it will land on Gov. Tom Wolf’s desk by the end of the year.

Though Wolf has signaled support for a Democratic-backed bill that would bring Pennsylvania’s minimum wage to $15 an hour by 2027, Laughlin’s bill might be the best chance advocates have to raise Pennsylvania wages at all. Republicans have not thrown their support behind the Democrats’ bill, sponsored by Sen. Christine Tartaglione, D-Philadelphia.

Is now the time?

The push for an increased minimum wage this summer comes against the backdrop of a faltering economic recovery from the COVID-19 pandemic. Companies across the country — large corporations and small businesses alike — are having trouble hiring enough staff to run at full capacity. There are currently 9.3 million open jobs in America — the highest number since the Bureau of Labor Statistics began tracking that data in 2000. In Pennsylvania, the state Department of Labor and Industry’s website shows 178,358 job openings.

Many, including Laughlin, have linked staffing shortages to the extra $300 weekly in federal unemployment benefits, saying that those receiving the money have a disincentive to return to work. Those benefits are set to expire Sept. 6, though many states have already ended them.

The reality is more complicated, labor economists say. 

A Pew Research survey from February revealed that 66 percent of unemployed Americans “seriously considered” changing their field of work amid the pandemic.

“People who lost those jobs back in March and April of last year had to go and find other work, and aren’t looking for that type of work anymore,” said Sarah Damaske, a labor economist at Penn State. “People remain out of the labor force because of child care shortages or because they have kids who aren’t vaccinated.”

Risa Kumazawa, a labor economist at Duquesne University, noted that 26 states have already ended the $300 unemployment benefits early. When July employment numbers came out, “we didn’t see people running back to enter the labor force,” Kumazawa said.

Damaske pointed to the $600 in federal unemployment benefits from the CARES Act that expired in July 2020 for clues on the impact of cutting off the $300 unemployments. She said that the reduction in benefits had almost no impact on the labor force — the number of people working or actively looking for work  remained nearly exactly the same. 

What it did do, however, is make conditions “materially more difficult” for low wage-workers and their families.

“When I interviewed the unemployed in Pennsylvania, I found that the closer people were to poverty, the less money they received from unemployment, and the worse their job searches went,” Damaske said. 

“They were trying to figure out — ‘Well, I have this little amount of money in a month, how do I make it? How do I balance this check and this check?’” 

Damaske and Kumazawa both said raising Pennsylvania’s minimum wage could help alleviate labor shortages that may continue into the fall — offering higher wages could help employers struggling to hire more employees.

Rising costs

It’s not just the labor shortage. Signs of growing inflation — a rise in the overall price of goods and services — are a concern for economists as well. But it’s another problem that could potentially be alleviated by implementing a higher minimum wage in the state. 

The Consumer Price Index, which measures the cost of a broad range of goods and services, increased by 5.4 percent in June. That was the fastest-paced increase since the 2008 financial crisis. Treasury Secretary Janet Yellen warned last month that prices may continue to rise for the next several months.

Both Tartaglione and Browne and Laughlin’s bills plan to tie the minimum wage to inflation, meaning that the minimum wage could increase when inflation does. 

Laughlin said that part of his bill is non-negotiable. He believes that making sure that the minimum wage increases when inflation does is the best way to ensure Pennsylvanians make a living wage and stay out of poverty.

“That’s one of the things in the bill I'm most proud of and I'm gonna insist it stays in there, If someone tries to amend that out, I will put it back in.”

– Sen. Laughlin

Laughlin’s bill to bring Pennsylvania’s minimum wage to $10 an hour, if passed, would take effect by the end of the year. 

$10 or 15?

Most Americans — 62 percent, according to Pew Research — agree the minimum wage should be higher. 

But the question of how much employers should be required to pay is contentious.

Laughlin said $10 an hour is a reasonable number because most business owners support it. He said he’s received very little pushback from any industry advocates. Restaurant industry advocates like John Longstreet, CEO of the Pennsylvania Restaurant & Lodging Association, have shown support for raising the minimum wage to $10.

But other minimum wage advocates said that $10 isn’t enough, but if it’s their only choice, they support it. 

“I would prefer $12 with a pathway to $15, but I would not turn away any raise for the minimum wage,” Tartaglione said. ”People are struggling on $7.25.”

Sen. Art Haywood, D-Philadelphia, is the only Democratic sponsor of Laughlin’s bill and is also a sponsor of Tartaglione’s bill. Haywood said he chose to throw his support behind both because each is a “step along the way” to bring Pennsylvania’s minimum wage to $15 an hour.

“A failure to pay a decent minimum wage is immoral,” Haywood said.

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Lindsay Weber
Lindsay Weber

Lindsay Weber is an intern with the Pennsylvania Legislative Correspondent Association and a 2021 graduate of Macalester College. Find her on twitter at @Lindsay_Weber_.