Minimum wage myths: Who in Pennsylvania Needs a Raise?
By Tom Joseph
Keystone State News Connection
Fast-food workers around the country have been agitating for raises, and some members of Congress are pressing to increase the national minimum wage. But what would the actual economic impact be of a boost for the lowest-paid workers in Pennsylvania?
Critics have charged that raising the minimum wage would mostly help teenagers, but economists say that's largely a myth. According to David Cooper, an analyst at the Economic Policy Institute, a common concern is that raising the minimum wage would increase unemployment. That was the conventional wisdom, he said, until a series of studies in the 1990s compared states that raised their minimum wages with others that had not. Cooper said they first looked at border counties between New Jersey and Pennsylvania.
"What they found was that in New Jersey, where the minimum wage was raised, employment actually went up relative to Pennsylvania, the direct opposite of what the textbook model would suggest."
Cooper also considered who would get a bump in pay if the hourly minimum went up to just over $10, as one bill in Congress proposes. He found it would be mostly the working poor, including a large portion of single mothers.
"The reality is that the average age of these workers is 35 years old," he said. "The majority of them are women, a little over a quarter have children, and 55 percent work full time; this is their full-time job."
He said other studies have also confirmed that raising low-end wages doesn't increase unemployment.
Cooper noted that the economists found that a higher minimum wage improved productivity, reduced turnover and absenteeism, and boosted morale among low-wage employees. In addition, he said, the new wages have a ripple effect on the local economy, because most minimum-wage workers have to spend every dime they make.
"Maybe they needed to buy a new car," he cited as an example. "Now that they're making a little more money, they can afford to make a payment plan, so they go and they buy that new car. That not only benefits the car manufacturer, but it also benefits the local dealership."
Roughly 200,000 workers in Pennsylvania currently earn minimum wage.