Minimum wage increase tops Rendell’s agenda
HARRISBURG – Ever since Gov. Ed Rendell uttered the words “minimum wage increase” at the start of the summer this year, a maelstrom of supporters and contenders jumped to attention. Unions led rallies at the Capitol during state budget talks, and a stream of policy briefs issued from Harrisburg think-tanks. That movement is gone for the moment, now that the Legislature is in summer recess.
But Rendell has said more recently he’s put the controversial issue at the top of his agenda for the fall. In his 2002 campaign, Rendell said raising the minimum wage in the state above the federal $5.15 per hour was something Washington should handle. But Rendell spokeswoman Kate Philips said the federal government’s failure to adjust the minimum wage in the last eight years means Pennsylvania should now act on its own, as 17 other states have done.
Rendell has said he’d like to see the minimum wage for Pennsylvania’s lowest earning workers raised to $7.15 an hour, on par with the rate New York and New Jersey are adopting.
“The fall will be the first time we’ll be able to look at this, be it through a commission (to study the issue) or direct legislation, which could happen quickly,” Philips said. “You don’t have to be a Democrat to realize that a fair wage is necessary and having a competitive wage with neighboring states is necessary for a growing economy.”
New Jersey’s rate will rise to $6.15 per hour Oct. 1, and then to $7.15 in October 2006. Ohio, West Virginia and Maryland adhere to the federal rate.
About 81,000 Pennsylvania workers earn at or below minimum wage, a drop in the bucket of an overall 5.9 million work force, according to figures provided by the Pennsylvania Department of Labor and Industry.
Those earning less are wait staff, who make up the difference in tips, but other categories of workers exempt from the minimum wage include students, farm laborers and domestic service workers.
Most of the 27,000 Pennsylvania workers earning at the level of minimum wage are in the food service industry, and about half of them are under age 25, according to the labor department.
Business groups opposed to a minimum wage increase point to the high number of youths earning the rate to argue it’s best left as a starting salary to get them into the work force and building skills that they’ll later transfer to better paying jobs.
Also, business groups warn that raising the minimum wage will hurt small businesses, which are unable to absorb the costs or pass them onto consumers in a competitive business climate.
“It’s simply going to result in fewer workers,” said Kevin Shivers, state director of the National Federation of Independent Businesses. “Any time you mandate that employers raise the minimum wage, you might as well be handing out pink slips with the pay increase.”
Shivers added that if state lawmakers want to help, they should lower the personal income tax to put money directly back into workers’ pockets or institute an earned income tax credit for working families below a certain income threshold.
But organized labor – one of loudest advocates for a hike in the minimum wage – argues that the 8-year-old rate has fallen terribly behind inflation. A full-time minimum wage worker makes $10,712 per year, below the 2005 federal poverty threshold of $12,830 for a family of two.
The minimum wage was first instituted at 25 cents per hour in the 1938 Fair Labor Standards Act, a workplace reform law that also regulated working conditions, established overtime pay and restricted child labor.
Since then, Congress has raised the rate reliably every few years, except for a period during most of the 1980s and since 1997.
“This puts a strain not only on the family, but also on the community for services that have to be provided, such as health care, food banks, clothing and child care,” said Jim Deegan, spokesman for the Pennsylvania chapter of the AFL-CIO.
Deegan disputed claims that a raise for low-income workers would hurt the Pennsylvania economy, or that jobs would go elsewhere, since so many involve retail positions needed to serve customers on the spot.
“Actually, it could be a boost for small business because when you raise the minimum wage, workers have more income and can spend more for goods and services,” he said.
Of course, Rendell can institute a minimum wage hike only with the support of the Legislature. But it’s unclear where the political winds are blowing, now that Rendell threw out one of his trump cards with a hefty pay raise for state lawmakers.
When he first mentioned a minimum wage increase, Rendell linked it as a trade-off to a pay raise, but then backed off.
Still, as a sign of lawmakers’ support, more than half of House members signed minimum-wage bills introduced earlier this year.
The more popular and farther reaching of the House bills has the minimum wage going up to $7.15 by January 2007 in a period of installments. Plus, it includes a required annual adjustment linked to the consumer price index for urban areas in the Mid-Atlantic states.
By comparison, the Senate in the past has been less reliably on board, not touching the issue even after the House approved rate increases repeatedly in a number of previous years.
However, 17 senators signed a Senate bill that calls for an increase to $7 per hour by 2007. All the bills are sitting in committees.
And a recent poll found that 85 percent of those polled support a higher minimum wage.
Rep. Frank LaGrotta (D-Beaver), who cosponsored both House bills, called the minimum wage hike “the single most important piece of legislation we could pass,” with broad bipartisan support.
LaGrotta said of the opposition: “It’s more than un-American. It’s a sin. I would ask them this question: What would Jesus do?”
But here’s how Shivers summed up what would happen if the issue gets too far: “I see business owners marching on Harrisburg with pitchforks and torches if this gains muster.”
Alison Hawkes can be reached at 717-705-6330 or ahawkes@calkins-media.com.