Pa. companies apprehensive about upward pressure on wages

By Michael Carroll | Mar 23, 2016

Pennsylvania Gov. Tom Wolf boosted the minimum wage for state workers.  

HARRISBURG – Gov. Tom Wolf’s decision last week to sign an executive order raising the minimum wage for state workers and those who work for state contractors raises expectations for boosting the minimum wage for all workers statewide, but employer representatives fear unintended financial consequences of such a move.

“The governor has been pretty clear that this action is meant to generate momentum for a push to increase the minimum wage across the board," Alex Halper, director of government affairs for the Pennsylvania Chamber of Business and Industry, told the Pennsylvania Record.

Wolf boosted the minimum wage for state workers by 40 percent, from $7.25 to $10.15 per hour. The wage increases will also affect workers of companies that are contracted to perform work for the state after July 1.

In signing the executive order, Wolf pointed out that, adjusted for inflation, the hourly pay for the bottom tier of the state’s workforce is now lower than what it was in 1979. He also claimed the wage hike would boost employee productivity and morale while decreasing employee turnover.

According to the state government’s PennWATCH website, more than 105,000 people work in state government. That’s about 2 percent of the total of 6.1 million civilian jobs statewide. Most of the state government jobs, however, pay more than the minimum wage.

Such a general minimum wage hike to $10.15 per hour, if it were to pass the state Legislature, would help some people but hurt others, he said.

“You’re looking at a 40 percent increase,” Halper said, adding that many small business jobs are entry-level and pay the minimum wage. “From the perspective of a small business, to increase wages 40 percent is daunting.”

To deal with a more general minimum wage increase, employers often have to reduce hours, cut jobs or curb expansion to compensate for the new government policy, Halper explained.

The chamber has advocated for more targeted policies to help low-income people, such as an earned income credit tax program that can weigh factors such as family income and the number of children in a family.

“In order to truly help these individuals, we need programs that better provide job training and skills that will help these folks advance in the workplace,” Halper said.

Although chamber officials are still reviewing the language of the executive order to clarify its meaning, Halper said that the provision to boost the minimum wage for state contractors would make it more difficult for small businesses to compete for state contract bids because the minimum wage hikes disproportionately affect small businesses.

He said the chamber has heard from employers who are now looking at their business models and budgets to investigate possible strategies to accommodate a general minimum wage hike if it goes into effect. Halper advised businesses to figure out the possible impact on their businesses and to make sure their local legislators know how new wage policies will affect their employees.

A broad minimum wage law does not simply apply to employers who hire at the minimum wage, Halper stressed, adding that such changes tend to apply upward pressure to wages of higher-paid workers as well, creating additional challenges to companies’ bottom lines.

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