Plan to hike minimum wage sounds good, but would have unintended consequences

On Wednesday, Gov. Tom Wolf proposed raising Pennsylvania’s minimum wage to $12 per hour, with plans to increase it by 50 cents annually until it reaches $15 per hour by 2025. And while that sounds good for anyone currently making less than that at their current job, the reality is that this proposal is not the simple fix the governor makes it seem to be.

First, the timeline of when it would go into effect — on July 1 — does not leave much time for businesses in the state, including many small businesses, to figure out just how much more this will cost them. With the current minimum wage at $7.25 per hour, that means under this proposal, some workers would get an overnight raise of $4.75 per hour as soon as June comes to an end. That’s just not feasible for most business owners.

Second, the governor stated while giving his proposal that raising the minimum wage would help get people off public assistance programs because they’d make more money. While that may be true for those who would remain employed and see a raise as a result of this action, the reality the governor fails to realize or mention is that many businesses would choose to lay off workers to comply with the law. Many businesses don’t have the means to pay everyone currently on staff $12 per hour or more and would have to cut back on staff and/or raise prices as a result. That would almost assuredly mean more people collecting unemployment benefits and receiving other forms of public assistance, not fewer.

What the governor and supporters of this plan also fail to realize is that many workers who were previously making $12 per hour or more will claim that if those co-workers who were making significantly less than them are getting a raise, they deserve one, too. Good luck keeping employees who make more — and are therefore likely highly-skilled and/or long-tenured — when everyone below them suddenly gets a raise and they do not.

And while some huge billion-dollar corporations with caviar-loving executives who own several yachts could probably afford to pay their workers better wages without laying them off, the truth is that most Pennsylvanians are either business owners or work for small businesses who may be struggling to make ends meet. Those people will bear the brunt of this proposal’s negative impact.

That’s why the Pennsylvania Chamber of Business and Industry is not supportive of this plan and neither are we.

We believe that valuable employees should be rewarded with appropriate pay levels when their employer can afford them. But what we don’t believe is a one-size-fits-all approach foisted upon this state’s entrepreneurs from Harrisburg is the way to go. The free market should dictate pay rates, not politicians.

We hope the state legislature realizes this well-intentioned effort by the governor will actually worsen many of the problems it claims it will fix, will create new problems and, as a result, will choose not to put the governor’s proposal into action.

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