Meadville Tribune

Opinion

May 13, 2014

Hope of raising minimum wage and everyone keeping their job is unlikely

The issue of the minimum wage is a complex topic which involves economic and political considerations.

In Pennsylvania there are 5,810,700 people who earn above minimum wage and 190,800 who earn minimum wage or less. About 3.2 percent of all jobs in Pennsylvania pay minimum wage or less. That works out to about one job out of every 33 jobs in Pennsylvania paying minimum wage.

Who earns minimum wage in Pennsylvania? Nineteen percent of minimum wage earners live in households with household incomes of more than $100,000 a year. Eighty-one percent of people who earn minimum wage have no kids. Fifty-eight percent of minimum wage earners are under 25. About 25 percent of the people who earn minimum wage did not finish high school. About half of all minimum wage jobs in Pennsylvania are in restaurants and bars.

The statistics show that most minimum wage earners in Pennsylvania are high school kids and college kids who are working part-time while they are in school or adults who did not finish high school. It is a concern that some minimum wage employees are raising kids or are many years into their careers and are only making $7.25.

The annual earnings for a full-time minimum wage worker exceeds the federal poverty level for one person. Minimum wage exactly matches the poverty level for a two-person household. Should a government mandated minimum wage keep a worker at the government-determined poverty level or should it be higher than the poverty level?

The advantages of raising minimum wage from $7.25 to $10.10 would be that minimum wage earners would have higher paychecks and more money to spend. They would earn about $6,000 a year more and they would rely less on government programs. It would be compassionate and well intended for us to increase it.

The main disadvantage would be fewer jobs. The nonpartisan Congressional Budget Office estimates that 500,000 jobs would be lost in the United States if the minimum wage was increased in every state to $10.10 and hour. Some companies would go out of business while others would lay off employees or reduce the hours that their employees work. I do not think we would be helping minimum wage employees if we got some of them a raise but caused others to lose their jobs.

The $6,000 pay raise a minimum wage employee would get would cost a typical employer about $7,000 when factoring in for the employer Social Security, workers’ compensation insurance and unemployment tax. Two minimum wage employees at $10.10 would cost about the same as three minimum wage employees at $7.25. It is not crazy to think that many employers would cut back jobs by about one-third. Self-serve checkout lanes at retail stores, touchscreen food ordering at fast food restaurants and even more MAC machines would probably be the result.

The political ramifications are interesting. A “yes” vote would cause some people to lose their jobs, but a “no” vote would prevent others from getting a raise. I wish we could get both more jobs and higher pay for each job, but that is not likely.

I will do what would help our area the most. I think we are better off with more jobs rather than fewer jobs. Society benefits more from more people working rather than fewer people working.

Republican state Rep. Brad Roae represents the Sixth Legislative District in the Pennsylvania House. The Sixth District includes the cities of Meadville and Titusville and Roae is an East Mead Township resident.

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