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The Problem with the Chamber Letter

The Pennsylvania Chamber of Business and Industry and its local chambers took the time to write to state lawmakers, including me, this week to tell us how bad it would be if we increase our minimum wage from $7.25 an hour to something more reasonable.

An increase, they said, would be “an impediment to economic growth.”

“Mandating an increase,” it wrote, “will occur at the expense of other workers who will face reduced hours, lose their job [sic], or experience greater difficulty finding a job in the first place.”

And then there’s this gem: “Very few minimum wage earners are living in poverty.”

Before articulating why the chamber’s letter is overblown and relies more on fear mongering than modern statistical fact and scientific expectation, let me repeat that I do believe some workers who now earn $7.25 an hour will be negatively impacted when we increase the minimum wage. Some minimum wage earners work in jobs that produce goods and services and their customers are very price sensitive. They, unfortunately, could be affected.

However …

Min WageUsing the very reports the chamber is using to try to deter lawmakers from supporting an increase for our hardworking frontline hourly employees, I can also use to support my widely accepted argument that increasing the minimum wage would be the rising tide that lifts all boats.

The Congressional Budget Office, which the chamber mentions in paragraph two of its letter, says in its February report that there is, indeed, “a two-thirds chance” that 500,000 workers – across the country – could lose their positions. The other half of that sentence, though, is its “central estimate” of an increase to $10.10 “would be in the range between a very slight decrease in employment and a decrease of 1 million workers.”

If those 500,000 workers are affected, the 16.5 million remaining minimum wage earners “would end up with higher earnings during an average week,” the same CBO report explains.

Should this happen, the CBO said a minimum wage increase would lower “the additional cost of hiring a new employee, leading to increased employment.

Because those low-wage workers tend to spend a larger fraction of their earnings, some firms see increased demand for their goods and services, boosting the employment of low-wage workers and higher-wage workers alike. That effect is larger when the economy is weaker, and it is larger in regions of the country where the economy is weaker,” the CBO study found.

That economic bounce could very well happen in Pennsylvania because our state’s economy has not rebounded like others across the United States.

Dismantling the notion that increasing the minimum wage would somehow hurt the economy, Princeton University’s Paul Krugman, one of this country’s top economists, said, “U.S. experience … offers many ‘natural experiments’ … The great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”

Krugman isn’t alone in his assessment as the University of Chicago’s Booth School of Business found that leading economic forecasters agree by a nearly 4-to-1 margin that the benefits of raising and indexing the minimum wage outweigh the costs.

Finally, the notion that “very few minimum wage workers live in poverty.” Really?

Nearly 200,000 Pennsylvanians earn $7.25 an hour or less (87,000 earn the minimum; 108,000 pocket less). Many minimum wage earners are teenagers or do live at home. That’s good for them.

But we should shrug our shoulders and say, “So what?” to a few thousand Pennsylvania neighbors and relatives who are not as fortunate? Who are working two or three minimum wage jobs so they can barely stay above the poverty line? Is that the way you want to work? I didn’t think so.

The minimum wage was never designed to lift a family out of poverty if only one member of that household works. The closest the minimum wage has come to keeping families at the poverty level was in 1968 when, according to the Oregon State University, the base hourly rate was 90 percent of the poverty level. In today’s dollars, the 1968 minimum wage equates to $10.86.

$10.86 would be a sweet minimum wage for Pennsylvania workers, but no one in Harrisburg is advocating that now.

We could consider any one of 13 bills that look to increase the minimum and deal with our tipped minimum wage. The bills I am championing now are SB 1300, which would incrementally increase the minimum to $10.10 by 2016, and SB 1099, which would raise the tipped minimum to 70 percent of the regular minimum wage.

Every neighboring state and more than a dozen others have increased their minimum wage rates. They don’t appear to be worried about the economic sky falling. Why? Because history proves it has never fallen following a minimum wage hike.

News of Note

Every now and then, I just want to make sure you are reading the important and interesting labor stories of the week:

Made in PA

A large bathtub can hold 50 gallons of water and weigh 417 pounds. Now imagine 40 million gallons of water. Such a massive amount of H2O would require 800,000 bathtubs and weigh approximately 333 million pounds. While this may seem like an incomprehensible amount of water to the average person, this is the typical volume of the products discussed each day by the Boilermakers Local 13 employees who work at Fisher Tank Company—an Fisher Tank Companyemployee-owned business that designs, builds, services and repairs storage tanks for the public and private sectors. 

Tanks are fabricated to meet the needs of customers at two state-of-the-art production facilities, one of which is located in Chester.

Fisher Tank has highly trained, experienced employees who are dedicated to their jobs and clients to ensure well-designed customized tanks and on-site construction is provided when necessary. By offering all customers the full range of their services, along with quality products and timely delivery, the company has earned a stellar reputation among the many industries it serves. 

From water to ammonia to gas, Fisher Tank provides storage solutions that can hold a variety of products for industries, such as mining, fire protection, municipal, energy and paper. Thanks to its employees’ positive attitudes and dedication to each project, no matter the size, Fisher Tank Company has been in business for the past 65 years and is sure to remain in business for 65 years more.





Fisher Tank Company