MINIMUM WAGE FACTS:  PENNSYLVANIA DATA

 

THE DATA

A.  Characteristics of Workers Affected by an Increase in the Minimum Wage from 5.15 and 7.15 an hour:

Increasing the minimum wage from 5.15 to 7.15 will affect 510,000, or 9.7 percent of Pennsylvania workers.  Of the workers affected by an increase in the minimum wage to 7.15,

 

1.      Age

o        71.1 percent are adults (people age 20 or older). 

2.      Full Time Workers

o        More than a third (37.1 percent) work full time.

o        Just over another third (34.3 percent) work between 20 and 35 hours a week.

 Industry

o        5.2 percent are employed in manufacturing

o        23.2 percent are employed in the leisure and hospitality.

o        27.1 percent are employed in retail trade.

3.      Occupation

o        164,744 or 19 percent of the total affected are employed as cashiers, retail salespersons and supervisors, counter and rental clerks.

o        Another 92,955 or 11 percent of the total affected are employed as clerical, including stock clerks, receptionists, other clerks and secretaries.

4.      Parents with Children

o        Of Pennsylvania workers age 16 or older, 18 percent of those affected by an increase in the minimum wage are parents with children at home. 

o        Of Pennsylvania workers age 18 to 64, 22 percent of those affected by an increase in the minimum wage to 7.15 are parents with children at home.

5.      Race and Spanish Ethnicity

o              12 percent of the workers who would be affected by an increase to $7.15 are African American (African Americans represent 8.4 percent of the workforce).

o              5.3 percent of the workers affected by an increase in the minimum wage to 7.15 (Hispanics represent 3.5 percent of PA’s workforce). 

6.      Rural/Urban

o        Of the workers who would be affected by an increase in the minimum wage more than one in five live in rural parts of Pennsylvania (22 percent).

7.      Distribution of Household Income & Gains From a Higher Minimum Wage

o        Almost a third (32 percent) of the gains from a minimum wage increase to 7.15 would accrue to the poorest 20 percent of Pennsylvania households (households earning less than $272 a week).  These households account for only 5 percent of total earnings in the state of Pennsylvania but will absorb nearly a third of the gains from an increase in the minimum wage.

o       20 percent of Pennsylvania’s households earn between $272 and 587 a week, these households account for 11 percent of the earnings of Pennsylvania households but will absorb 14 percent of the gains from an increase in the minimum wage.

  

Data Source:  All statistics in this section were tabulated from the Merged Outgoing Rotation Groups (MORG) of the 2004 Current Population Survey (CPS).  These figures exclude workers currently earning less than 5.15 an hour on the grounds that workers not currently earning the minimum will not be affected by an increase. The sample is further limited to individuals age 16 or older and excludes the self-employed and workers employed without pay.

 

B.  Characteristics of Workers Earning 5.15 an Hour or Less:

Workers Earning Less than 5.15

·         In 2004 Pennsylvanians earning hourly wages and making below the minimum wage represented about one percent of the total Civilian Labor Force that were Employed.

·         Less than two percent of the hourly wageworkers in Pennsylvania earned less than $5.15 an hour.

·         There were 62,000 Pennsylvania workers earning less than $5.15/hr 

Data Source:  Bureau of Labor Statistics

 

Workers Earnings 5.15 or Less

·         89,000 or 2.73 percent, of all Pennsylvanian’s earning hourly wages were paid at or below the federal minimum wage of $5.15 per hour in 2004

Data Source:  Bureau of Labor Statistics

 

Workers Earning 5.15

·         27,000 Pennsylvanians earned the minimum wage in 2004 up 6,000 from the previous year

Data Source:  Bureau of Labor Statistics

 

TALKING POINTS ON MINIMUM WAGE:

Research (elaborated below) clearly demonstrates that, 

a.       The present minimum wage no longer represents a subsistence standard of living for a worker, much less a family.

b.       The increased cost of living leaves families below the federal poverty level and increases the burden on taxpayers to pay for public assistance.

c.       No employer should expect taxpayers to subsidize payroll to bring employees up to a minimum standard of living.

d.       It is not acceptable that in the United States, someone can work full time and still below the poverty level

e.       The federal minimum wage has not increased since 1997

f.        In the eight years since the federal minimum wage was raised, business profits have risen, and worker productivity has increased, cost for food, clothing and other basic necessities, especially fuel have gone up significantly.

I.       FALLING VALUE OF MINIMUM WAGE:

The last time the General Assembly increased the state’s minimum wage was in 1988 in Pennsylvania.  At that time citizen outrage over a $12,000 legislative pay raise prompted legislators to increase Pennsylvania’s minimum wage to $3.70 (35 cents above the federal minimum).  Today a 16 percent increase in current minimum wage would bring it to $5.97 per hour; a 34 percent increase would bring it up to $6.90 an hour

 

Assuming a 5 percent increase in CPI in the year and a half between July 1, 2005 and January 1, 207:

a.      16 percent increase in the prevailing minimum wage + 5% COLA = $6.26

b.      34 percent increase in the prevailing minimum wage + 5% COLA = $7.25

In addition,

·         The federal minimum wage rate was last raised in September 1997, when it was increased by $0.40

·         We are currently in the eighth  year without an increase, the longest such stretch since the Fair Labor Standards Act (FLSA) went into effect in 1938

·         If the minimum wage had kept pace with inflation after its peak level of $1.60 per hour in 1968, the 2005 Minimum Wage would have been valued at $8.89 per hour.

·         The current minimum wage of $5.15 is 40 percent below the 1968 value. 

Data Source:  Bureau of Labor Statistics

 

II.          INCOME/WAGE ARGUMENT

A.  By raising the minimum wage, we can to help working families’ break out of poverty without putting our businesses at a competitive disadvantage.

 

·         A person earning the minimum wage who works full-time, 40 hours per week, 52 weeks per year makes $10,712 per year.  This is $2,100 below the poverty line for a family of two.

o              At $6.25 an hour, full-time workers will earn $13,000 per year.

o              At $7.15 an hour, full-time workers will earn $14,872 per year.

·         A full-time, full-year worker employed at the minimum wage ($10,712) earns just 24 percent of the Pennsylvania median household income of $44,389.

·         The “Break Out of Poverty Minimum Wage” (meaning the hourly rate at which a full time worker’s earnings will just exceed the federal poverty level) for a family of two and three are:

Family Size

Federal Poverty Level

“Break Out of Poverty” Wage

Family of 2

$12,830

$6.17 minimum wage

Family of 3

$16,090

$7.36

 

Data Source:  U.S. Census

 

     B.      Comparison to current CEO wages:

·   CEOs compensation is up 25% from 2003, according to a USA TODAY analysis (3/31/05). This includes all of their compensation includes salary, bonus, incentives, stock awards, stock-option gains and potential returns from fresh option grants.

·   The median CEO compensation package these days is about $14 million - the equivalent of the annual wages paid to over 1,300 minimum workers.

Data Source:  USA Today

 

C.    Part of a Broad Strategy:

A decent minimum wage could be part of a broad strategy to end poverty in the state and guarantee benefits to Pennsylvania’s working poor. 

·         Hand in hand with the federal Earned Income Tax Credit (EITC) this much-needed raise would help reduce the incidence of poverty especially among single mothers

·         The current $5.15 minimum wage gives a Pennsylvania minimum wage worker a weekly paycheck of $206 and an annual income of about $10,700 (rounding (10,712); this combined with EITC earnings  ($14,100) still places a minimum wage worker’s earnings seven percent below the 2004 poverty threshold of $15,200 (for a family of three). 

·         Studies by the Internal Revenue Service indicate millions of Americans are eligible for the EITC but fail to receive a payment;

·         In addition to raising the minimum wage, a public education campaign to encourage eligible workers to take advantage of the EITC and publicizing one of the nation's most important anti-poverty programs would be a two-pronged approach to tackle the incidence of poverty in Pennsylvania.

Data Source:  Pennsylvania Department of Labor & Industry

 

II.            POVERTY IN PENNSYLVANIA:

·   Over 1.5 million Pennsylvanians (nearly 12 percent) are living in poverty – or about one in eight people. 

·   Pennsylvania’s poverty rate has worsened over the last two years despite the fact that the economy has been improving.

·   There were over 220,000 more Pennsylvanians living in poverty last year than in 2002.

Data Source:  U.S. Census

 

III. BUSINESS ARGUMENT:

Most employers who traditionally employ minimum wages are paying above that wage simply because they are trying to attract good workers.
By increasing the minimum wage to $6.25, the lowest paid workers will take home an average of an additional $1,000 a year - dollars that will get spent right here in the local economy.

1.                   FPI Study:  Fiscal Policy Institute (FPI), a non-partisan research and education organization released a study last year (2004) on the effects of minimum wage on employment and payrolls in small businesses5 that makes several comparisons between states with a higher minimum wage than the federal $5.15 minimum and all other states (where the federal minimum prevails).  The overall conclusion of this analysis was that states with higher minimum wage has performed at least as favorably as in states where the federal minimum prevails. 

·                     Between 1998 and 2001, the number of small business establishments grew twice as quickly in states with higher minimum wages (3.1% vs. 1.6%)

·                      Employment growth was nearly 50 percent higher in high minimum wage states (4.8% vs. 3.3%)

·                      Annual and average payroll growth was also faster in higher minimum wage states.

Fiscal Policy Institute:  State Minimum Wages & Employment in Small Businesses (2004): http://www.fiscalpolicy.org/

 

2.  Princeton StudyNoted Princeton economists David Card and Alan Krueger published a study on the impact of the 1992 increase of the New Jersey minimum wage.  The authors surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise.  Comparison of employment growth at stores in New Jersey and Pennsylvania (where the minimum wage was constant) provided sample estimates of the effect of the higher minimum wage.  Standard theory would predict that New Jersey's 19 percent increase would cost jobs. They found no indication that the rise in minimum wage reduced employment. 

http://www.irs.princeton.edu/pubs/pdfs/90051397.pdf

 

3. Wisconsin StudyIn 2003, Governor Jim Doyle and the Department of Workforce Development convened the ‘Minimum Wage Advisory Council’ to assist determining whether there should be an increase in Wisconsin’s minimum wage.  The council included leaders from the business community, labor organizations, the university system, and both houses of the Legislature.  The study, ‘Report and Recommendations of the Minimum Wage Advisory Council’, released May 2004, clearly bolstered a call for a higher minimum wage as a key element of Wisconsin’s ‘Grow Wisconsin’ economic plan.  The findings state that, ‘raising the minimum wage will have positive impact on both workers and their employers by reducing turnover, increasing work experience, and saving on training and recruitment costs for both workers and employers.

http://www.dwd.state.wi.us/er/equal%5frights%5Fdivision/pdf%5Ffiles/mwac%5Ffinal%5Freport.pdf

 

4.  Petition by Economists:  Hundreds of economists including Nobel Laureates like Paul Samuelson (MIT), Lawrence Klein (University of Pennsylvania) and Clive Granger (University of San Diego) from across the country recently signed a petition attesting to this fact and supporting a minimum wage increase. 

 

IV.  RISING ENERGY COSTS:

·         According to the latest inflation report, energy prices rose by 12 percent in the month of September alone and were up an astonishing 35 percent over the last year.

·         At $3.00 a gallon, it takes someone earning the minimum wage almost a whole day’s work to fill up a tank of gas.

Data Source:  Pennsylvania Department of Labor & Industry

 

V.     INFORMATION FROM OTHER STATES:

There is growing public consensus that $5.15 per hour is nowhere near a just wage. Between 75 and 90 percent of respondents (to a recent survey conducted by the Financial Project) typically support between a $1.00 and $1.50 increase in the Minimum Wage.

·         In 2003, of our 6 neighboring states, only Delaware had a minimum wage above $5.15.  In the last year, New York and New Jersey have passed legislation to raise their state minimum wage. 

·         On October 1, New Jersey’s minimum wage rose by $1 to $6.15.

·         Florida’s minimum wage, raised to $6.15 will be adjusted to keep up with inflation with a Cost of Living Adjustment.

·         All told, 17 states now have laws on the books that mandate minimum wages higher than the 1997 federal standard of $5.15.

·         When analyzing historical employment trends, jobs levels of states that increased their minimum wage tend to follow the U.S. patterns.  There is also no long-term effect on job levels by minimum wage increases as the state’s jobs continue to follow economic trends.

 

(State Graphs, a few examples, follow)

Non-Farm Jobs Percent Change from Prior Year 



 

 

 

ADDITIONAL INFORMATION

1.  REFERENCE TABLE:

 

Table 1:  Employed Wage & Salary Workers Paid Hourly Rates

 (Number of worker in thousands)

Total, 16 Years and Over

United States

Pennsylvania

Total paid hourly rates

Number

73,939

3,263

Percent

100

100

Less than $4.25

Number

1,070

45

Percent

1.4

1.4

$4.25

Number

11

N/A

Percent

>0

N/A

$4.26-$5.14

Number

402

17

Percent

0.5

0.5

$5.15

Number

520

27

Percent

0.7

0.8

$5.16-$5.64

Number

1,021

48

Percent

1.4

1.5

$5.65-$6.14

Number

2,301

117

Percent

3.1

3.6

$6.15 - $6.64

Number

1,907

91

Percent

2.6

2.8

$6.65 - $7.14

Number

4,656

170

Percent

6.3

5.2

  $7.15 - $10.00

Number

N/A

847

Percent

N/A

25.9

 $10.01 or more

Number

N/A

1,901

Percent

N/A

58.3

Data excludes incorporated self-employed workers.  To arrive at this detailed wage distribution, data (in the appropriate wage ranges) was extracted from Census micro-data.  The estimate of percentage of workers in the hourly wage range $7.15 to $10.00 an hour in the extracted data was assumed to be an accurate representation.  This calculated percentage (31 percent) was then applied to the CPS report to arrive at the final estimate of number of hourly wage workers in PA earning between $7.15 and $10.00 an hour.  The next category of hourly wage workers, ‘$10.00 and more’ was adjusted accordingly to arrive at the total number of hourly wageworkers in Pennsylvania of 3,263,000.For Data Extracted to arrive at the wage cohorts over $7.15, Hourly workers reporting hourly earnings less than $.72 an hour and greater than $145.08 an hour were excluded from the sample was used to extract the micro-data.   Users are cautioned that these data are based on a sample and are therefore subject to sampling error.  It should be noted that it is not possible to determine whether workers surveyed in the CPS are actually covered by the Fair Labor Standards Act or by individual State minimum wage laws. 

Source/s: U.S Department of Labor, Bureau of Labor Statistics; Current Population Survey; PA Dept. of Labor and Industry; Keystone Research Center, Pennsylvania.

 

 

2.  US DATA ANALYSIS

Characteristics of Minimum Wage Workers: 2004 (United States)

According to Current Population Survey estimates for 2004, some 73.9 million American workers were paid at hourly rates, representing 59.8 percent of all wage and salary workers.1 Of those paid by the hour, 520,000 were reported as earning exactly $5.15, the prevailing Federal minimum wage, and another 1.5 million were reported earning wages below the minimum.

Ø                  Minimum wage workers tend to be young. About half of all hourly-paid workers earning $5.15 or less were under age 25, and about one-fourth were age 16-19. Among teenagers, about 9 percent earned $5.15 or less. About 2 percent of workers age 25 and over earned the minimum wage or less. Among those ages 65 and over, the proportion was 4 percent.

Ø                  About 4 percent of women paid hourly rates reported wages at or below the prevailing Federal minimum, compared with about 2 percent of men.

Ø                  Nearly 3 percent of white hourly-paid workers earned $5.15 or less, compared with about 2 percent for both blacks and Hispanics or Latinos. The figure for Asians was about 1 percent. Among whites and Hispanics or Latinos, women were about twice as likely as men to earn the Federal minimum wage or less.

Ø                  Never-married workers, who tend to be young, were more likely to earn the minimum wage or less than persons who are married.

Ø                  Among hourly-paid workers age 16 and over, about 2 percent of those who had a high school diploma but had not gone on to college earned the minimum or less, compared with about 1 percent for those who had obtained a college degree.

Ø                  Part-time workers (persons who usually work less than 35 hours per week) were much more likely than their full-time counterparts to be paid $5.15 or less (about 7 percent versus 1 percent).

Ø                  By occupational group, the proportion of hourly-paid workers whose earnings were reported at or below $5.15 ranged from less than 1 percent for persons employed in management, professional, and related occupations, to about 9 percent for those in service occupations. About three in four workers earning $5.15 or less in 2004 were employed in service occupations, mostly in food service jobs.