Raising the Minimum Wage Would Give Over a Million PA Workers a Raise

Increase Would Also Boost the Economy
Date of Press Release: 
August 14, 2012

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Increasing the federal minimum wage from $7.25 to $9.80 per hour would give more than 28 million U.S. workers—and over 1.1 million Pennsylvania workers—a raise while generating approximately 100,000 new U.S. jobs over three years, finds a new study released in Pennsylvania by the Keystone Research Center (KRC).

In How Raising the Federal Minimum Wage Would Help Working Families and Give the Economy a Boost, researchers Douglas Hall and David Cooper at the Economic Policy Institute (EPI) in Washington DC show that raising the minimum wage would provide a substantial lift to the economy and benefit workers still reeling from the effects of the recession, generating almost $40 billion in increased wages.

“The federal minimum wage was first established in 1938 and played a key role in lifting the economy out of the Great Depression,” said KRC economist Stephen Herzenberg. “Over the next three decades the value the U.S. minimum wage increased steadily, more than doubling in inflation-adjusted terms. Enabling families at all income levels to share in the benefits of growth helped sustain the most prosperous three decades and the longest period of low unemployment in American history.”

In contrast to prevailing myths about minimum-wage workers, raising the minimum wage would benefit millions of workers across demographic groups, not just teenage part-time workers. In Pennsylvania over 80 percent of workers who would be affected are at least 20 years old. Female workers would benefit disproportionately from the increase, comprising 57 percent of those Pennsylvanians affected. In Pennsylvania, non-Hispanic white workers make up nearly four out of five of those workers affected (77 percent). Three quarters of the Pennsylvania workers benefitting would be in families that make less than $75,000. “Rural and southwestern Pennsylvania would also benefit disproportionately,” said Mark Price, KRC labor economist.

While increasing the minimum wage immediately benefits the lowest-paid workers through boosted earnings, it also yields positive effects on the larger economy. Raising the federal minimum wage to $9.80 would put nearly $40 billion in the hands of directly and indirectly affected families when they need it most, augmenting their spending power in the local economy. In return, these families would be more likely than any other income group to spend these extra earnings immediately on basic needs or services they could not previously afford.

This additional spending power would be a useful tool to spur job growth, as employers would need to hire new staff to keep up with heightened demand for goods and services. In fact, an increase in the federal minimum wage from $7.25 to $9.80 per hour would result in a net increase in economic activity of approximately $25 billion, generating approximately 100,000 new jobs. This hike would have a positive impact across the country, with job creation in every state.

“With the national unemployment rate stuck above 8 percent and wages for most workers declining, now is the perfect time to raise the minimum wage,” said Price. “A minimum wage increase would reverse a downward spiral of falling wages and declining consumer demand, and begin to rebuild the middle class as the engine of growth.”