The Harrisburg wage game
Legislators in the Pennsylvania General Assembly once again have mistaken capitulation for compromise. And the result is as one might expect – another exercise in embarrassing political expediency masquerading as sound public policy.
The Pennsylvania Senate has passed and sent to the House legislation that would raise the state minimum wage from $7.25 an hour to, in four steps, $9.50 an hour on Jan. 1, 2022. What the House might do remains a question mark.
Now, the “compromisers” in the Senate will tell you that the legislation “is a good deal.”
After all, Gov. Tom Wolf did not get his requested $15 hourly minimum wage (by 2025). Neither did he get an automatic inflation adjuster or a hike in the minimum tipped wage.
Additionally, supporters note that in return for the smaller minimum wage, the Wolf administration has dropped its plan to expand overtime pay eligibility for salaried workers.
Thus, raising the minimum by a small amount is well worth the price to pay to eliminate a trio of possibly more deleterious wage edicts, goes the rationalization.
But is it?
Some of the most ardent supporters of raising the minimum wage to $15 argued that the 2009-set $7.25 wage floor simply had not kept pace with inflation.
While Wolf’s original proposal – a 100 percent-plus increase – was economically farcical on its face, the compromise does, in fact, roughly account for inflation.
To wit, that $7.25 in 2009 would be $8.54 in 2019 inflation-adjusted dollars. The agreement calls for the minimum wage to rise to $8 hourly on July 1, 2020; to $8.50 on Jan. 1, 2021; to $9 on July 1, 2021; and, again, to $9.50 on Jan. 1, 2022.
Whether those latter values parallel inflation remains to be seen, of course.
But the fact of the matter remains that government, by fiat, has, on net, increased the private sector’s cost to do business. And that cost will either be passed along to consumers or, more likely, result in some employees having their hours cut or, perhaps, positions being eliminated.
It was Jean-Baptiste Colbert, minister of finance under France’s King Louis XIV, who once quipped that “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
And so, too, is that sentiment applicable when government, capitulating in the name of compromise, dictates what private businesses must pay their employees.
Just because a bad public policy does not exceed the rate of inflation does not suddenly make it a good public policy.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).