Report: Wolf’s Plan to Raise Minimum Wage Could Cost Jobs

A new study claims that raising the minimum wage from $7.25 an hour to $12 could eliminate 54,000 jobs.

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Gov. Tom Wolf wants to raise the minimum wage from $7.25 to $12 per hour, per his budget proposal, but a new report claims such a hike could prompt widespread job losses.

WITF reports that according to the Independent Fiscal Office, the move could cost the state nearly 54,000 jobs. 

IFO director Matthew Knittel told WITF that some of the job losses would be immediately evident, while a portion could take years to unfold if businesses choose to eliminate unfilled positions or fail to replace retired employees.

And while Wolf claims that raising the minimum wage could generate a $95 million economic impact, IFO estimated that number to look more like $40 million – $25 million of which could take years to materialize, the organization claims.

Pennsylvania is one of 21 states that do not require employers to pay a wage that exceeds the federal minimum. All states surrounding Pennsylvania have a minimum wage that surpasses the state’s by at least $1 per hour – and two states (New York and Maryland) have a minimum wage that exceeds the state’s by $2 per hour.

A Wolf spokesman refuted the IFO’s findings and told WITF that “every state surrounding Pennsylvania has raised their minimum wage, and there is no evidence that those increases led to a loss of employment.”

Wolf has not specified how the minimum wage hike would be implemented. In its report, IFO analyzed the proposed minimum wage hike as if it would be fully implemented on January 1, 2018 – accounting for a three-year phase-in approach in a single year.

It’s important to note that most states have implemented minimum wage hikes through a more drawn out phase-in process, and that “without a phase-in, the proposal would cause more labor market disruptions compared to the phase-in approach,” according to the report.

If Pennsylvania’s minimum wage were raised to $12 per hour in 2018, the state would have the highest minimum wage of any state for that year.

Follow @ClaireSasko on Twitter.