The State of Working Pennsylvania 2017

Posted at https://www.keystoneresearch.org/publications/research/state-working-pennsylvania-2017

Authors: 

Mark Price, Stephen Herzenberg

Publication Date: 

August 31, 2017

Read the Press Release
Download the full report
Download the “Agenda to Raise Pennsylvania’s Pay”

Executive Summary

A year ago, “The State of Working Pennsylvania 2016” presented data showing little wage growth, and in some cases wage declines, for virtually every group of Pennsylvania workers over the preceding 15 or 35 years, regardless of race, gender, and education level. We argued that when our political leaders fail to offer workers hurt by a restructuring economy a realistic promise of better days, anger and despair can spread, fueling divisiveness and fraying our social fabric. The events of the last year in America have borne out this warning. They have underscored the urgent need for political leaders to unify all Americans and Pennsylvanians behind real solutions to the economic struggles faced by working families, so that our country and state might honor again the widely shared beliefs that all work has value and that all Pennsylvanians deserve a fair shot at the American Dream of upward mobility.

The 22nd edition of “The State of Working Pennsylvania” demonstrates that policymakers in our neighboring states have all taken at least one step towards an economy that more fairly rewards work – by raising their state minimum wage. But Pennsylvania lawmakers have not taken this step, ignoring Gov. Wolf’s call for a $12 per hour minimum wage despite overwhelming support for a higher minimum wage among state voters from both parties.

The action by lawmakers in our six neighboring states (Delaware, Maryland, New Jersey, New York, Ohio, and West Virginia) to lift their minimum wages to at least $8.15 per hour (the Ohio level) and as much as $9.70 per hour throughout all of New York state (and higher in and around New York City and in the District of Columbia) have made a tangible difference to the lives of lower-wage workers in the states around Pennsylvania.

• In these six states and the District of Columbia the 10th percentile wage in the last four years (through the first six months of 2017) has risen by $1.02 per hour, to $9.73 per hour. That increases amounts to $2,104 per year for a full-time, full-year worker.
• In Pennsylvania, the increase in the 10th percentile has been only a third as large, 33 cents per hour. If our 10th percentile wage had seen an increase as large as neighboring states, full-time, full year workers at this wage level would have another $1,435 in annual income.
• At the 20th percentile – a wage level at which some research suggests the minimum wage has some impact – as well as the 30th percentile our neighboring states have seen wages increase by 90 cents to a dollar per hour while Pennsylvania wages have increased by only 40-45 cents per hour.
• Counting just those in the 10th percentile and below, Pennsylvania workers received $362 million less in their paychecks in the 12 months spanning the second half of 2016 and first half of 2017 than if lawmakers had emulated their peers in neighboring states.

Without legislative action, the money lost by Pennsylvania low-wage workers because our lawmakers have not raised the minimum wage like those in neighboring states will grow over time. Four of those neighbors have additional minimum wage increases of 9% to 38% already on the books by 2024.

The body of this report shows that, despite continuing economic growth and falling unemployment, more aggressive policies to increase wages are also needed for Pennsylvania workers from the 30th to the 80th percentile of wage distribution. In the last year for which we have data, the 40th percentile enjoyed only a 14 cent per hour wage increase and the 50th to 80th percentile experienced anywhere from a four cent per hour raise to a 28 cent per hour wage cut. With wages stagnant, the top 1% garnered even more of the total increase in Pennsylvania income in this recovery than any other in the past 70 years – 42.9%.

The failure of the broad middle class in Pennsylvania to benefit from an economic recovery now in its ninth year suggests that Gov. Wolf’s creation of a Middle Class Task Force, announced in his February budget address, could not be more timely. As this task force undertakes its work, we encourage it to give Pennsylvanians in rural areas and urban areas, from Erie to Philadelphia and Pittsburgh to the Poconos, an opportunity to offer their suggestions for how to lift up our state’s middle class.

At the end of this report, as part of our own input to the Middle Class Task Force, we offer an updated “Agenda to Raise Pennsylvania’s Pay.” One specific idea in this agenda is that Pennsylvania update the overtime threshold below which salaried workers in the state would automatically receive overtime pay. Under Pennsylvania law, we believe Gov. Wolf can do this through executive action. If he were to raise this threshold to the level proposed by President Obama (but derailed by a Texas court), an estimated 459,000 Pennsylvania workers, most of them in the middle third of the Pennsylvania wage distribution, could benefit.

Our full agenda drives home a central theme of this report: just as the economy has been rigged to benefit the 1% over the past decades, creative policies could reverse that tendency and restore an economy that works for all. As well as improving people’s lives, such an economy would help reduce the anger and lack of hope now tearing apart America. Here’s to Pennsylvania policymakers doing more in the next 12 months to move in this direction than federal policymakers have in the past 12 months.