Pennsylvania Gubernatorial Candidate McGinty Muddles Minimum Wage Facts

Katie McGinty, Democratic candidate for governor, has released a new video in which she calls on Republican Gov. Tom Corbett and the GOP-dominated General Assembly to increase Pennsylvania’s $7.25-per-hour minimum wage.

McGinty said that if she’s elected governor her first legislative push will be to raise the commonwealth’s minimum wage to $10.10 per hour and index it to inflation.  Her campaign web site mistakenly says that Pennsylvania’s minimum wage was last increased in 1996, when in fact former-governor Ed Rendell — for whom McGinty worked — hiked it in 2007 from $5.15 per hour.

“We know our economy is gonna suffer if we’re not paying people,” McGinty intones in a Philadelphia accent.  “That’s what the data says, that’s what the experts say.”  An article from The Wall Street Journal headlined, “Stagnant Wages Are Crimping Economic Growth,” artfully appears to mislead viewers into thinking that the nation’s foremost free-market periodical actually supports McGinty’s statist position.

For the record, Steve Moore – one of the Journal’s editorial board members – makes clear in a video of his own that the paper believes minimum wage laws hurt the very people they were intended to help.

A plethora of evidence shows Moore is right and McGinty is wrong.

The U.S. Department of Labor’s own assessment of the first 25-cent minimum wage in 1938 found job losses for 30,000 to 50,000 workers, or 10 to 13 percent of the 300,000 affected workers.

Last month, the Employment Policies Institute (EPI) released results of two definitive analyses. The first was a survey of San Jose restaurants to gauge how they were affected by the city’s 25 percent minimum wage increase to $10.00 in 2013. Of those surveyed, two-thirds saw a big increase in business costs that resulted in reducing employee hours, eliminating jobs, and passing the additional cost onto consumers. The second EPI study estimated that at least 360,000 jobs — and as many as 1,084,000 jobs — would be eliminated if the federal minimum wage were raised to $10.10.

According to the US Census, since 2003, poverty in Pennsylvania has gradually increased from 10.5% to 12.6%.  Of the businesses surveyed by the Lincoln Institute in the spring of 2007, 27 percent decided not to hire inexperienced workers as a result of the minimum wage increase.

  • 26 percent said they are not hiring new employees
  • 12 percent cancelled or postponed expansion plans
  • 6 percent cut their hours of operation
  • 2 percent laid off employees due to the minimum wage hike

Economics can be esoteric, but there is simple logic behind minimum wage laws’ failure to curb poverty and stimulate economic growth: When you raise the price of something, people demand less of it, including labor.

Facts are often irrelevant to politicians like McGinty, who must appeal to labor unions — which advocate minimum wage laws — in order to win a tough primary election.