Wolf's minimum wage II
The Pennsylvania Budget and Policy Center applauds Gov. Tom Wolf for raising the minimum wage for state workers and workers whose companies are on contract with the state.
Prior to his action, these workers who are heads of household and making the minimum wage were not making enough money to live above the poverty line. It should be our moral obligation, as a commonwealth, to ensure those working in Pennsylvania are paid enough to make ends meet for their families.
This is the first step in increasing the minimum wage for all workers in Pennsylvania. Doing this not only helps working people, it relieves pressure on Pennsylvania's budget.
People making the minimum wage spend almost every dime they earn. Raising the minimum wage generates new economic activity. The Keystone Research Center estimates a higher minimum wage will increase revenues from the state income tax by $45.6 million and the sales tax by $75.9 million.
It will also decrease state spending, as many workers making the minimum wage will move from traditional Medicaid to the expanded Medicaid created by the Affordable Care Act. The federal government reimburses Pennsylvania for just under half the cost of traditional Medicaid, but the reimbursement for expanded Medicaid is 90 percent or more. We estimate that raising the minimum wage for all Pennsylvanians will reduce state spending by $104 million.
We face a structural deficit of about $2 billion, so we can't afford to miss this opportunity to reduce it by $225 million simply by raising the minimum wage to $10.10.
The author is the director of the Pennsylvania Budget and Policy Center.