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Minimum wage debate simmers as state unveils jobs report
Sunday, March 02, 2008

Kennywood's summer workers, the young men and women who sell French fries and strap riders into roller coasters, are the lifeblood of the amusement park.

But when the state mandated an increase in the minimum wage for Pennsylvania workers, some of those seasonal employees had to go.

Kennywood Entertainment shed about 80 positions in 2007 and increased its ticket prices as a result of the 2006 law, said park President Pete McAneny. The park made it work without any noticeable deleterious effect on customer service, Mr. McAneny said. But, he added, "You can't do that every year" and get away with it.

Anecdotes from companies and industries that rely on low-wage workers demonstrate the perils of setting an artificial base wage when the market ought to be doing it, according to the Pennsylvania Chamber of Business & Industry, which opposed the minimum wage increase.

But Kennywood's story won't be in the state's forthcoming report on the effect of the new wages on the state's economy. And that irritates some Republican senators who think any portrait of the business climate will be incomplete without such evidence. The state's labor secretary is set to release the report tomorrow. The report was compiled by the state's Center for Workforce Information and Analysis.

Acting Labor Secretary Sandi Vito's report will reveal that there has been negligible impact on the number of jobs in the state, and whatever fluctuations Pennsylvania has seen cannot be directly correlated with the new base wage, which will grow to $7.15 an hour for all nontip-earning workers by July 1.

Many of the state's workers who were making less than $7.15 an hour saw their wages increase to the new minimum last year. However, at Pennsylvania businesses that employ fewer than 10 workers -- and there are more than 200,000 -- the full effect of the increase won't be known for five more months.

"What's gonna happen this summer?" asked Gene Barr of the business chamber.

Many economic indicators point toward a recession, and Mr. Barr speculates the pressures inherent to a slowing economy, combined with the mandatory wage increase, will be too much weight for some small companies to bear.

"We're going to see adverse affects on people," he said.

But in budget hearing remarks made to the state Senate Appropriations Committee last week, Ms. Vito told skeptical Republicans that Pennsylvania's economy hit an all-time high in 2007 in the number of people holding jobs -- a fact her boss, Gov. Ed Rendell, often touts. "We saw record high job numbers, unemployment levels that were below the national unemployment rate," she told the Post-Gazette on Friday.

She also noted that whatever sector-specific dips the state might have seen -- in retail, for instance -- there's no definite causal effect between the new minimum wage and job numbers.

A fluctuating stock market, higher gas and utility prices, the declining housing market and changing interest rates likely had as much effect on job levels as the base wage.

Kennywood's Mr. McAneny admitted, "We got clobbered" on utility prices last year after an electricity contract expired. Still, "There isn't any line item that is bigger than payroll" at the West Mifflin amusement park, he said.

Minimum wage debates are almost always party-line events, with Democrats and liberals being more amenable toward lifting the wage, and Republicans and conservatives arguing against them.

Both sides point to mountains of data, reports and economic surveys.

The economists cited by liberals say the job losses are anecdotal, and liberals themselves say the wage increases are needed to help lift people out of poverty.

Conservatives say abrupt jumps in the minimum wage precipitate job cuts, and that low-wage earners (such as the Kennywood workers) often don't come from poor households, meaning wage increases can't possibly erase poverty.

In the end, though, the House voted 161-37 to increase the minimum wage. That came after the Senate had voted 38-11 to do the same.

The overwhelming approval may have had something to do with the previous year's ill-fated legislative pay raise -- proponents of the wage increase pointed out that the senators and representatives had voted to give themselves generous raises, yet wouldn't give an extra $2 an hour to Pennsylvania's minimum wage workers.

Mr. Rendell, who made the increase one of his election-year priorities, signed the legislation in July 2006. It was the first increase in the base wage since a new federal minimum wage had taken effect 10 years previously.

Lost amid whatever debate tomorrow's report may stir is the fact the federal minimum wage is increasing to $7.25 in July 2009. Both the U.S. Senate and the House voted overwhelmingly last year to increase the federal minimum, part of the first major legislative package passed by the new Democratic congressional majority.

The same package also included almost $5 billion in tax breaks for small businesses to help offset the effect of the wages.

The federal minimum wage for employees who receive tips -- primarily affecting waitresses and bartenders -- remains at $2.12.

Bill Toland can be reached at btoland@post-gazette.com or 412-263-2625.
First published on March 2, 2008 at 12:00 am