In just the past few weeks, leading American business leaders appear to have experienced a sudden and surprising bout of conscience. On Monday, August 19, the Business Roundtable, which represents the largest U.S. corporations, issued a statement signed by 181 CEOs that embraced stakeholder capitalism—the idea that corporations have obligations to employees, the community, and customers, as well as shareholders. On the next day, Tom Wilson, the chair of the executive committee of the U.S. Chamber published an op-ed titled “Save Capitalism by Paying People More.” Wilson acknowledges in blunt terms that ordinary working Americans aren’t flourishing economically. (For excerpts from Wilson’s op-ed, see Box 1 near the end of this report.)
This year’s annual “The State of Working Pennsylvania” documents the accuracy of Wilson’s observation in Pennsylvania. To be sure, this report does have a bit of good news. In 2018, for the first time since 2001, Pennsylvania workers enjoyed wage increases across the board—3.1% on average across the entire wage distribution (i.e. from the 10th percentile to the 90th percentile). These gains reflect what is now the longest economic expansion in U.S. history and an unemployment rate in Pennsylvania below 4% for the first time since before 1976.
Acknowledging this progress, the longer-term picture remains one of meager gains for workers. Over the last economy cycle, from the 2007 peak to 2018, the annual average increase in the Pennsylvania median wage has been less than half a percent. Even now, some slack remains within the Pennsylvania job market, which helps explain why wages in this expansion took so long to kick up. Underemployment remains above the 2007 pre-Great Recession level and the employment rate (share of adults aged 20 and over employed) remains below the 2007 level. If the employment rate today were at the 2007 level, Pennsylvania would have another roughly 150,000 jobs. Looking over a longer period, since 1973, the top 1% in Pennsylvania received 46% of the total increase in income in the state.
- August 19, 2019
- Jacob Vigil, MSW
Half of all workers in New Mexico cannot earn paid sick leave and have to either go to work when they or a family member is sick or stay home and lose pay. This is the highest rate in the nation. Because the federal government has no paid sick leave policy, several states and municipalities have enacted paid sick leave policies but paid sick leave legislation for New Mexico stalled during the most recent legislative session. The report looks at which sectors (among other employer demographics) are most and least likely to offer paid sick leave. The report concludes that statewide paid sick leave and paid family leave laws would go far to ensuring all New Mexico workers and their families have opportunities to lead healthier lives and are crucial to building the strong workforce our state needs to support a thriving economy.
With all of the claims about how great the economy is right now, the data shows that the average Kentuckian’s wages remained flat in 2018, continuing the trend of nearly the last two decades. Unemployment is certainly lower than it’s been in a long time and the job market continues to tighten in parts of the state, but Kentucky workers are not experiencing the kind of wage growth and improvement in standard of living that such an economy should afford.
Wrapped into his 2019 budget proposal, Governor Wolf has proposed to raise the minimum wage in July 2019 to $12/hour, with yearly 50-cent increases until it reaches $15/hour in 2025. After 2025, the minimum wage would be adjusted for inflation. Also included in this plan is to eliminate the separate tipped minimum wage of $2.83/hour—tipped workers would earn $12 in July 2019 and would follow the same scheduled changes each year.
This increase is needed to make up for the declining value of the minimum wage over time. Figure 1 shows the minimum wage relative to the median wage for full-time, full-year workers in Pennsylvania over time. In 1968, the minimum wage was 51% of the median wage in Pennsylvania; the minimum was $1.60 compared to the median of $3.15. As you can see by the dark blue line, this value has decreased steadily over time. Today, the minimum wage is only 30% of the median wage in Pennsylvania. Doing nothing and maintaining a $7.25 minimum wage will result in this falling to 26.3% by 2025. Alternatively, Governor Wolf’s plan to raise the minimum wage to $15/hour by 2025 will bring the minimum back to about half of the median wage, where it was in the late 1960s.