Tiernan Jenkins

May 16, 2026

Pennsylvania’s stagnant minimum wage has left the Commonwealth economically uncompetitive and socially disadvantaged, as evidence shows that a minimum wage increase would improve worker earnings, reduce poverty and public assistance reliance, stimulate local economic growth, and avoid the severe employment harms critics predict. The General Assembly should enact minimum wage reform to modernize Pennsylvania’s wage floor and restore the minimum wage’s intended protective functions. 

Pennsylvania, since 2023, has had a Democrat dominated House, a Democratic Governor, and a Republican Senate, resulting in high levels of legislative gridlock and a very small percentage of bills passing both chambers of the Pennsylvania Assembly (5, 6). There are currently multiple pieces of proposed legislation in the State House that aim to raise Pennsylvania’s minimum wage, however they have not seen much recent progression. Passing bills within the Commonwealth requires bipartisan support, which will not likely be found unless the arguments for and against raising the Commonwealth’s minimum wage are understood, compared, and compromise is found.

Pennsylvania House Bill No. 2189 (HB 2189), introduced by Representative Dawkins (D – Philadelphia) on February 2, 2026, proposes significant amendments to The Minimum Wage Act of 1968 (1). This bill would substantially increase Pennsylvania’s minimum wage over a three year period, modify tipped employee compensation rules, eliminate the small employer subminimum wage exemption, and implement an automatic annual cost of living adjustment beginning in 2030 (1). This piece of legislation proposes phased/incremental increases to the Commonwealth’s minimum wage, beginning January of 2027 with a raise from $7.25 to $11. January of 2028 will bring the floor to $13, followed by a raise to $15 in 2029, and from 2030 onward, a cost of living adjustment will be added to the minimum wage every January 1st. The cost of living adjustment will be calculated by the Secretary of Labor and Industry using the percentage change in the Consumer Price Index for All Urban Consumers for the Pennsylvania, New Jersey, Delaware, and Maryland region, as reported by the Bureau of Labor Statistics, and posted publicly upon calculation and rounding to the nearest 5 cents. The bill also revises the tipped employee wage formula in Section 3(d), establishing that tipped employees are to be paid a cash wage equal to at least 60% of the applicable minimum wage. 

A common stance taken by supporters is that Pennsylvania is falling behind other states, especially those directly impacted by the minimum wage and a potential raise. According to a Penn Policy article, more than half of US States plus Washington D.C. have raised their minimum wage since 2014, “including every state that borders Pennsylvania”, and adjusted for inflation; “the minimum wage is now worth less than at any time since the mid-1950s” (7). To speak more generally about national economic trends, according to the Economic Policy Institute, productivity has increased by over 90% since 1974, but the average compensation of non-supervisory workers has only increased by 33% (8). Pennsylvania’s minimum wage was last raised on July 1, 2007, to $7.15, which was soon superseded by the federal minimum wage increase to $7.25 on July 24, 2009 (1, 9). For almost 17 years, Pennsylvanians have not seen a statewide or national level change to their minimum wage. Not only do the neighboring state’s wage raises make it clear that change is needed, but not following suit harms Pennsylvania’s economy. According to an analysis of employment and wages in specific economic sectors between Pennsylvania border counties, New York border counties, and New Jersey border counties, it was found that minimum wage workers are leaving Pennsylvania in search of better wages in neighboring states who have higher minimum wage laws (19). This drain has led to slower growth in the Pennsylvanian leisure and hospitality sector and retail sector compared to New York and New Jersey (19). Inflation devaluing the current minimum wage, economic productivity not being reflected in the minimum wage, and the consequences of underpaid workers are all driving supporters of HB 2189 and similar legislation to push for its passing.

Supporters of a raise often cite cases in which minimum wage raises have had a negligible impact on the employment rate relative to the increase in minimum wage (10). They also point to the concept that a higher minimum wage can actually increase available jobs by creating more competition and boosting local economies (7, 11). The wage floor is a powerful tool that can correct discrepancies in labor markets where employers possess wage setting power. A Brookings article concludes that “many of those who would be impacted by a raise in the minimum wage are actually low-wage workers making slightly above the minimum wage” (12). The effect of raising the minimum wage would go far beyond helping those roughly 47,000 Pennsylvanians making minimum wage or less, and make an impact also for the roughly 250,000 Pennsylvanians making close to the minimum wage (13). While those 250,000 Pennsylvanians are earning above minimum wage, a raise to $15 would bring their pay up drastically from its proximity to $7.25. The minimum wage is the lowest legal wage, so many employers will provide wages slightly higher, from cents to a few dollars more, in order to remain competitive. However, currently their employees are by no means making more than the proposed minimum wage of House Bills 2189 and 1549, meaning that a passing of these bills would result in a large number of workers being lifted to a higher wage. 

A UC Berkeley Journal of Law and Political Economy article published in 2022 investigates the real impacts of minimum wage raises on employee retention and productivity. They cite a University of Chicago article, finding that minimum wage raises can in turn increase workers’ productivity, boosting the morale, retention, and effort of employees (14). While many critics argue that higher wages will lead to higher labor costs and therefore cause layoffs, the UC Berkeley article shows that firms make adjustments in three ways to avoid this (14). Firstly, the high rate of turnover seen in many minimum wage positions is corrected through a raise in the wage by lowering recruitment costs and building a more stable workforce, balancing the cost of frequently replacing employees with the cost of a moderately higher minimum wage (14). Secondly, opponents to minimum wage raise note concern about prices rising. It is true that prices will most likely increase with the minimum wage, but generally it will be a modest change with little to no impact on demand, still giving low-income households far more of a gain in wages than they lose in price increases (14). A result of this price increase is that those who earn above the new minimum wage and do not receive a raise will notice price increases but not receive the wage increase to counteract them, leaving them with a higher relative cost from the minimum wage raise (14). The article points out a “coordination problem”, in which single firms are unable to raise their wages, because it would make them less competitive relative to similar firms (14). In passing legislation, like HB 2189, the Commonwealth raises the minimum wage uniformly, across all sectors and firms, eliminating the first mover disadvantage of independently raising employee’s wages. Lastly, a large fear often mentioned by those against raising the minimum wage is that some businesses will not be able to afford the increased labor costs and will be forced to shut down (14). The UC Berkeley article considers the issue of some business exit as mostly harmless to the economy. It accepts that firms with lower productivity will be forced to exit by the rising costs, but the workers will move to higher paying, more productive businesses, where efficiency will increase, wages earned will increase, and employment remains stable overall (14). The minimum wage raise should be able to shape the composition of the economy towards high productivity while retaining employment. 

Raising the minimum wage can help spur Pennsylvania’s economies by increasing spending on normal goods, reducing poverty and income inequality, and lower public assistance spending. According to the Federal Reserve Bank of Boston, a raise in the minimum wage has been shown to increase spending on some normal goods, for example, spending on food outside of the home increased with a ten percent wage increase (15). This addresses the concern that as wages rise, prices will rise, making demand fall, causing job losses, but an increase in spending shows that while prices will rise modestly, real consumption increases anyways. Minimum wage raises subsequently stimulate the local service sector demand, as restaurant consumption rises, helping many service based local economies through the wage changes. This empirical research also found that with a ten percent increase in the minimum wage, there was only a 0.25 percent increase in overall inflation (15). Despite the small rise in prices, these findings suggest that wage gains outweigh price effects, leading to increased purchasing power for minimum wage earners and higher local consumption.

Studies indicate that raising the minimum wage has positive effects on reducing poverty and fighting economic inequality. The federal minimum wage no longer serves its purpose of protecting workers from wages “too low to buy the bare necessities of life” (16). A full time worker earning $7.25 per hour falls below the federal poverty threshold for a single adult household, demonstrating that the current wage floor failed as an anti-poverty mechanism (16). Raising the minimum wage will help save Pennsylvania’s low-income workers by increasing their earnings, helping workers gain independence from public benefits, and relatively maintaining the employment rate (16). By raising wages for the lowest income earners, minimum wage policy compresses the bottom of the wage distribution, helping combat income inequality (16). 

Regarding impact, according to Penn Policy, women would make up 61% of workers in Pennsylvania impacted by a minimum wage raise to $15 in 2026, and more specifically, women of color would make up around 31% of those affected workers (17). Additionally, it is a common misconception that a minimum wage increase would only impact teenagers, but in truth, “about 81 percent of affected workers are over age 20, meaning nearly 700,000 adult workers would receive a raise”, and over 170,000 are currently parents raising children (17). 

Pennsylvania employers often fail to provide a living wage; many underpaid workers are forced to rely on social welfare programs to support their survival, which comes at a cost to the tax payer (7). Residents could benefit from the savings generated through the reduced spending on government assistance programs. Through Medicaid savings alone, as there is less need for social assistance programs, the government could save more than $300 million annually (17). Programs including the Supplemental Nutrition Assistance Program (SNAP), multiple tax credits, and additional food and housing assistance programs would all see reduced participation rates and resulting government savings (18). Supporters of the minimum wage raise believe that workers deserve enough payment for their work to not need supplemental government support in order to survive, rather, a wage that will protect low-income employees’s health and dignity, independent of welfare assistance. 

Minimum wage reform addresses poverty, inequality, productivity, employment, public assistance use, inflation, consumer spending, neighboring state’s actions, and the general positive impact on the economy. Raising the minimum wage is economically justified, fiscally defensible, labor market stabilizing, and distributionally corrective. 

Despite these positive effects of a minimum wage raise, critics of a raise make several points in addition to the concerns already addressed so far, including that workers will see reduced hours, that small or rural businesses will be hit that hardest, or that there will be less entry-level positions available. Those against a minimum wage raise argue that employers will not be able to sustain the higher labor costs, and will either fire workers, remove their benefits, or decrease the amount of hours that they work (20). Through this theory, while the minimum wage paid to employees would increase, it becomes questionable whether they would actually see any improvement. The increased labor costs will also, according to critics, present a much harsher reality for small businesses, who would be less able to absorb the increased cost of labor following a minimum wage raise due to their generally smaller margins. Unlike larger corporations who have the ability to absorb some of the increased labor costs with their larger operations, higher cash flow, and more integrated necessity, small businesses can be more easily harmed by increased operational costs. On top of that, there are concerns that raising the minimum wage will reduce the availability of entry-level, low-earning jobs that give employees a more accessible starting position to gain experience and some income, especially for teenage workers (20). Those opposed to raising the minimum wage often have legitimate fears about the stability of employment and the survival of small businesses.

However, while concerns over employment stability and small business survival are strong arguments against a raise of the minimum wage, they are modest and shown to be inaccurate misconceptions based on a prior lack of research. Research on the impacts of a minimum wage raise on small businesses found that food industry, retail, and other small businesses, do not typically cut jobs in relation to minimum wage raises, and that small businesses, who account for a key percentage of minimum wage employment, are generally not harmed following an increase (21). Rather than minimum wage employees across the board facing layoffs or reduced hours as the costs of their labor rise, it is important to analyze the researched impacts of a minimum wage raise, which have found that the wage increases “kill job vacancies, not jobs”, enable easier hiring, and decrease turnover (21). Rather than eliminating jobs, minimum wage increases can enable firms to maintain steady employment levels even as the wages rise, and the increased productivity, stability, and lower turnover offset the labor costs, therefore reducing the need for employers to cut worker hours or benefits (21). Even as hiring will likely slow with a raised wage floor, employees are incentivised to stay in their jobs and will be able to earn closer to a living wage, while any job openings will be filled quickly from their higher wage offerings. So while it is true that businesses may raise prices slightly to absorb some of the increased costs of a higher minimum wage, businesses, including lower cash-flow small businesses, are able to both retain profitability and their employees. 

The income earned on the $7.25 minimum wage is not enough to cover the cost of living in Pennsylvania. A full time employee, working a minimum of 40 hours per week for a total of 2,080 hours per year, will earn $15,080 before taxes (22). The living wage, or the minimum pay needed to realistically cover expenses in a specific area, can be calculated using the MIT Living Wage Calculator for Pennsylvania as a whole, although it also provides county-specific data. For Pennsylvania, the annual income before taxes needed to satisfy the living wage as a single adult with no children is $48,515 (23). From the same calculator, the poverty wage is $7.67, $0.42 more than the federal minimum wage used in Pennsylvania (23). A minimum wage raise would help make life in Pennsylvania more affordable for the lowest earners, fighting poverty and economic disadvantage.  

House Bill 2189 represents a necessary response to a minimum wage that has become economically obsolete and socially insufficient. Pennsylvania’s current $7.25 minimum wage that has not been raised since 2009 lags behind neighboring states, no longer reflects economic productivity, and fails to meet the basic living wage standards. An increase in the minimum wage would positively affect hundreds of thousands of workers who earn just above the current minimum wage, and help reduce poverty and inequality along with reliance on public assistance. In these realities, enacting House Bill 2189 is not merely a policy preference, but a necessary step towards restoring the minimum wage as a meaningful economic safeguard while advancing economic stability, equity, and growth in Pennsylvania.

Sources

[1] House Bill No. 2189, 2026.

[2] Pennsylvania General Assembly. “House Bill 1549 Information; 2025-2026 Regular Session.” Accessed April 17, 2026. https://www.palegis.us/.

[3] House Bill No. 1549, 2025.

[4] Peet, Stephanie, and Daniel Thornton. “Pennsylvania Moves Closer to $15 Minimum Wage as Bill Advances to Senate.” Jackson Lewis, June 24, 2025. https://www.jacksonlewis.com/insights/pennsylvania-moves-closer-15-minimum-wage-bill-advances-senate.

[5] Ballotpedia. “Party Control of Pennsylvania State Government.” Accessed April 17, 2026. https://ballotpedia.org/Party_control_of_Pennsylvania_state_government.

[6] Represent PA. “Pennsylvania Ranks near the Bottom in Getting Bills Passed.” Accessed April 17, 2026. https://www.representpa.org/pennsylvania-ranks-near-the-bottom-in-getting-bills-passed/.

[7] Pennsylvania Policy Center. “Why We Should Raise the Minimum Wage in Pennsylvania to $15 Per Hour.” June 14, 2023. https://pennpolicy.org/research_publication/why-we-should-raise-the-minimum-wage-in-pennsylvania-to-15-per-hour/.

[8] Economic Policy Institute. “The Productivity–Pay Gap.” March 23, 2026. https://www.epi.org/productivity-pay-gap/.

[9] Department of Labor. “Minimum Wage.” Accessed April 17, 2026. https://www.dol.gov/agencies/whd/minimum-wage.

[10] Bram, Jason, Fatih Karahan, and Brendan Moore. “Minimum Wage Impacts along the New York‑Pennsylvania Border.” Liberty Street Economics, September 25, 2019. https://libertystreeteconomics.newyorkfed.org/2019/09/minimum-wage-impacts-along-the-new-york-pennsylvania-border/.

[11] Economic Policy Institute. “Economists in Support of a Federal Minimum Wage of $15 by 2024.” Accessed April 17, 2026. https://www.epi.org/economists-in-support-of-15-by-2024/.

[12] Harris, Ben, and Melissa Kearney. “The ‘Ripple Effect’ of a Minimum Wage Increase on American Workers.” Brookings, January 10, 2024. https://www.brookings.edu/articles/the-ripple-effect-of-a-minimum-wage-increase-on-american-workers/.

[13] PA House Democrats. “PA House Passes Dawkins’ Minimum Wage Bill.” June 11, 2025. https://www.pahouse.com/InTheNews/NewsRelease/?id=138983.

[14] Zipperer, Ben. “Turnover, Prices, and Reallocation: Why Minimum Wages Raise the Incomes of Low-Wage Workers.” UC Berkeley Journal of Law and Political Economy 3, no. 1 (2022). https://doi.org/10.5070/LP63159038.

[15] Cooper, Daniel, María Luengo-Prado, and Johnathan Parker. “The Local Aggregate Effects of Minimum Wage Increases.” Federal Reserve Bank of Boston, 2017. https://www.bostonfed.org/publications/research-department-working-paper/2017/the-local-aggregate-effects-of-minimum-wage-increases.aspx.

[16] Hickey, Sebastian Martinez, and Ismael Cid-Martinez. “The Federal Minimum Wage Is Officially a Poverty Wage in 2025.” Economic Policy Institute, April 28, 2025. https://www.epi.org/blog/the-federal-minimum-wage-is-officially-a-poverty-wage-in-2025/.

[17] Figueroa, Laura Beltran. “Minimum Wage in the 2026–27 Proposed Pennsylvania Budget.” With Felicity A. Williams. Penn Policy. https://pennpolicy.org/wp-content/uploads/2026/02/2026_BudgetOverview_MinWagev3.pdf.

[18] National Low Income Housing Coalition. “Raising Minimum Wage Would Reduce Public Assistance Spending.” February 16, 2016. https://nlihc.org/resource/raising-minimum-wage-would-reduce-public-assistance-spending.

[19] Kovach, Claire, and Stephen Herzenberg. “When Low-Wage PA Border County Workers Want a Living Wage Job, What Do They Do? Cross Over Into New York or New Jersey.” Keystone Research Center, June 15, 2023. https://keystoneresearch.org/research_publication/when-low-wage-pa-border-county-workers-want-a-living-wage-job-what-do-they-do-cross-over-into-new-york-or-new-jersey/.

[20] Greszler, Rachel. “Increasing the Minimum Wage Comes at Too High a Price for Workers.” The Heritage Foundation, July 23, 2024. https://www.heritage.org/jobs-and-labor/commentary/increasing-the-minimum-wage-comes-too-high-price-workers.

[21] Lempinen, Edward. “Even in Small Businesses, Minimum Wage Hikes Don’t Cause Job Losses, Study Finds.” UC Berkeley News, April 14, 2023. https://news.berkeley.edu/2023/03/14/even-in-small-businesses-minimum-wage-hikes-dont-cause-job-losses-study-finds/.

[22] University of California, Davis. “What Are the Annual Earnings for a Full-Time Minimum Wage Worker?” Center for Poverty and Inequality Research, December 11, 2025. https://poverty.ucdavis.edu/faq/what-are-annual-earnings-full-time-minimum-wage-worker.

[23] Massachusetts Institute of Technology. “Living Wage Calculation for Pennsylvania.” Living Wage Calculator. Accessed April 17, 2026. https://livingwage.mit.edu/states/42.

[24] Pennsylvania General Assembly. “House Bill 2189 Information; 2025-2026 Regular Session.” Accessed April 17, 2026. https://www.palegis.us/.