Pennsylvania’s proposed minimum wage hike could have significant negative consequences on many of the services labor pool, a prominent industry leader is warning.
Democrats in the state House of Representatives passed a bill in June to raise the state’s minimum wage to $15 per hour by 2026. The wage would be slowly raised in measured increments over those years until it reached the target amount, after which it would be indexed to inflation.
Notably, the wage for tipped workers—restaurant servers and others who rely on customer tips for most of their wages—would also significantly increase, set at 60 percent of the hourly minimum wage.
Joe Massaro, president and CEO of the Pennsylvania Restaurant & Lodging Association, told DVJournal the hospitality industry is “most concerned” with preserving the current tipped wage of $2.83 per hour.
“There have been examples in other municipalities or states where the base wage was increased so significantly that restaurants were forced to do things like add service charges to consumers’ bills,” Massaro said.
“The result of that is servers making less tips, if not no tips,” he said. “So what was thought to be helping the server by increasing the base wage actually reduced their total take-home because people were tipping less.”
Massaro noted the tipped wage of $2.83 is already bolstered by a state rule that ensures tipped workers make at least the minimum wage; if their total wages do not equal that of the federal minimum of $7.25, then employers must pay them an additional hourly rate to make up the difference.
Democrats in the state legislature have cheered the minimum wage measure, which has a lower chance of passing in the Republican-controlled state Senate. Democratic Gov. Josh Shapiro has publicly called for the $15 wage.
This month’s speaker of the House Joanna McClinton, called the effort a part of the Democratic party’s “people-first agenda.”
“We advanced a long overdue boost in the state minimum wage,” McClinton said, “which lags every surrounding state and has kept too many Pennsylvanians in poverty.”
The legislation stipulates that every January 1 from 2027 onward, “the minimum wage shall be increased by an annual cost-of-living adjustment calculated by the secretary using the percentage change in the Consumer Price Index.”
Massaro noted that, in most cases, tipped workers receive net wages significantly above a $15 per hour rate.
“The median national tipped worker wage is $27,” he said. “In some higher-end restaurants, there are reports of $40 per hour or more. That was from a national poll of close to 3,000 employees.”
Though wage statistics for Pennsylvania are not readily available, Massaro said the state tends to mirror other national industry statistics.
“Tipped employees bring knowledge, experience, and hospitality,” Massaro said. “They’re often working off-hours, evenings, holidays. Doing anything to jeopardize the reward to them—the tips they earn—would drive many of them out of the profession.”
“They work those tough hours because it’s a great income,” he said.