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Restaurant Leader: PA Minimum Wage Hike Could Wreak Havoc on Workers

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.

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FLOOD: Government Should Not Force Business to Pay People More for Doing Less

Over the last few months, policies being put forward by the Democratic majority in the Pennsylvania House of Representatives have become frighteningly extreme.

Take their latest quest to pursue increasing Pennsylvania’s mandated wage.

Even though market forces have driven real starting wages higher, with Pennsylvanians having increased bargaining power with employers about working wages and conditions, increasing cost mandates on small businesses and mom-and-pop shops by increasing Pennsylvania’s mandated wage has been something they have long sought after.

However, even this policy proposal is showing the extreme limits of their party’s legislative agenda.

According to one Democrat proposal, they want Pennsylvania’s mandated wage to increase from the current $7.50 per hour to $21 per hour by 2028. And they even want to ensure that higher wage is paid to violent criminals and other inmates working in state and local prisons.

But what is even more troubling is that Democrats are pursuing their priority of increasing the mandated wage while also having people work less in a plan entirely footed by taxpayers.

According to a proposal being floated by my colleagues on the other side of the aisle, they are seeking $15 million in taxpayer funds to give tax credits to companies to implement a four-day work week.

Pennsylvania House Democrats literally want to pay people more to work less.

This proposal would not replace the current 40-hour work week with four ten-hour days, but would instead do away with an entire day of work to create a 32-hour work week where productivity time would decrease, but under other Democratic proposals, pay would increase.

As part of the proposal, Pennsylvania taxpayers will literally be paying for people to not work that fifth day with tax credits of $5,000 per employee, not to exceed $250,000 per employer as part of this proposal’s aforementioned $15 million annual appropriation.

While moving toward a four-day work week sounds appealing, its benefits and reports of increased productivity have been proven by scant evidence.

In fact, a major pilot program is underway in the United Kingdom to test the efficacy of a 32-hour work week, but the benefits are equally as disturbing as the downsides, including more burnout and anxiety from being required to perform the same amount of work in less time.

Ultimately, while Pennsylvania and the rest of the country continues to stand at the economic brink, we should be promoting policies that create a thriving economy, not looking at ways to pay people more to do less work.

It should be easier to do business in Pennsylvania than it currently is, and it should be easier to get a job. Right now, Pennsylvania’s government has erected so many barriers to economic growth and development that we should be looking at ways to get government out of the way.

Whether it is real permitting reform, making professional licenses more transferrable, or finding ways to make Pennsylvania more competitive, we should be having a real discussion about ways in which we can increase the opportunity for all Pennsylvanians to experience earned success and go above and beyond in the use of their talents, rather than investing in unproven economic classroom guesswork that has taxpayers funding people to not work.

As we stand here today, there is nothing prohibiting any company in Pennsylvania from offering a four-day work week to their employees. Even as our workforce has entered a post-pandemic era, flexible schedules and remote work have become the norm.

But the idea that a government mandate to pay people a higher wage while also having taxpayers themselves foot the bill for the implementation a thought experiment seems ill sighted.

As we move forward this session, I am eager to work with my colleagues on both sides of the aisle to have that real conversation about how we can drastically improve the Commonwealth’s economic climate.

But when the starting point is extremism a middle ground with serious solutions seems unattainable.

 

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Meet The Other Doctor in PA’s U.S. Senate Race

Currently, four physicians are serving in the United States Senate, and TV celebrity Dr. Oz has made headlines with news that he hopes to join them.

But another local physician, Dr. Kevin Baumlin, has also thrown his stethoscope into the ring. Baumlin, a Democrat who works in a Philadelphia emergency room, hopes to change healthcare and society as a whole.

“I wasn’t really planning on running for Senate,” Baumlin told Delaware Valley Journal. “We started a not-for-profit just before COVID. That was going to be our legacy project. We’ve been very successful in our lives and we wanted to do something good to give back as we transition to the next part of our lives and careers.”

What pushed Baumlin to run for Senate are his concerns about issues like healthcare. As a physician, one of Baumlin’s top priorities is reforming Medicare and improving the care older adults receive.

“The issues I want to work on are federal-level issues,” Baumlin explained. “So, from a health care perspective, I want to work on fixing Medicare. Number one is to get homecare services included as a benefit. So you get at least four hours of care [for your older adult family members]. My parents are in their 80s and I’m 57 and my mom has some health problems and getting her homecare so my dad can go to his golf game is a big topic of conversation. It’s $25 an hour, out of pocket, and it’s not covered by Medicare.”

According to a Genworth survey, between now and 2030 more than 10,000 people will turn 65 every day. In addition, seven out of 10 people will need long-term homecare and, according to Medicare’s website, that type of long-term care isn’t covered.

It’s not just Medicare and older adult care that Baumlin wants to improve. He hopes to tackle the cost of healthcare for all Americans.

“I want to work on legislation to make healthcare portable and affordable,” Baumlin said. “By that I mean have no copays and no deductibles. Because that’s what makes young families go broke. Literally.

“If you make $34,000 a year and you have a $9,000 deductible, that’s 20 percent of your income. How can you budget for that? Because all of that money has already been budgeted out. There’s no extra $500 a month hanging out so you can pay your minimum for your $9,000 deductible. It’s just not in anyone’s budget. And that’s not okay and we need to fix that.”

Ending fracking is also a big concern that Baumlin hopes to address. He sent a letter to one of his opponents in the Democratic primary, Montgomery County Commissioners Chair Dr. Val Arkoosh, urging her to join him in opposing the practice that has created thousands of jobs and millions of dollars of revenue for the state.

“As medical health professionals, we have both seen first hand the dangerous impacts fracking has had on Pennsylvania families living within a one-mile radius of a fracking site,” Baumlin wrote to Arkoosh, an anesthesiologist. He said that he will “make it a priority to end fracking on day one” if he’s elected.

Senators do not have the power to end policies like fracking.

Baumlin also wants to raise the minimum wage.

“All the parents deserve to have a job where they make $15 to $20 an hour so they can work one shift instead of two. So they can be home to help with homework and things like that,” he said.

And, Baumlin says he believes changes to the education system are needed to bring about fundamental changes to our society.

“We need to work on how education is funded,” Baumlin said. “So that we decrease the inequitable society we have and fund urban areas and urban schools so that we can raise people up with a good education and give them the foundations they need so that they can succeed and right the wrongs of the past. To me, that’s social justice.”

 

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PA Gov. Wolf Issues Executive Orders on Minimum Wage, Worker Safety

Gov. Tom Wolf signed an executive order Thursday raising the minimum wage for workers at companies that receive state grants, loans, or tax relief to $13.50 an hour. It is now the minimum hourly rate for state employees.

At a press conference near Pittsburgh Thursday, Wolf pointed out the current $7.25 minimum wage in Pennsylvania is less than workers are paid in all surrounding states. New Jersey’s minimum wage is $12. New York’s is $13.20, Ohio’s is $9.30, and West Virginia’s is $8.75.

Wolf also called on the state legislature to pass laws requiring paid sick leave, institute federal workplace protections, and raise the minimum wage for all workers to $12.00 with a path toward $15 an hour by 2024.

“With our economy on the comeback, there are so many job openings that people can select the option that is best for their family. This has created a tremendous moment for workers,” said Wolf in a press release. “With Pennsylvanians’ renowned work ethic, this is an opportunity to improve jobs and workplaces. My workforce plan will create safer workplaces, guarantee paid leave, and promote higher wages for workers.”

But Commonwealth Foundation Vice President Nate Benefield said Wolf’s actions were unnecessary because wages are already rising.

“Everything in Wolf’s action Thursday was meaningless and unnecessary,” said Benefield. “Wages have consistently risen in Pennsylvania because of market forces, and are rising now due to high demand for labor. Government mandates are neither helpful in raising wages or helping employers fill jobs. All this activity was simply virtue signaling to appeal to Wolf’s campaign donors (government union bosses).”

And  Senate Majority Leader Kim Ward (R-Westmoreland) said, “Pennsylvanians are tired of still dealing with the effects of the political agenda forced on them throughout the pandemic. From selective business closures, to mask and vaccine mandates, to breaching Pennsylvanians’ personal health information, as well as the inability to properly process unemployment claims, Pennsylvanians are worn out by the uncertainty presented by the Wolf administration.”

Wolf’s announcement is “one more attempt to bypass the voice of the people,” Ward added. “The efforts outlined today to protect Pennsylvania workplaces is a ruse that further opens the door to executive branch overreach, crushes small businesses, and generates greater confusion for employers to keep their employees employed and safe. Pennsylvanians have already spoken when it comes to government interference in our lives and workplaces when they voted to limit the governor’s executive powers with the passage of the constitutional amendment in the primary.”

Pennsylvania Chamber of Commerce CEO Gene Barr said the Chamber “appreciates the governor’s intent” but warned of unintended consequences. “For example, requiring strict wage and benefit standards for employers to qualify for state aid may not impact larger corporations but could pull critical lifelines from small businesses already struggling through pandemic and workforce crises,” Barr warned in a statement.

“The governor has also called for public shaming of employers who violate labor laws,” Barr said.  “We certainly support holding accountable those who skirt the law, harming employees and creating an unfair advantage over law-abiding competitors. At the same time, policymakers should recognize that violations are often unintentional and eventually remedied. Employment laws and regulations are notoriously complicated; such as similar federal and state laws that include subtle differences creating what’s known as the ‘compliance trap.’

The governor mentioned employers owing unemployment compensation back taxes, but some may not even be aware they owe, especially after the chaos of the last year and a half.  We would hope a public list of ‘bad actors’ only includes companies who violate the law and willfully fail to comply after exhausting appeals or any administrative resolution process,” Barr said. “We look forward to working with the administration as it further develops these policies.”