Minimum Wage Act Advisory Board Statistical Report
Frequently Asked Questions (FAQs)
- Why was the Minimum Wage Advisory Report prepared?
Under the Minimum Wage Act, Labor & Industry’s Minimum Wage Advisory Board is required to issue a report. The report is to detail, to the maximum extent possible, data on the previous calendar year’s demographics of those workers who are paid the minimum wage or below.
- Was a report sent to the General Assembly last year?
No. The change in the minimum wage rate did not take place until January 1, 2007. Therefore, there was no demographical data for 2006 that would have taken into consideration any impact related to the increase in the minimum wage. The Department waited until it could prepare a meaningful report comparing that data from 2006 to 2007.
- Who are members of the Minimum Wage Advisory Board?
By law, the Minimum Wage Advisory Board is comprised of nine members: three representatives from recognized labor organizations, three representatives from recognized employer associations, and three members of the general public. The report’s inside cover lists the members. The Secretary of the Department of Labor and Industry is the Board’s Chairperson.
- What information is contained in the report?
The report contains statistical information on Pennsylvanians who work at or below the minimum wage. It analyzes the demographic characteristics of the hourly workers making at or below minimum wage and details the industry characteristics of employers who hire those individuals. It also contains discussion of issues involving inflation and poverty in relation to the minimum wage. Minimum wage data and laws from other states are also compared and discussed.
- What data was used to compile the report?
The Board utilized the Current Population Survey (CPS) prepared by the Bureau of Census for the Bureau of Labor Statistics for the U.S. Department of Labor. The CPS is a nationwide survey that includes about 50,000 households, and approximately 2,000 Pennsylvania households.
- Did the Department compile its own data for the report?
No. The Minimum Wage Act does not mandate that Pennsylvania employers submit data for compiling this report. Use of the CPS data provides the most unbiased and authoritative information for this report.
- What changes were made to the Pennsylvania Minimum Wage?
Under amendments to the Minimum Wage Act, Pennsylvania employers had to comply with the following minimum wage schedule subject to exclusions and exemptions. Employers should closely review how these schedules, exclusions, exemptions apply: www.dli.state.pa.us (Keyword: “minimum wage”):
- Until December 31, 2006, $5.15 an hour.
- Beginning January 1, 2007, $6.25 an hour.
- Beginning July 1, 2007, $7.15 an hour.
- Beginning July 24, 2009, $7.25 an hour.
Pennsylvania also has a small business schedule for an employee complement comprised of ten or less full-time employees calculated on a 40-hour workweek:
- Until December 31, 2006, $5.15 an hour.
- Beginning January 1, 2007, $5.65 an hour.
- Beginning July 1, 2007, $6.65 an hour.
- Beginning July 1, 2008, $7.15 an hour.
- Beginning 24, 2009, $7.25 an hour.
Pennsylvania also has a 60-day training wage which may be utilized once for an employee under 20 years of age:
- Until July 23, 2007, $5.15 an hour.
- Beginning July 24, 2007, $5.85 an hour.
- Beginning July 24, 2008, $6.55 an hour.
The minimum wage for tipped employees is $2.83 per hour only if an employee received over $30 per month in tips. An employer shall pay the difference when the employee’s tips plus the credit does not meet the current Pennsylvania minimum wage.
- What are the report’s findings?
Overall, the increase in the minimum wage did not negatively impact Pennsylvania’s economy. The statistics show:
- 132,800 workers were directly affected by the minimum wage increases (the difference between those earning below $7.15 in 2006 and 2007), or nearly 4 percent of those who make hourly rates and over 2 percent of total employment.
- The average minimum wage worker tends to be white, female, 16-24 years old, never married, high school graduates or those who did not complete high school.
- The leisure, hospitality and retail trades are most likely to employ workers at or below the minimum wage. These industries employed about 66% of all minimum wage earners in 2007.
- Seventy percent of the hourly workers earning at or below the minimum worked part-time in 2007. Employment growth in excess of the 10 year average occurred 2 months after the minimum wage increase in July 2007.
- Industry data shows a less than 1% decline in retail trade and manufacturing employment over the short term (1 to 3 months later) after January and July 2007.
- Leisure and hospitality employment increased by less than 1% (1 to 3 months later) after January and July 2007.
- State level changes in employment and unemployment were relatively small because the demand for labor in large part created a market where most individuals made at or above the minimum wage.
- How is unemployment affected by the changes to the minimum wage?
Pennsylvania’s unemployment rate for 2007 was lower than the national average. Also, the overall number of jobs hit an all time high for the time period in which the minimum wage increase was implemented. There were minimal increases for Pennsylvania females and among 16-24 year olds. Unemployment also increased slightly for those workers who did not graduate high school. However, these changes are not statistically significant and did not materially impact the overall health of Pennsylvania’s economy.
- What is the current Pennsylvania Minimum Wage?
Based on the Minimum Wage Act amendments, the current minimum wage required in Pennsylvania is $7.15 per hour. Employers with the equivalent of 10 or less employees must pay at least $6.65 per hour and then $7.15 per hour on July 1, 2008. At this time, employers may pay a 60-day training wage to employees under 20 years old at a reduced rate of $5.85 per hour, which will be increased to $6.55 per hour on July 24, 2008.
- What will the minimum wage be for Pennsylvanians in the future?
Last year, the Federal government enacted legislation to increase the Federal minimum wage. Pennsylvania is legally required to enforce a minimum wage that meets or exceeds the federal minimum wage. Federal law will increase the Pennsylvania minimum wage to $7.25 per hour effective July 24, 2009. This will eliminate Pennsylvania’s 60-day training wage for younger employees.
Is this minimum wage report available?
Yes. The minimum wage report will be available at the Department of Labor and Industry’s website at www.dli.state.pa.us
(Keywords: “minimum wage report”). For more information on an employer’s responsibility under the Minimum Wage Act, its provisions, mandatory workplace posters, frequently asked questions and a statement of policy, go to the same website. (Keywords: “minimum wage”).