by Joe Sylvester
Federal tax cuts and the booming economy are leading businesses to raise pay for workers, business experts say.
A local economics professor who specializes in labor issues, however, believes it’s in companies’ best interests to even pay workers well above the minimum wage of $7.25 an hour. He said workers who currently cannot afford necessities would spend more on those needs and stimulate the economy.
Salyajit Ghosh, Ph.D., a professor of economics at The University of Scranton, said, however, a minimum of $15 an hour (the base pay Amazon announced it would pay its workers) is not sustainable for businesses in the Scranton and Wilkes-Barre area.
“I don’t see why $10 or $11 could not be seen as a sustainable wage in Scranton/Wilkes-Barre,” he said.
Higher pay also attracts more workers and keeps those workers, said Ghosh. With the low unemployment rate and fewer workers available, companies already are giving raises. Darlene Robbins, president of the Pottsville-based Pennsylvania Manufacturers and Employers Association, said she is hearing about more companies granting raises and bonuses, from big corporations such as Disney and Apple to Pennsylvania companies such as PNC Financial, which she said increased its minimum pay to $15 an hour, and Fulton Financial Corp. in Lancaster, which now pays a $12 minimum-per-hour. Manufacturers also are increasing minimum pay, though, Robbins said, “I don’t know that any of my companies paid minimum wage.”
She said they paid closer to $16 to $19 an hour.
“If they want to retain or attract new employees, they’re going to have to pay the going rate,” Robbins said.
“Opportunities have been provided because of the economy, because of tax reform and less regulations,” she added. “It’s a labor market.”
Geisinger increased its minimum pay to $11 an hour across the health system, effective Sept. 30, up from $10, according to Amy Brayford, Geisinger’s chief human resources officer.
The increase marked the second time in three years that Geisinger raised its minimum hire rate for employees.
About 800 employees saw a pay increase, particularly food service workers and environmental service technicians.
Greater Scranton Chamber of Commerce President Bob Durkin said with the unemployment rate at just around four percent, “It virtually puts us at full employment.”
He said many employers now face the challenge of finding enough qualified workers in the tight labor market.
He said companies already were increasing their minimum pay before Amazon did, though not to $15.
“There are so many new businesses, so many businesses are growing,” Durkin said. “There is going to be wage pressure.”
And he said that is good.
“I’m always happy to see people make a sustainable wage,” he said.
He said, however, there will always be a low end to the salary scale.
“It’s healthy to have something like that, to get people into the work force, get their feet wet.”
The market should determine what those wages should be, said Pennsylvania Manufacturers’ Association President and Chief Executive Officer David N. Taylor.
“We are in an economic position now where the economy is growing,” Taylor said. “We have more jobs available than there are people looking for work. There still is a problem matching people with the skills.”
He said when the market is increasing wages, that’s good for workers and a healthy sign for the economy.
“That’s how we want wages to grow, rather than through artificial government intervention.”
Taylor said better pay also helps prevent poaching, which he said is a big problem. Keeping workers happy helps make sure they don’t stray, he said.
He said he also hopes low unemployment and rising wages help attract people outside the work force who have given up looking for a job and bring them back to the job market.
Ghosh, who has been writing about the minimum wage issue for some time, said it is absolutely necessary to raise the minimum wage.
“Whether it’s $15 depends on the cost of living,” the economics professor said. “There are different city governments and states taking the initiative to raise the minimum wage above the federal $7.25. There is quite a bit of disparity in the federal minimum wage to begin with. Given the cost of living, it is absolutely needed to raise the minimum wage.”
Ghosh said the federal poverty line is at an annual income of $24,600 for a family of four. For a family of three, it’s at about $24,300.
He said that about 40 million Americans, around 12.3 percent of the population, are considered poor.
Ghosh said that if the principal wage earner is at minimum wage and working 60 hours a week, he or she would not make enough to reach the poverty line.
“Even working 10 hours a day, five days a week, you cannot make ends meet,” he said. “That’s how out of line the federal minimum wage is.”
He said that while some working in minimum wage jobs are working their first jobs, more than 50 percent earning minimum wage are 25 or older.
“If you haven’t gotten a raise in years but prices keep going up, you see how unfair it is,” Ghosh said.
He said there is some pushback from companies and lawmakers, who say an increase would hurt business. The same people also argue that not many people receive minimum wage.
“The two arguments don’t work at the same time,” Ghosh said.
In Pennsylvania, 3.4 percent of hourly workers make minimum wage or less, he said.
He said that if you raise the income of executives or others who are making a good living, they will only spend a certain amount and invest the rest, but if you increase the pay of people receiving minimum wage, they will spend the increase on the necessities they could not afford before.
“Their needs are so great, they are not about to buy everything they need,” Ghosh said. “They will spend it on local businesses, not buy stocks and bonds and other speculation. They are buying food and clothing that will help local businesses.”
He said paying workers more also will give them incentive to work harder and not leave.