PA Chamber: Minimum Wage Hike's Negative Impact Being Felt

Lessons Can be Learned From Unfunded Government Mandates

Harrisburg, Pennsylvania, UNITED STATES

HARRISBURG, Pa., March 28, 2007 (PRIME NEWSWIRE) -- The Pennsylvania Chamber of Business and Industry issued a reminder to elected officials preparing to debate a Rendell administration budget proposal peppered with new and costly mandates that government interference with the free market is not the silver bullet for ensuring the economic well-being of the Commonwealth and its residents.

"Supporters of having the government, instead of the private market, determine wage rates have said that there has been no solid evidence supporting claims that increasing the minimum wage leads to lost jobs," said Gene Barr, PA Chamber vice president of political and regulatory affairs. "But just tell that to the roughly seventy Kennywood Park employees who were laid off as a result of the recent increase in the state's minimum wage."

Barr said the southwestern Pennsylvania amusement park was forced to lay off these workers - largely high school and college students - and raise ticket prices to make up for increased labor costs. Another 20 workers were laid off at nearby Idlewild Park.

Other examples:

 --  The fitness chain store operator in the Lehigh Valley who laid
     off 100 part-time workers
 --  The central Pennsylvania business that reduced its work force by
     three "marginal" workers; will attempt to automate additional
     work and will consider a reduction in health-care benefits
 --  The central Pennsylvania business that runs an apprenticeship
     program for engine repair had to reduce available opportunities
     to just one
 --  The large multi-state food retailer that will raise prices to
     consumers to cover additional costs
 --  The eastern Pennsylvania-based retailer that cut hours back in
     its stores and still surrendered profits
 --  The western Pennsylvania manufacturer that laid off two employees
 --  The business owner with a young family who must now work 15 more
     hours a week at his pizza shop because he cannot afford the
     financial hit of the increased minimum wage

Barr said business and consumers know what government doesn't always understand.

"When the price of a product or service increases, consumers who cannot absorb the increase outright either limit their purchasing; find a way to fit the higher cost into their budget; or stop purchasing that product or service altogether," he explained. "It is no different for employers faced with higher costs of running a business - in this case, added labor costs."

Barr said impacted employers unable to absorb the wage hike that went into effect in January had little choice but to pass the cost on to consumers; reduce hours or benefits for employees; lay off workers; or freeze hiring. More may be forced to do the same when the final wage adjustment takes effect in July.

"The philosophy that Pennsylvania can mandate itself into prosperity is flawed because it fails to recognize that the money to pay for government mandates - whether artificial wage rates, new programs or regulatory requirements - has to come from somewhere," Barr stressed. "When those mandates fall on job creators, the options for paying for them are limited."

Barr said that while some Pennsylvanians have benefited from the minimum wage increase, either directly or indirectly, many Pennsylvania consumers and workers were and still could be negatively impacted by the government's refusal to let the market and competition for workers dictate wage rates.

"We've said it once, and we'll say it again - economic prosperity doesn't come from government mandates, but rather from a free market within an environment of competitive business taxes, limited and efficient regulation, balanced labor laws, and freedom from the risk of arbitrary confiscation due to lawsuit abuse that government helps to foster," he said. "Pennsylvanians will be best served if elected officials recognize government's true role."

The Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with thousands of members statewide. More information is available on the Chamber's website at

The Pennsylvania Chamber of Business and Industry logo is available at


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