City’s Foolhardy Move On Minimum Wage By Matt Wolfe

This article was published by The Philadelphia Daily News. Click here to read the article on the publisher’s website.

THERE ARE 2,565 municipalities in Pennsylvania. Only one has a law that raises the minimum wage above that set by the federal and state governments.

Can you guess which municipality is the ONLY one with a local law that raises the minimum wage? Go ahead. Take a stab at it. If you guessed Philadelphia, you get a gold star.

Welcome to the recently enacted “Philadelphia 21st Century Minimum Wage Standard.” This impressive-sounding ordinance is another instance of City Council and Mayor Street putting politics over good government and pandering to special-interest groups.

It simply makes it more expensive to do business in Philadelphia. City contracts will cost more at a time when we can’t afford it. It also sends the absolute wrong message to the companies we so desperately need to do business in and with our city.

The substance of this ordinance is that any company that is awarded a contract with the city, or receives many types of financial assistance, must pay employees on that project a minimum wage that is 150 percent of the federal or state’s, whichever is higher.

The federal and state minimums are now identical. There are some provisos regarding the size of the contract or the employer, but most employers who want to do business with the city will have to pay a higher minimum wage than they would be required to otherwise. Higher than anywhere else in Pennsylvania.

The purpose of the ordinance is to assure that as many employees as possible in the city make an hourly wage that enables them to live with more dignity and increased economic self-sufficiency. A laudable goal. This is just a bad vehicle for meeting it.

Will the bill provide our families with a living wage? Some. Many beneficiaries, however, will be young people who are not primary wage-earners in their households. Many other beneficiaries will be suburbanites. Perhaps the biggest beneficiaries are the city employee unions. Since this ordinance will increase the city’s costs, less work will be contracted out, leaving more work for city employees. Somebody always pays for these things, don’t they? Who pays for this? Not surprisingly, Philadelphia taxpayers.

Businesses only bid on contracts with the city to make a profit. They estimate the costs, factor in the profit that they want to make from the job and place a bid.

Philadelphia already gets clobbered because it is slow to pay its bills. Whether this is due to general incompetence or a misguided scheme to hang on to cash for a longer time, it increases the cost of the city’s contracts. Contractors factor in the delay in payment in formulating a bid. It’s the same with this minimum-wage ordinance. If the contractor must pay more to its workers on the contract, its bid will be higher. If they bid at all.

This is not a good way to help low-wage city residents. At best, this ordinance is a form of social welfare whereby the city indirectly subsidizes an increase in wages for certain workers.

If the city wants to help, a better way would be to do so directly. The same money could be used for career training, health care or continuing education.

Using this indirect method will help teens who do not need the help and workers in the suburbs.

Minimum-wage laws should be handled at the federal level.

States that raise the minimum wage on their own put themselves at a competitive disadvantage. For a city to do it, particularly one losing residents and jobs, is lunacy. The most disturbing part of this is that City Council passed it unanimously. Perhaps Council should wonder why the state’s other 2,564 municipalities are unanimous that increasing the minimum wage in their township or borough is a bad idea. *

Matthew Wolfe is a lawyer who lives in West Philadelphia.

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