In his inaugural budget address Tuesday, Governor Josh Shapiro proposed raising the minimum wage to $15 per hour as early as January 1, 2025 per his state budget. This reflects House Bill 1500 (HB 1500) passed by House lawmakers last year, and would raise the base wage for tipped restaurant employees up to $9 per hour. This would more than double Pennsylvania’s current minimum wage in less than a year.

As proposed in HB 1500, Miami and Trinity University economists estimate this proposal could cost the state nearly 86,000 jobs. They estimate 1 in every 4 job losses would be a tipped server or bartender.

The majority of economists oppose the $15 minimum wage target, arguing it will have negative effects on youth employment and small business survival, as well as exacerbating existing economic obstacles:

• A survey of American labor economists found most believe a $15 minimum wage would have a negative effect on youth employment (75%) and small businesses (81%), and the majority (58%) believe it would contribute to existing inflation.

• An “overwhelming” majority of three decades of academic research on minimum wages finds minimum wage hikes cause job loss for minimum wage earners.

• A Harvard Business School study finds every $1 increase in the minimum wage increases the likelihood of restaurant shutdown by 14 percent.

• Economic research on raising the base hourly wage for tipped employees, finds the job and earnings losses acutely hurt tipped servers and bartenders. Currently playing out as Washington, D.C. raises its tipped minimum wage, servers are reporting lower tips, tipped employment is down, and restaurant closures are on the rise.

Rebekah Paxton, Research Director at the Employment Policies Institute, released the following statement based on Shapiro’s comments:

“Governor Shapiro is putting politics ahead of Pennsylvanians calling for this increase. Economists agree: the track record of doubling the minimum wage in other states has negative tradeoffs for those that are affected by the proposal. His call for a $15 minimum wage would put the Commonwealth’s small businesses at risk, and endanger the livelihoods of tens of thousands of Pennsylvanians.”