Pitt Experts Available to Discuss Effect of Federal Minimum-Wage Increase on Workers, Businesses, and Consumer Costs; and What the "Right" Wage Really Should Be

PITTSBURGH-With the first legislation for federal minimum wage increase in 10 years making its way through Congress, the following Pitt faculty members are available to comment on how workers, employers, and consumer costs will fare if the increase passes, and what that raise should be to make a difference.

Ralph Bangs, associate director of the Center on Race and Social Problems and co-director of the Urban and Regional Analysis Program at the University Center for Social and Urban Research (UCSUR), studies working wages and the cost of living in the Pittsburgh area. A 1997 study Bangs coauthored found that local working families with a basic, no-frills lifestyle needed a minimum wage much higher than the state and federal levels-at least $6-per-hour per person for a couple with no children. Pittsburgh's cost of living meets the national average, while wages for part- and full-time employees in the area are lower than in the rest of the nation. "It's very clear that the benefits of a minimum-wage increase would be greater here," Bangs said. "The benefits of raising the minimum wage are many and the negative effects are few." Bangs may be reached at 412-624-7379 (office) and rbangs@pitt.edu; or through Morgan Kelly.

Christopher Briem (BREEM), regional economist at UCSUR, is available to speak in general terms about the Pittsburgh labor market, including regional wage and employment trends as well as the incidence of poverty and near-poverty in the local population. He pointed out that in the last quarter of 2005, average monthly salaries in southwestern Pennsylvania ranged from $2,530 in Fayette County to $3,546 in Allegheny County; the lowest area wages were for hotel and food service employees, at $1,202. In 2004, Pittsburgh ranked 19th among the 25 largest metropolitan areas in terms of average yearly income, Briem noted. He may be reached at 412-624-3791 (office) and cbriem@pitt.edu; or through Morgan Kelly.

James Craft, professor of organizational behavior and human resources management in Pitt's Joseph M. Katz Graduate School of Business, is available to offer an analytical assessment of the impact of the proposed minimum wage increase. Craft said, based on experience and some empirical work, a rise in the minimum wage to $7.25 will not likely have any serious overall negative employment impact. According to Craft, young and unskilled workers are most likely to be affected negatively, while women, African Americans, and Hispanics are most likely to benefit from a minimum wage increase. "Because more poor people are employed today as a result of welfare reform, an increase will likely move some additional people above the poverty level," Craft said. "While the cost of labor to some employers will be greater, it is also possible that the higher wage will lead to reduced turnover, which reduces costs." Craft is available at 412-648-1680 (office) and craft@katz.pitt.edu; or through Amanda Leff.

Susan Hansen, professor of political science in Pitt's School of Arts and Sciences, said much of the debate over the minimum wage has focused on its alleged adverse effects on employment. Yet, recent empirical research has found little evidence of higher unemployment after an increase in the minimum wage. As a result, the debate has shifted to the following three issues:

Impact on consumer demand: People who earn more can spend and save more. This can boost the whole economy;

Impact on social services: People who earn more will have less need for welfare or subsidized housing, and are less likely to be homeless; and

Fairness: Compensation for CEOs and elected officials has increased markedly since the federal minimum wage was last raised in 1997, while overall wages and median family incomes have remained stagnant.

Hansen's publications include "The Impact of a Low-Wage Strategy on State Economic Development," State Politics and Policy Quarterly, and "Life Is Not Fair: Governors' Job Performance and State Unemployment," Political Research Quarterly. Hansen has joint appointments in the Graduate School of Public and International Affairs and the Women's Studies Program. She is available at 412-648-7272 (office) and sbhansen@pitt.edu; or through Amanda Leff.

Angela Williams Foster, professor of public and urban affairs in the Graduate School of Public and International Affairs, said raising the minimum wage to $7.25 is a step in the right direction. "However, for many households, the increase will be insufficient for them to afford the bundle of goods and services associated with everyday life," Foster said. "A significant number of housing units will remain out of reach for residents, without receiving additional subsidies or making compromises in housing quality standards." To afford a two-bedroom rental unit in the Pittsburgh region (valued at $750 by the Fair Market Rent), the household would need to earn an hourly wage of $14.50-well above the minimum wage, she said. "Additional policies are needed to bring housing units within reach for all of our region's residents, in order to fill the gap between the minimum wage and a wage that would be consistent with typical living expenses," Foster said. She is available at 412-648-7565 (office), 412-771-1610 (home), and amf50@pitt.edu; or through Amanda Leff.

For a list of Pitt faculty experts, visit www.umc.pitt.edu/m/experts.html.

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1/24/07/tmw