Fact Sheet
Minimum Wage 2026
Summary
- The Pennsylvania Department of Labor and Industry (L&I) numbers for 2025 show less than one percent of Pennsylvania workers (42,900) earn the minimum wage or less—a new all-time low. The number of minimum wage workers has fallen by roughly 42 percent over the past five years.[1]
- L&I data show 80 percent of minimum wage workers are part-time and have no children, and most are not sole earners.[2] The policy does not target the struggling families its proponents describe.
- Analysis by Pennsylvania’s Independent Fiscal Office (IFO) calculates that a minimum wage hike to $15 an hour would cost an estimated 15,600 jobs; moreover, the IFO sees consumers carrying 60 percent of the costs through higher prices.[3] The impact would fall hardest on low-income families and on rural Pennsylvania, where a $15 floor would exceed 70 percent of the median wage in 16 counties.[4]
- Even the Shapiro administration concedes the mandate would do little to raise wages. At two separate March 2026 House Appropriations budget hearings, the Department of Human Services acknowledged market wages will meet or exceed $15 by 2027, and Revenue Secretary Pat Browne conceded employers are already raising wages without a mandate.[5]
- To help workers, Pennsylvania should focus on reducing barriers to employment caused by unnecessary licensing, high taxes on employers, overregulation that stymies job creation, and the lack of education opportunities.
Current Minimum Wage Proposals
Gov. Josh Shapiro’s 2026–27 Executive Budget calls on the General Assembly to raise the minimum wage to $15 per hour for non-tipped workers and $9 per hour for tipped workers, effective January 1, 2027. The administration claims more than $80 million annually in increased revenue; moreover, Shapiro’s budget plan forecasts, with the hike, 60,800 Medicaid beneficiaries would lose eligibility for the program, resulting in over $300 million in total Department of Human Services (DHS) savings.[6] However, the IFO brief on the 2026–27 budget plan projects a net annual revenue impact of just $50 million—37 percent below the $80 million figure—when accounting for the corporate tax offset.[7]
During his 2026 budget address, Shapiro once again asked lawmakers to “put a minimum wage bill on my desk.”[8] The following month, in March, the Pennsylvania House of Representatives passed House Bill (HB) 2189, an initiative for a statewide minimum wage increase that would more than double the current minimum wage over the course of three years. This bill would increase the minimum wage to $11 per hour on January 1, 2027, then raise it to $13 in 2028 and $15 in 2029, with annual cost-of-living adjustments thereafter. And it would set the tipped wage rate at “not less than” 60 percent of the statewide minimum. Counties may opt to set rates between the statewide minimum and $15 via ordinance. HB 2189 would also repeal the exemption for employers with ten or fewer employees and freeze the training wage at $7.25.[9]
History of Minimum Wage Proposals
Shapiro, in all four of his budget proposals, has sought a $15 minimum wage. The Pennsylvania House, in addition to HB 2189, has responded to his calls, passing HB 1500 in 2023 and HB 1549 in 2025.[10]
The $15 target aligns with national demands by public sector unions since 2012. Unions have a direct financial stake in a higher minimum wage: raising the wage floor increases the cost of hiring non-union unskilled workers, making skilled union labor relatively more attractive. Research finds that when the minimum wage rises significantly, union workers earning near the minimum see earnings gains of 20–40 percent, but at the expense of the lowest-wage non-union workers.[11]
In 2016, then-Gov. Tom Wolf raised the minimum wage by executive order for state employees under his jurisdiction and state contractors, setting it at $10.15.[12] In 2022, Wolf issued another executive order increasing the minimum wage for the same workers to $15 per hour.[13]
How Many Pennsylvanians Earn the Minimum Wage?
In 2025, the number of minimum wage workers in Pennsylvania reached 42,900, a new all-time low. Just 0.7 percent of all workers earn minimum wage or less—down roughly 9 percent from the prior year’s 47,200. The number of minimum wage workers has fallen approximately 42 percent in just five years since 2020.[14]
- L&I’s latest numbers from the Minimum Wage Advisory Board show workers earning minimum wage or less represent 1.4 percent of all hourly workers and 0.7 percent of all workers.
- About 3,900 Pennsylvanians earn exactly the minimum wage.
- About 39,000 Pennsylvanians earn less than the minimum wage. These are tipped workers whose tips must bring their earnings above minimum wage.
- Those earning between the minimum wage and $12 dropped to 189,000—down 65,100 from 2024.
- Another 320,900 Pennsylvanians earn between $12.01 and $15—down from 442,700 in 2024.
- In sum, 553,700 workers earn less than $15 an hour—191,200 fewer than last year, a decline of nearly 26 percent.[15]
Who Makes the Minimum Wage?
- Nationally, nearly half (about 46 percent) of minimum-wage earners work for smaller businesses with fewer than 100 employees.[16]
- Minimum wage earners are more likely than the average Pennsylvania worker to be female, unmarried, and below the age of 24 with no education beyond high school.[17]
- The large majority (80 percent) of minimum wage workers have no children and work part-time.[18]
- Most minimum wage workers are not sole earners. According to L&I, nearly half of minimum wage workers live in households with total annual incomes of $75,000 or more.[19]
What is the Impact of a Minimum Wage Increase?
In March 2025, the IFO cautioned that forcing a $15 minimum wage would cost 15,600 jobs, while the remaining 684,000 directly affected workers would receive an average raise of $1.94 per hour.[20]
The IFO’s projection—which does not include any estimates for job losses among tipped workers—likely underestimates the impact. This month, a nationwide survey of economists, published by the Employment Policies Institute (EPI), reveals that nearly three-fourths (74 percent) say raising the minimum wage “is not effective at alleviating poverty.”[21] EPI projected in 2023 that Pennsylvania, with a $15 minimum wage, could lose as many as 85,779 jobs.[22]
Job losses disproportionately affect workers on the fringes of the job market.
- Part-time workers: National data shows most jobs (81 percent) paying less than $11 are part-time, putting them first in line for employment contraction. The IFO forecasts a drop of 11,800 part-time jobs with the $15 minimum wage.[23]
- Women: EPI estimates that 64 percent of job losses will be among women.
- Tipped employees: Assuming tipped wages are increased to at least $9 an hour, EPI calculates roughly one in four (24 percent) of tipped employees in Pennsylvania figure to lose their jobs.
- Rural workers: A $15 minimum wage would exceed 70 percent of the median wage in 16 rural Pennsylvania counties.[24]
- New workers: Research on the minimum wage and job loss published in 2022 by the National Bureau of Economic Research (NBER) states: “the evidence of negative employment effects is stronger for specific workers than specific industries.” The findings reveal “strong and consistent evidence of negative employment effects for teens, young adults, the less-educated, and directly-affected (low-wage) workers.”[25]
Overall, there is more at stake than pay. Studies show minimum wage mandates can reduce worker hours and benefits, resulting in net harm to workers, including those who keep their jobs.
- A study, summarized in the Harvard Business Review, examined the impact of the minimum wage on firms’ scheduling practices in the retail industry and showed that a $1 increase in the minimum wage leads to a 27.7 percent increase in the number of workers scheduled per week, but a 20.8 percent reduction in weekly hours per worker.[26]
- A study from the Competitive Enterprise Institute details how mandated wage increases reduce other employer-based benefits such as tips, health insurance, employee discounts, flexible hours, and tuition assistance.[27]
- Evidence from Hawaii and Nebraska, which increased their respective minimum wages to $12 and $10.50 per hour in 2022, suggests that increased minimum wages result in a decline of those seeking employment.[28]
- Research using a pre-committed methodology finds that large minimum wage increases reduce employment among low-skilled workers by approximately 2.5 percentage points, while small increases have no detectable effect.[29]
- A 2026 NBER study finds that a 10 percent increase in the minimum wage raises robot adoption by approximately 8 percent—accelerating automation in the food service and retail industries where Pennsylvania’s minimum wage workers are concentrated.[30]
Who Pays for a Minimum Wage Increase?
The IFO, in its 2025 analysis, projects that businesses would respond to a minimum wage increase chiefly by raising prices, with Pennsylvania consumers absorbing 60 percent of the cost. Meanwhile, reduced non-wage compensation or business profits (20 percent), costs exported to non-residents (10 percent), and presumed efficiency gains from reduced turnover (10 percent) would absorb the remaining costs. In other words, those receiving a boost in minimum wage would also pay the lion’s share for it.[31] Research from Stanford economists finds that these price increases function as a regressive tax, with the poorest families paying a larger share of their income than wealthier families, even when not assuming job losses.[32]
Wages are Rising for Workers
Government intervention is not necessary to raise wages.
- According to the Economic Policy Institute, since 2019, hourly wages for the lowest-paid workers at the bottom 10 percent grew by “a tremendous” 15.3 percent, faster than average growth over the prior 40 years.[33]
- The IFO estimates that the effective market minimum wage—the wage rate determined by market forces without government intervention—is roughly $11 to $11.50 per hour.[34]
Even administration officials have conceded the point. This year, at a House Appropriations Committee hearing on March 4, the DHS acknowledged the governor’s minimum wage proposal would have “minimal impact” because by 2027, market wages will already meet or exceed $15 per hour.[35] Days later, Revenue Secretary Pat Browne, during the committee’s March 10 hearing, acknowledged that employers are already increasing wages without mandates.[36]
Reforms Can Raise Wages Without Reducing Jobs or Benefits
If Shapiro and policymakers are concerned about wages, they should pursue the following proven reforms:
- Lower the cost of doing business: By accelerating the current phased reduction to 4.99 percent by 2031 of the commonwealth’s Corporate Net Income Tax (CNIT),[37] it is possible to raise wages and increase hiring. For example, Senate Bill (SB) 207, an initiative to fast-walk the reduction in the CNIT to an improved 4 percent by 2026, would instantly put the state in a tie for the third-lowest CNIT rate nationwide.[38]
- Enact comprehensive regulatory reform: Pennsylvania administers more than 164,000 regulations, reducing regulations by 36 percent would result in an annual one percent economic growth in the state’s gross domestic product, or GDP, and create more than 180,000 new jobs.[39]
- Lower barriers to employment: Lawmakers, in 2024, took a small step by ending costly licensing requirements for natural hair braiding, yet much needs to be done to remove needless barriers to work among the commonwealth’s 29 licensing boards and commissions.[40] Notably, Shapiro’s 2026–27 budget proposes licensing reform—reducing unnecessary licenses, aligning barber training hours with New Jersey, and streamlining social worker licensing.[41] The administration acknowledges that licensing barriers suppress employment, yet it simultaneously proposes a wage mandate that would compound those barriers for the least-skilled workers.
- Give kids opportunity: A good education leads to higher incomes and stable employment.[42] All families should have access to quality education options. The Learning Investment Tax Credit (HB 1662) would create an $8,000 per child refundable tax credit to offset education expenses if parents choose a non-public school. Lifeline Scholarships (HB 1489) would target aid via Education Savings Accounts (ESAs) to the more than 200,000 students stuck in failing district schools.[43] And the continued expansion of Pennsylvania’s successful donor-funded Education Improvement Tax Credit (EITC) and Opportunity Scholarship Tax Credit (OSTC) programs would help fund students at far less than the $23,061 Pennsylvania public schools spend per student.[44] Moreover, Pennsylvania must opt into the new Federal Scholarship Tax Credit (FSTC) program before January 1, 2027, to unlock millions of dollars additional scholarship funding.[45]
[1] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025” (Pennsylvania Department of Labor and Industry, March 2026), 3, 7, 10, https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/cwia/products/minimum-wage-reports/minimum-wage-report-2025.pdf.
[2] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” 4–5, 17 (Figure 7), 21 (Figure 10).
[3] Matthew Knittel et al., “Analysis of Revenue Proposals: FY 2025–26 Executive Budget” (Independent Fiscal Office, March 2025), 15, 21, https://www.ifo.state.pa.us/download.cfm?file=Resources/Documents/Revenue_Proposal_Analysis_2025_03.pdf.
[4] Taeyoung Doh and Luca Van der Meer, “The Employment Effect of an Increase in the National Minimum Wage: Review of International Evidence,” The Federal Reserve Bank of Kansas City Economic Review 108, No. 2, (March 2023), https://www.kansascityfed.org/research/economic-review/the-employment-effect-of-an-increase-in-the-national-minimum-wage-review-of-international-evidence/; Pennsylvania Department of Labor and Industry, County Wages, accessed April 22, 2026, https://www.pa.gov/agencies/dli/resources/statistic-materials/products/occupational-wages/county-wages; Center for Rural Pennsylvania, County Profiles (rural and urban classification: 48 rural, 19 urban counties), accessed April 22, 2026, https://www.rural.pa.gov/data/county-profiles.
[5] House Appropriations Committee, 2026 Budget Hearings: “Department of Human Services (DHS) Hearing Wrap (March 4, 2026)” and “Department of Revenue (DOR) Hearing Wrap (March 10, 2026),” Pennsylvania House Republican Caucus, accessed May 1, 2026, https://pabudget.com/2026budgethearings.
[6] Pennsylvania Office of the Budget, “Governor Josh Shapiro: Budget in Brief 2026–2027” (Commonwealth of Pennsylvania, February 3, 2026), 6, 15, 32, https://www.pa.gov/content/dam/copapwp-pagov/en/budget/documents/publications-and-reports/commonwealthbudget/2026-27-budget-documents/2026-27%20budget%20in%20brief.final.web.v.2.pdf. See also: Commonwealth Foundation, “Governor Shapiro’s Reckless 2026–27 Budget Proposal,” February 2026, https://commonwealthfoundation.org/research/governor-shapiros-reckless-2026-27-budget-proposal/, citing IFO projection of $135 million in annual state Medicaid savings from federal work requirements.
[7] Independent Fiscal Office, “Analysis of Revenue Proposals,” February 2026, https://www.ifo.state.pa.us/download.cfm?file=Resources/Documents/BB_Analysis_of_Executive_Budget_Revenue_Proposals_2026_02.pdf.
[8] Pennsylvania Office of the Governor, “Governor Shapiro’s 2026–27 Budget Address as Prepared for Delivery,” February 3, 2026, https://www.pa.gov/governor/newsroom/2026-press-releases/governor-shapiro-s-2026-27-budget-address-as-prepared-for-delive.
[9] Rep. Jason Dawkins et al., House Bill 2189, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/hb2189; Pennsylvania Office of the Governor, “Budget Priority Passes House: Pennsylvania House Passes Bill to Increase Minimum Wage Following Governor Shapiro’s Call to Finally Raise the Wage,” news release, March 24, 2026, https://www.pa.gov/governor/newsroom/2026-press-releases/pa-house-passes-bill-to-increase-minimum-wage-following-gov-shap.
[10] Rep. Jason Dawkins et al., House Bill 1500, Pennsylvania General Assembly, Regular Session 2023–24, https://www.palegis.us/legislation/bills/2023/hb1500; Rep. Jason Dawkins et al., House Bill 1549, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/hb1549.
[11] James Sherk, “Union Members, Not Minimum-Wage Earners, Benefit When the Minimum Wage Rises,” Heritage Foundation, February 7, 2007, https://www.heritage.org/jobs-and-labor/report/union-members-not-minimum-wage-earners-benefit-when-the-minimumwage-rises.
[14] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” 3, 5, 7, 10 (Figure 1); Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2020” (Pennsylvania Department of Labor and Industry, March 2021) 12, https://www.pa.gov/content/dam/copapwp-pagov/en/dli/documents/cwia/products/minimum-wage-reports/minimum-wage-report-2025.pdf.
[15] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” 3, 7, 10.
[16] Minimum Wage Facts and Analysis, “Don’t Call It Relief: Small Businesses, Restaurants Will Be Negatively Impacted by $15,” January 22, 2021, https://minimumwage.com/2021/01/dont-call-it-relief-small-businesses-restaurants-will-be-negatively-impacted-by-15/.
[17] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” (March 2026), 4, 12 (Figure 2), 13–14, 22 (Figure 11).
[18] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” 4, 17 (Figure 7), 21 (Figure 10).
[19] Minimum Wage Advisory Board, “Analysis of the Pennsylvania Minimum Wage: 2025,” 15, 17–18 (Figures 7–8).
[20] Knittel et al., “Analysis of Revenue Proposals: FY 2025–26 Executive Budget,” 15, 22 (Table 11). Note: The IFO did not model employment impacts for tipped workers. See also: Pennsylvania Senate Republicans, “Key Points from Senate Budget Hearings with IFO,” February 20, 2024, https://www.pasenategop.com/news/key-points-from-senate-budget-hearings-with-independent-fiscal-office-department-of-corrections/ and Vimeo video, “Budget Hearing Q&A: IFO, Second Round,” PA Senate GOP, February 20, 2024, https://vimeo.com/pasenategop/iforothman2.
[21] Employment Policies Institute, “Impact of Increasing the Federal Minimum Wage: Survey of US Economists” (May 2026), 4, https://epionline.org/studies/data-snapshot-three-quarters-of-economists-oppose-15-minimum-wage-proposals/.
[22] William Even and David Macpherson, “A $15 Minimum Wage in Pennsylvania Would Cost Nearly 86,000 Jobs,” Employment Policies Institute, June 2023, https://epionline.org/app/uploads/2023/06/230619_EPI_MinWagePennsylvania_FINAL.pdf.
[23] Knittel et al., “Analysis of Revenue Proposals: FY 2025–26 Executive Budget,” 20.
[24] Taeyoung Doh and Luca Van der Meer, “The Employment Effect of an Increase in the National Minimum Wage: Review of International Evidence,” The Federal Reserve Bank of Kansas City Economic Review 108, No. 2, (March 2023), https://www.kansascityfed.org/research/economic-review/the-employment-effect-of-an-increase-in-the-national-minimum-wage-review-of-international-evidence/; Pennsylvania Department of Labor and Industry, County Wages, accessed April 22, 2026, https://www.pa.gov/agencies/dli/resources/statistic-materials/products/occupational-wages/county-wages; Center for Rural Pennsylvania, County Profiles (rural and urban classification: 48 rural, 19 urban counties), accessed April 22, 2026, https://www.rural.pa.gov/data/county-profiles.
[25] David Neumark and Peter Shirley, “Myth or Measurement: What Does the New Minimum Wage Research Say about Minimum Wages and Job Loss in the United States?” (Working Paper 28388, National Bureau of Economic Research, January 2021, Revised March 2022) 16, 19–20, https://www.nber.org/system/files/working_papers/w28388/w28388.pdf.
[26] Qiuping Yu, Shawn Mankad, and Masha Shunko, “Research: When a Higher Minimum Wage Leads to Lower Compensation,” June 10, 2021, Harvard Business Review, https://hbr.org/2021/06/research-when-a-higher-minimum-wage-leads-to-lower-compensation, summary of the research paper by Yu, Mankad, and Shunko, “Evidence of the Unintended Labor Scheduling Implications of the Minimum Wage,” June 10, 2021 [Revised May 23, 2022] 14, Manufacturing & Service Operations Management, forthcoming, https://ssrn.com/abstract=3863757 or https://dx.doi.org/10.2139/ssrn.3863757.
[27] Ryan Young, “Minimum Wages Have Tradeoffs: Unintended Consequences of the Fight for 15,” Competitive Enterprise Institute, September 30, 2019, https://cei.org/studies/minimum-wages-have-tradeoffs/#:~:text=A%20partial%20list%20of%20minimum,Act%20or%20any%20other%20vehicle.
[28] Victor C. Melo, et al., “Minimum Wage Laws and Job Search,” (Working Paper 33433, National Bureau of Economic Research, January 2025), https://www.nber.org/system/files/working_papers/w33433/w33433.pdf.
[29] Jeffrey Clemens and Michael R. Strain, “The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence Using a Partially Pre-Committed Analysis Plan,” Journal of Labor Economics, forthcoming (accepted May 2025; NBER Working Paper No. 29264), https://www.nber.org/papers/w29264
[30] Erik Brynjolfsson et al., “Minimum Wages and Rise of the Robots” (Working Paper No. 34895, National Bureau of Economic Research, February 2026), https://www.nber.org/papers/w34895.
[31] Knittel et al., “Analysis of Revenue Proposals: FY 2025–26 Executive Budget,” 15, 22.
[32] Thomas MaCurdy and Frank McIntyre, “Winners and Losers of Federal and State Minimum Wages,” Employment Policies Institute, June 2001, https://epionline.org/studies/r24/.
[33] Elise Gould et al., “Strong Wage Growth for Low-Wage Workers Bucks the Historic Trend, Economic Policy Institute, March 24, 2025, https://www.epi.org/publication/strong-wage-growth-for-low-wage-workers-bucks-the-historic-trend/.
[34] Knittel et al., “Analysis of Revenue Proposals: FY 2025–26 Executive Budget,” 15, 17.
[35] House Appropriations Committee, 2026 Budget Hearings: “Department of Human Services (DHS) Hearing Wrap (March 4, 2026).”
[36] House Appropriations Committee, 2026 Budget Hearings: “Department of Revenue (DOR) Hearing Wrap (March 10, 2026).”
[37] Pennsylvania Office of the Budget, “Governor Josh Shapiro: Budget in Brief 2026–2027,” 7.
[38] Sen. Greg Rothman et al., Senate Bill 207, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/sb207.
[39] James Broughel, “Cutting Red Tape in Pennsylvania,” Commonwealth Foundation, September 18, 2023, https://commonwealthfoundation.org/research/cutting-red-tape-pennsylvania/.
[40] Commonwealth Foundation, “New Pennsylvania Law Eliminates Job-Killing Hair Braiding Licensing Requirements,” news release, October 16, 2024, https://commonwealthfoundation.org/2024/10/16/pennsylvania-hair-braiding-licensing-requirements/; Institute for Justice, “Occupational Licensing in Pennsylvania,” accessed July 20, 2025, https://ij.org/issues/economic-liberty/occupational-licensing/pennsylvania/; Pennsylvania Department of State, “Boards and Commissions,” accessed July 20, 2025, https://www.pa.gov/agencies/dos/department-and-offices/bpoa/boards-commissions.
[41] Pennsylvania Office of the Budget, “Governor Josh Shapiro: Budget in Brief 2026–2027,” 8, 15.
[42] U.S. Bureau of Labor Statistics, “Employment Projections: Education Pays Earnings and Unemployment Rates by Educational Attainment, 2024,” August 28, 2025 [last modified], 2025,https://www.bls.gov/emp/chart-unemployment-earnings-education.htm.
[43] Rep. Martina White et al., House Bill 1662, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/hb1662; Rep. Clint Owlett, House Bill 1489, Pennsylvania General Assembly, Regular Session 2025–26, https://www.palegis.us/legislation/bills/2025/hb1489; Commonwealth Foundation, “PASS/Lifeline Scholarship Program,” May 5, 2025, https://commonwealthfoundation.org/research/lifeline-scholarship-program-pass/.
[44] Commonwealth Foundation, “Education Tax Credits Deliver Over 100,000 Scholarships, Yet Waitlists Remain,” April 2026, https://commonwealthfoundation.org/research/pennsylvania-education-tax-credits-analysis/; Commonwealth Foundation, “Pennsylvania School Funding Reaches $23,000 per Student in 2024,” May 15, 2025, https://commonwealthfoundation.org/research/pennsylvania-school-funding-reaches-record-level/.
[45]Commonwealth Foundation, “Federal Scholarship Tax Credit,” February 23, 2026, https://commonwealthfoundation.org/research/federal-scholarship-tax-credit/.