On Saturday, Pennsylvania's elected officials will receive their annual cost of living adjustment (COLA), and many lawmakers will be receiving substantial raises to keep their salaries in line with inflation. The base salary of a legislator in the General Assembly will increase approximately $2,550 to $76,163 and Governor Rendell will receive pay bump of nearly $6,000 and will collect $170,150 in 2008.

This annual cost of living increase was signed into law in 1995 and kicks in every year. The U.S. Congress passed a similar law in 1989 that automatically raises their salaries each year to account for inflation and rise in the cost of living, unless they vote otherwise. Unsurprisingly, Congress has only twice neglected to give itself a pay raise since then.

After nearly a decade of inaction, both the Pennsylvania General Assembly and the federal government have passed bills to increase the minimum wage, but neither contains a mechanism to keep wages matched with inflation. This means that workers are unlikely to see another raise to the minimum wage until political pressure builds for our lawmakers to act, and that could take years.

Meanwhile, the effects of the steadily rising price of oil are rippling through the economy. Pennsylvania's families are being pinched at the gas pump, heating bills are rising, and the costs of groceries and consumer goods are being driven upwards by rising transportation costs. While the average family worries about how to pay for the commute to work and heating their homes, elected officials have a hedge against inflation.

Raising the minimum wage and keeping it level with inflation would extend the same kind of financial security that our elected officials currently enjoy to hundreds of thousands of families across the state. Approximately 308,000 workers in Pennsylvania directly benefited from the federal wage increase to $7.25, and an additional 500,000 workers were expected to see their hourly wages rise as an indirect result. By attaching a simple cost of living adjustment to the minimum wage bill, we would be improving the lives of 14.5% of Pennsylvania's population.[1]

It makes economic sense too. A 1992 study by Lawrence Katz of Harvard University and Alan Kreuger of Princeton University, found that fast-food establishments who raised their minimum wage saw an increase in employment and no change in the price of the goods for sale.[2]

Current economic models have shown that modest increases in the minimum wage lead to higher productivity, lower recruiting and training costs, decreased absenteeism, and increased worker morale without negatively effecting employment rates. A 1998 study by Jared Bernstein and John Schmitt of the Economic Policy Institute found that, "The effect on employment is generally economically small and statistically insignificant; any impact is almost as likely to be positive as negative, varying unpredictably across demographic groups" [3]

The minimum wage hike of 2006, was only a band-aid—a temporary fix to address the income inequality that had developed after nearly a decade of neglect. It is time that we take the politics out of the process and enact an annual cost of living adjustment that pegs the minimum wage to inflation or the consumer price index (CPI). If tax-payers are willing to offer such wage security to our public servants, certainly the least they can do is extend the same courtesy to our lowest wage earners.

In 2006, I worked with Pennsylvania for Democracy and the Coalition to Raise the Minimum wage, successfully lobbying the state legislature to raise the minimum wage from $5.15 to $7.15. As State Senator, I will work to amend the minimum wage bill to permanently keep hourly wages in line with inflation by scheduling regular Cost of Living Adjustments (COLA) to the base minimum wage.

[1] Minimum Wage Issue Guide, Economic Policy Institute, Table 3 and Table 3a
www.epinet.org/content.cfm/issueguides_minwage

[2] The Effect of the Minimum Wage on the Fast-Food Industry
Lawrence F. Katz, Alan B. Krueger
Industrial and Labor Relations Review, Vol. 46, No. 1 (Oct., 1992), pp. 6-21

[3] Making Work Pay: The Impact of the 1996-97 Minimum Wage Increase
Jared Bernstein, John Schmitt
Washington, DC: Economic Policy Institute, May, 1998.