Americans finally got a raise! That's the gist of recent headlines hailing significant economic growth in 2015, but in Pennsylvania the economy is still struggling.
From 1991 to 2015, Pennsylvania ranked 46th in job growth, 45th in personal income growth, and 46th in population growth while the size and scope of state government grew dramatically.
Consider the state's unemployment problem:
- Pennsylvania’s unemployment rate rose again in August—the fourth time in the last six months.
- The unemployment rate now sits at 5.7 percent, which is nearly 1 percentage point above the national average.
- Of all 50 states, Pennsylvania experienced the second largest increase in the unemployment rate over the last year.
So what’s the solution to the state’s decades-long stagnation? Some have proposed government mandates like a minimum wage hike and raising taxes to pay for more government spending.
Neither will solve our economic challenges.
Let’s take the minimum wage first. In practice, it harms the very people it intends to help.
For example, Chicago restaurant owners Mark Robertson and Mike Sullivan recently closed their Mexican restaurant because of the city’s wage mandate. The owners stated,
Unfortunately, the rapidly changing labor market for the hospitality industry has resulted in immediate, substantial increases in payroll expenses that we could not absorb through price increases” … “In the last two years, we have seen a 27 percent increase in the base minimum wage, a 60 percent increase in kitchen wages, and a national shortage of skilled culinary workers.
Increasing government spending is another popular proposal that harms the economy. States with the highest tax rates experience slower income growth and job growth than states with the lowest tax rates.
The commonwealth must head in a new direction.
The first step is restraining government spending—starting with $800 million in corporate welfare—and lowering taxes to put more money in the pockets of working people.
Another critical step is improving the quality of education. Increasing school choice options—such as expanding tax credit scholarships is critical to creating a society where all Pennsylvanians can seize economic opportunities.
Together, these solutions will empower Pennsylvanians and reinvigorate the state's economy.