The annual release of census data is often a guide to policy success and failure at both the national and state levels. This year is no exception. The American Community Survey data released yesterday shows that Pennsylvania’s failure to raise the minimum wage has led to our state falling behind the rest of the nation in measures of poverty and household income. But our early participation in the Medicaid expansion, along with new federal subsidies in the health care insurance marketplace has led to a reduction in the percentage of people uninsured in our state.
Poverty data points to the continuing failure of Pennsylvania to raise the minimum wage. The standard poverty rate in the United States fell from 11.5% to 11.1% between 2022 and 2023. But it rose slightly in Pennsylvania from 11.8% to 12% although that increase was not quite outside the margin of error of .3%. It is troubling that poverty remains higher in Pennsylvania than in other states and that it increased in the last year during a time of tight labor markets. The most likely explanation of our higher-than-national poverty rate is the failure of the Pennsylvania General Assembly to raise the minimum wage above $7.25. Pennsylvania remains one of only 16 states not to raise its minimum wage above that federal level. (Sources: For national data, U.S. Census Bureau, Official Poverty Rates by Age: 2009 to 2023. For state data, U.S. Census Bureau, American Community Survey 1-Year Estimates, Table S1701, Poverty Status in the Past 12 Months for 2023 and 2022.)
Another data series also points to the same failure of public policy in Pennsylvania. While the nation saw a small, but statistically significant, drop in median household income, adjusted for inflation, of .2%, the decline in Pennsylvania was statistically significant and six times greater, -1.3%. It was also greater than the states that surround Pennsylvania. Again, the static minimum wage in Pennsylvania likely accounts for our state falling behind the national average. (Source: Katherin Engle and Kirby G. Posey, “Household Income in States and Metropolitan Areas: 2023,” American Community Survey Brief ACSBR-023, US Census, September 2024.)
Pennsylvania’s lower minimum wage reduces household income and directly increases poverty by holding down wages. More than 20% of workers in the state would see an increase in their wages if we were to institute a $15 per hour minimum wage. A low minimum wage also depresses consumption and economic activity in the state. Because minimum wage earners spend almost all they make, an increase in the minimum wage to $15 per hour would raise consumption in the state by more than $5 billion.
Census data on the share of the population that is uninsured points to a continued success of Pennsylvania policy—our early adoption of the Medicaid expansion under the Affordable Care Act, as well as the increase in subsidies for health insurance in the marketplace under President Biden. The percentage of people without insurance fell both nationwide and in Pennsylvania. According to ACS data from 2019 to 2023, it fell from 9.2% to 7.9% nationwide and from 5.8% to 5.4% in Pennsylvania. (Source: U.S. Census Bureau, American Community Survey 1-year Estimates, Table S2701, Selected Characteristics of Health Insurance in the United States for 2023 and 2019.)
