Pennsylvania Gov. Josh Shapiro’s proposal to raise the state’s minimum wage to $15 an hour could eliminate jobs, increase consumer prices, and hurt small businesses, according to the Commonwealth Foundation, the Harrisburg, Pa.-based free-market think tank.
“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,” the Commonwealth Foundation says in a May 17 Minimum Wage 2026 Fact Sheet.
Shapiro’s 2026–27 executive budget calls for raising the minimum wage for non-tipped workers to $15 per hour and the tipped wage to $9 per hour beginning Jan. 1, 2027, an increase the governor argues would help workers and strengthen the state economy, with estimates that the proposal would generate more than $80 million annually in additional revenue and reduce Medicaid enrollment enough to save more than $300 million in state Department of Human Services (DHS) spending.
But opponents say the proposal ignores economic realities already pushing wages upward and risks harming the very workers it is intended to help.
In its fact sheet, the Commonwealth Foundation points to a Pennsylvania Independent Fiscal Office (IFO) March 2025 analysis that estimates increasing the minimum wage to $15 an hour would cost roughly 15,600 jobs statewide, while the remaining 684,000 directly affected workers would receive an average raise of $1.94 per hour.
“Moreover,” the foundation says, “the IFO sees consumers carrying 60 percent of the costs through higher prices. 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.”
Business groups and free-market organizations argue such job-loss estimates may be conservative, according to the Commonwealth Foundation.
For instance, the Employment Policies Institute projects in a May 6 minimum wage survey of 166 American economists that Pennsylvania could lose as many as 85,779 jobs under a $15 minimum wage, including significant losses among tipped workers.
In its survey, the institute points out that nearly three-quarters of economists (74 percent) oppose a $15 federal minimum wage, and they say it’s “not effective at alleviating poverty.”
The Pennsylvania Chamber of Business and Industry agrees, saying a mandatory, higher minimum wage isn’t the best way to fight poverty because the majority of those living at or below the poverty line can’t benefit from a job they don’t have in the first place.
Opponents also argue market conditions are already increasing wages without government mandates.
The IFO has estimated Pennsylvania’s “effective market minimum wage” is already between $11 and $11.50 an hour, while state labor data also show the number of workers earning minimum wage or less fell to about 42,900 in 2025, representing just 0.7 percent of all Pennsylvania workers — the lowest level on record, according to the Commonwealth Foundation.
Many of the state’s largest employers already pay well above the current minimum wage, including Amazon, Walmart, and UPS, the foundation adds.
Additionally, critics argue that large increases in mandated wages can accelerate automation and reduce opportunities for entry-level workers, teenagers, and part-time employees.
For example, the Commonwealth Foundation also cites a February 2026 working paper from the National Bureau of Economic Research, titled “Minimum Wages and Rise of the Robots,” saying that a 10-percent increase in the minimum wage was associated with an 8-percent increase in robot adoption in industries such as food service and retail, where many low-wage workers are employed.
Even administration officials have conceded the point, says the Commonwealth Foundation, which highlighted a series of March 4 public budget hearings held by the state House Appropriations Committee in which 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.
“Days later, Revenue Secretary Pat Browne, during the committee’s March 10 hearing, acknowledged that employers are already increasing wages without mandates,” noted the foundation.
The Commonwealth Foundation recommended that if Shapiro and policymakers are concerned about wages, they should instead pursue several reforms, such as lowering the cost of doing business.
This could be done by accelerating the current phased reduction to 4.99 percent by 2031 of the commonwealth’s Corporate Net Income Tax (CNIT) 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, the foundation said.
Among several other recommendations, the foundation says the administration also could enact the Learning Investment Tax Credit (HB 1662), which would create an $8,000 per child refundable tax credit to offset education expenses if parents choose a non-public school.
Pennsylvania also should opt into the new Federal Scholarship Tax Credit program before Jan. 1, 2027 to unlock millions of dollars in additional scholarship funding.
“A good education leads to higher incomes and stable employment,” the foundation says. “All families should have access to quality education options.”