Unintended Consequences: Workplace Mandates Can Hurt Workers
Who will bear some of the cost of workplace mandates being considered by the General Assembly? Connecticut workers, writes CBIA’s Eric Gjede.
I frequently hear from businesses that they simply cannot find skilled workers to replace their aging workforce. Many lament that we spend so much to educate our younger residents, only to lose nearly 40% of them to opportunities in other states.
Every year, lawmakers propose a flurry of bills designed to be pro-worker, like the minimum wage increase, or other bills intended to attract young people, such as paid family and medical leave.
However, if you step back and take a holistic view, many of the laws we enact ostensibly to benefit workers turn out to have a negative impact on employees as well as employers.
Increasing the minimum wage always polls well with voters, and it’s likely legislation will be enacted this year that will eventually raise our state’s minimum wage from $10.10 per hour to $15 per hour.
While some workers will undoubtedly benefit from a minimum wage hike, many others will see reductions in hours and benefits, resulting in less take-home pay.
Businesses will also likely be forced to increase the price of goods and services, meaning everyone will have less buying power. Automation of low-wage jobs is already happening and a rapid increase of the minimum wage will only accelerate it.
Mandatory Payroll Deductions
A paid family and medical leave program also is proposed this year, providing up to 12 weeks of pay every year for employees who are out of the workplace dealing with their own or any one of an extended list of family members’ illnesses.
This proposal also is incredibly popular with voters when only those details are provided.
To pay for that paid family and medical leave program, however, the state plans to automatically deduct at least 0.5% from workers’ paychecks.
One problem with this is that the numbers just don’t add up. A person earning $52,000 a year, for example, would only contribute $260 annually into the fund, yet would be eligible to take out $12,000 each year.
We can't keep making it more expensive for businesses to be here, and we can't keep making it more expensive for workers to live here.
But that's not all.
A state-mandated retirement plan is set to kick in this year, and Connecticut workers not eligible for an employer sponsored plan will see their wages automatically reduced by 3%, with no pretax benefits as offered by private sector plans.
That same person making $52,000 a year will now also pay $1,560 a year into a state-run retirement plan.
Health Insurance Mandates
Myriad other bills are also being considered, including more health insurance mandates and sweeping highway tolls, that will make living in Connecticut more expensive for everyone.
While I have advocated at the state Capitol for years that we can't keep making it more expensive for businesses to be here, we also can't keep making it more expensive for workers to be here.
Legislators need to stop increasing the size of government, especially since we can't even afford the state government we have now.
We should not adopt feel-good programs for workers that require us to deduct money from their wages or force businesses to find labor savings through staff or schedule reductions.
When businesses thrive, competition for workers will drive higher wages and richer benefits.
However, it is also true that we will only get the skilled workers we desperately need if we can show them that the state will not keep shrinking their paychecks to pay for government programs.
Instead of creating across-the-board mandates and putting more pressure on the fragile, volatile small business economy, lawmakers should bring employers—the state's job creators—to the table to be part of the solution.
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