Labor Committee Wage Bills Harmful to State’s Economy

The Labor Committee is considering two wage related bills that could push Connecticut even lower in national business competitiveness ranks.  CBIA is opposing both measures that again increase the state’s minimum wage, and impose a wage tax on large businesses and small-business franchises.

Maximum Minimum

Although lawmakers increased the state’s minimum wage to $8.70 per hour this year, and wrote into law an additional increase for next year, SB 32 would continue to hike the minimum wage to $10.10 per hour by 2017.

Basically, SB 32 proposes the largest minimum wage increase in a four-year period in the state’s history—a jump that would result in Connecticut having the highest minimum wage in the nation. 

But when most of our neighboring states are offering an $8 per hour minimum wage, how would this be good for Connecticut?

If employers believe that it’s more cost-effective to locate or grow elsewhere, the state will lose job opportunities.  And if businesses go elsewhere, people that started in entry-level, unskilled positions will lose the chance to advance their careers. 

It’s a Tax

In a separate bill on wage, HB 5069 imposes a punitive tax on very large businesses (500 employees or more), as well as many popular consumer franchises. The only way to avoid the new tax ($1 per hour, per employee) would be for those businesses to pay their hourly employees the standard wage–an above-market wage that’s marked up an additional 30% to cover the cost of various employee benefits. 

Proponents are advancing HB 5069 because they make a false and disparaging assumption that because some of the jobs they offer are part time or entry-level, every fast food or big box store employee  is collecting some form of state aid.   

In reality, many of these workers are teenagers or college students living at home – with their only financial assistance coming directly from mom or dad. 

The punitive tax imposed on businesses in HB 5069 is yet another reason for businesses to forgo growing in Connecticut. Or they might choose to reduce employee hours, cut training opportunities, or replace workers with technology.         

These wage-related bills reinforce the poor business cost and business-friendliness rankings given by CNBC and others, and are bad for Connecticut. 

Lessoned Not Learned

In addition, a third proposal l (HB 5256) would require retailers to pay employees two and a half times their normal rate for any hours worked on Christmas and Thanksgiving.  Although the proposal has not yet been scheduled for a hearing, it is yet another employer wage mandate that will set Connecticut apart from our neighboring  states for all the wrong reasons. 

National competitiveness rankings–such as CNBC’s “America’s Top States for Business”– praise Connecticut’s strengths and reveal areas where we’re falling short.        

CNBC’s 2013 report scored Connecticut high for education (#5) and quality of life (#17), for example, but low for the cost of doing business (#43) and lower (#45) overall as a state in which to do business.     

While rankings are debatable, their impact isn’t—in this case, giving the perception that Connecticut is a high-cost, business-unfriendly state.

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede