Wage Hike Poses Economic Threat as Job Growth Struggles
Have state lawmakers finally realized that increasing the minimum wage, when not dictated by the market, hurts the economy?
Earlier this month, on a 7-6 party line vote, the legislature’s Labor and Public Employees Committee approved HB 6208, which raises the state’s minimum wage, currently $10.10 per hour, in equal steps over the next five years until it hits $15 per hour by 2022.
The business community and municipalities opposed the bill, arguing Connecticut’s lackluster recovery from the recession means this is not the time to add to the cost of creating jobs.
Connecticut ended 2016 with a net loss of 200 jobs, the first year since 2009—the heart of the recession—the state did not post employment gains.
We were the only New England state that lost jobs last year and our post-recession job recovery rate—just 74%—is the slowest in the region.
Massachusetts leads the region, recovering over 300% of lost jobs, followed by New Hampshire (194%), Vermont (152%), Rhode Island (132%), and Maine (106%).
Connecticut’s 4.7% unemployment rate is also a full percentage point higher than the New England average of 3.7%.
Proponents of increasing the minimum wage routinely claim providing higher wages to entry-level workers will stimulate the economy by causing an increase in local spending.
They forget that requiring businesses to pay more money doesn’t mean they actually have that money to pay out.
When the market doesn’t call for increased wages, it means businesses must cut somewhere in order to comply with the law.
Lawmakers should be doing everything they can to drive job growth—not making creating jobs and providing state services more costly.
In fact, Connecticut has raised its minimum wage each of the last four years, yet the projected stimulus of these increase have yet to materialize.
There is some indication state government is starting to understand that increasing the minimum wage has a negative impact.
An analysis of the minimum wage bill by the nonpartisan budget office showed the proposed increase costing the state Office of Early Childhood an additional $2.3 million in fiscal year 2019.
That increases to about $7.3 million by FY 2022.
Increasing the minimum wage means the cost of providing these important services will become more expensive.
Given the state's fiscal issues, fewer services will be provided and painful cuts will have to be made.
Connecticut businesses, unfortunately, know that pain all too well.
An increase in the minimum wage is a bad idea for Connecticut.
Lawmakers should be doing everything they can to drive job growth in the state—not doing things that make creating jobs and providing state services more costly.
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