The cream of last year’s CNBC crop of America’s Top States for Business shared at least one key to success: Their cost of doing business rankings improved significantly from the year before.
Top-state Georgia jumped from #20 to #8 in the cost of doing business. Texas (overall No. 2) moved up by 12 places; Utah (No. 3) jumped five, from #21 to #16.
Washington State’s cost of doing business ranking moved up 10 places, from #44 to #34, which propelled it up in the CBNC Top States overall rankings from #21 to #7.
In Connecticut, however, where the CBNC cost of doing business ranking dropped four places closer to the bottom, now #47, state lawmakers continue to consider proposals that would make matters worse.
For example, SB 1044 imposes a $15 minimum wage on any small business that’s part of a franchise where all the local franchisees collectively employ 500 people, or any business with 500 or more employees.
Pay the wage or pay a tax of $1 per hour worked by each employee making less than $15 per hour is the choice contained in SB 1044.
This bill, which would be the first of its kind in the nation, was correctly characterized in a Hartford Courant article: “The wage penalty bill, while dressed in moral clothing, is just another budget chip.”
In fact, advocates now want SB 1044 to be folded into the budget, despite not having had a vote in either of the legislative budget-writing committees.
Here are the top 5 reasons SB 1044 is wrong for Connecticut.
- It’s a small business tax. Franchise agreements typically call for the individual franchisee to pay local taxes – meaning Connecticut’s small businesses will be impacted.
- Not all unions are on board. Labor organizations representing grocery store employees said this tax would "negatively impact members" and result in "increased grocery prices" that could "adversely impact our workforce.”
- It expands state government. According to a recent study, this bill will create the need for nearly 1,000 more state employees—worsening the state’s fiscal woes by increasing bureaucracy and unfunded state employee pension obligations.
- Detour ahead. There’s no guarantee the taxes collected won’t be diverted away from the beneficial programs they’re supposed to fund and into the state’s deficit-ridden General Fund—just like what’s happened with the Special Transportation Fund and others.
- It sets up a repeat of Seattle. Both large and small businesses in the state will face a new $15 minimum wage. But after Seattle introduced a $15 minimum wage, many businesses began trimming their workforces and cutting other benefits; some are closed and left the city. Those jobs are gone.
There are many other solid reasons to reject this bill, including the fact that it takes into account only wages and ignores that employees may be receiving far more than $15 per hour in non-wage benefits.
And it’s based on a false premise--that every person making less than $15 per hour is a recipient of state services. The fact is, many are teens working first jobs, retirees, or individuals working a second job for supplemental income.
Ultimately, such a proposal sends the wrong message. While our neighboring states are encouraging business and job growth, this tries to impose a massive new punitive tax on Connecticut job creators.
Passing SB 1044 or folding the bill into the budget would be disastrous for the state’s economy. Lawmakers should walk away from this proposal.