State debates proposed hike in minimum wage

Last Thursday, the state legislature’s joint Labor Committee approved a bill that would raise the state’s minimum wage.

If passed by the General Assembly, the measure would raise Connecticut’s minimum wage by a dollar from $8.25 to $9.25 over the next two years, and adjust it each year afterward in accordance with the cost of living index. The Labor Committee passed the proposal in an 8 to 3 vote, but the fate of the bill remains unclear as the economic implications of the bill continue to be debated, with widespread opposition among business owners and Republicans.

“The goal is to increase the economic power of low-income workers, because the people who are working on low-wage jobs are operating on a very narrow margin,” said Senate Majority Leader Martin Looney, who represents New Haven. Looney said that he has supported increases in the minimum wage to improve the living conditions of low-income individuals in the past, and led a successful effort to pass Connecticut’s first Earned Income Tax Credit alongside Gov. Dan Malloy last November.

Connecticut’s minimum wage is tied for the fourth-highest in the nation, behind those of Washington, Oregon and Vermont. But Looney said Connecticut’s minimum wage is “higher than the national average” because the state’s cost of living is also much higher, and that the bill hopes to adjust for that.

One of the bill’s Republican opponents, State Sen. Rob Kane of Watertown, said the bill comes at an inopportune time and will hurt businesses’ ability to operate in an uncertain economy.

“You can see that businesses are really struggling right now and are trying to stay afloat with all the high energy costs and real estate costs and everything else, and raising the minimum wage will really create a burden on our small businesses,” Kane said. “$8.25 is not really $8.25 if you add in insurance and taxes and everything else. If you were to lower that wage, businesses could hire more people based on the lower wage and people could find more work.”

Kane said the majority of minimum-wage jobs are held by teenagers and college-age young people, and added that he is working on a bill that will lower the minimum wage for members of the workforce between 16 and 20 years old.

But Looney said raising the minimum wage will not add to businesses’ costs or disrupt the state’s labor market.

“Historically, increases in the minimum wage have not led to reductions in employment and have not decreased jobs,” Looney said.

Kane and Looney both said the bill’s prospects in the General Assembly are uncertain. The bill must go through two other committees before going to the House and Senate for final approval.

Yale economics professor Giuseppe Moscarini said in an email that he foresees both positive and negative effects from a minimum wage hike should the bill be passed. While he said increasing the minimum wage can stimulate immediate spending because minimum-wage workers tend to spend all or most of the money they earn, his main concern lies in the bill’s clause that adjusts to the cost of living index after the third year.

“The minimum wage has obviously a redistributional purpose, and in this respect it works very well ­— low-income workers do gain,” Moscarini said in the email. But he added: “[I]ndexing to inflation… can cause a compression of the wage structure from below. If above-minimum wages will not be automatically adjusted, that may be very distortive.”

Students from various political organizations weighed in on both sides of the minimum wage debate. Harry Graver ’14, chief whip of the Yale Political Union’s Conservative Party, said in an email that he believes the bill to be a “political calculation” and that it will hurt the low-income workers it is trying to help.

“Simply put, sometimes the productivity of someone’s labor does not justify the arbitrarily determined minimum wage,” Graver, a staff columnist for the News, said in the email. “This doesn’t force businesses to be charitable, but instead to just not hire certain employees.”

But Zak Newman ’13, president of the Yale College Democrats, said he supports the bill in part because he read about an economist’s testimony at the Labor and Public Employees Committee’s Feb. 28 public hearing. The economist said that “this is a good time to be making this move… and it won’t hinder job growth.”

“I think it is really important that we think about what is really a livable wage and a wage that will allow people to be contributing back to the economy,” Newman said. “I think we’ve seen in the economic downturn that people with the lowest paying jobs have been hardest hit, so with Connecticut’s economy on the mend, we should support these people and get them back on their feet.”

The federal minimum wage is currently $7.25 an hour.

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