Minimum wage hike will impact workers, businesses alike

Minimum wage workers throughout the state will see an increase in their paychecks.
As of Jan. 1, the state raised the minimum wage from $8.25 to $8.70, the first of two scheduled increases as a result of a new law Governor Dannel Malloy signed last year. By 2015, the minimum wage will increase to $9, according to a press release from Malloy.
“This gradual increase over two years is a balanced approach to helping hard working men and women without adversely impacting the business community,” said Malloy in a press release. “Studies have shown that increasing the minimum wage is one of the best ways to get children out of poverty.”
Currently, it is estimated that 70,000 to 90,000 workers earn the minimum wage out of Connecticut’s workforce of 1.7 million people, according to a press release. An employee working 40 hours a week earns $17,160 per year under the current rate of $8.25 an hour.
“This small increase will make a real difference in the lives of 100,000 Connecticut residents that earn minimum wage,” said House Majority Leader Joe Aresimowicz in the release. “Raising the minimum wage isn’t just good for workers—it’s good for business too. A higher minimum wage would inject dollars in our economy as folks spend increased earnings at local businesses.”
Although state leaders say a higher minimum wage will help improve the lives of low-wage workers, local businesses may experience setbacks from the increase. Richard Williams, president and owner of the D.R. Templeman Company who serves on the board of directors at the Plainville Chamber of Commerce, wrote a letter with chamber members and officers to State Senator Jason Welch last spring in opposition of the new minimum wage law, stating an increase will make it difficult for local businesses to compete with other businesses in other states. He also said that as the minimum wage increases, so will the cost food and other goods and services, causing low-wage workers to spend more money.
“Our minimum wage is much higher than the federal minimum wage,” said Williams, comparing Connecticut’s new minimum wage of $8.70 to the federal minimum wage of $7.25. “If we cannot sell our goods because they are overpriced, how can we sell anything?”
At the Central Connecticut Chambers of Commerce, new president and CEO Jim Albert referred to a previous and current position on the minimum wage increase that was practiced under previous administrations (former chamber president and CEO Michael Nicastro).
“We believe a reasonable increase in the minimum wage over a two-year period is fair. But, we are concerned that many small and mid-sized businesses are still struggling with the slow economic recovery and increasing costs and their revenues have not increased much over the past few years, if at all,” he said in an email interview.
Albert said the statement went on to say that an increase in minimum wage may affect those businesses negatively by possibly forcing them to reduce jobs or slow down the hiring process for the future. “In general, we prefer to let market forces help determine all wage increases. But the current increases in Connecticut’s minimum wage from $8.25 to $8.70 in 2014 and then $8.70 to $9.00 in 2015 are reasonable.”
Executive Director of Bristol Preschool Child Care Center Shirley Anderson said while the increase in minimum wage won’t affect her employees, it could affect the parents of her students.
“It may affect some of my parents since we are on a sliding fee scale based on income and family size,” Anderson said in an email. “Some parents pay $8 a week, and cost of care may increase to $16 a week,” based on their potential increase in income.
Joshua Medeiros, the city’s recreation coordinator, said the increase will impact the department’s employees who work as camp counselors in the city, and also the handful of employees who earn minimum wage year-round. He said the department is looking at adjusting its payroll right now which would impact all employees, but he said the individuals who earn minimum wage currently, about 50 between full time and the summer employees, will see their pay increase. He added the increase will impact the department’s yearly budget as well, although he said he doesn’t see the state’s increase making a huge impact on the department.
Assistant Counsel Eric Gjede, who serves on the Government Affairs Team of The Connecticut Business and Industry Association (CBIA), the largest business organization statewide, said the new law for the minimum wage has good intentions, but it will hurt the state overall.
“It is a well-intentioned bill that does not help the folks it is designed to help,” said Gjede, adding the new minimum wage will not help bring local residents out of poverty as the prices of consumer goods and services may increase as a result.
Besides hurting consumers and businesses, the new minimum wage also may have a negative effect on minimum wage employees themselves. The Employment Policies Institute, a non-profit research organization that studies public policy issues surrounding economic growth, reported on its website that employers may hire workers with “higher skill levels” as they endure increased labor costs, resulting in a reduction of low-wage workers and even teenagers. According to the 2012 U.S. Bureau of Labor Statistics, among working teenagers paid hourly, about 21 percent made the minimum wage or less, compared with about 3 percent of employees age 25 and older.
“It will reduce opportunities, especially for teens and people looking for a second job to supplement another income,” Gjede said.
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