BEYOND $15?
State’s minimum wage law has lever for inflation relief
With Connecticut’s lowest-paid workers in line for raises in six weeks, the state’s minimum wage could end up climbing beyond the $15 threshold lawmakers set for next year — courtesy of a littlenoticed provision in an enabling 2019 law that links minimum hourly pay to a federal index that tracks payroll costs for employers.
In 2019, Gov. Ned Lamont signed into law a Connecticut General Assembly bill to increase the minimum hourly wage to $15 by 2023.
An early version of that legislation included a mechanism to peg the minimum wage to the Consumer Price Index that measures inflation. Lawmakers ended up scrapping that in favor of linking the minimum wage instead to the Employment Cost Index updated monthly by the U.S. Department of Labor.
Speaking this week in Hartford on budget adjustments for the upcoming fiscal year, Lamont referenced the pressures many workers continue to face as a result of the COVID-19 pandemic and a spike in household costs like rent, vehicles and gas.
“For me, the No. 1 priority was getting people back to work, doing everything I can to keep this economy growing,” Lamont said Monday in Hartford. “Make sure it’s an economy that leaves nobody behind and it means real opportunity for everybody.”
In Connecticut, employers must pay at least $13 an hour with a few exceptions, including workers who make tips.
Despite struggles to fill open slots, some employers continue to offer starting pay below $15 for jobs requiring minimal qualifications.
Connecticut’s minimum wage rises a dollar starting in July, with one more hike scheduled for July 2023 to reach the $15 threshold that activists have been lobbying to make the national standard. Annualized, that will allow the lowest paid workers to earn an extra $4,000 on top of the $27,000 the $13 minimum wage equates to for full-time jobs.
Through its historic progres
factors may have an impact on consumer demand.”
Stamford-based WWE was another beneficiary of consumers getting out more. It posted first-quarter revenues of about $333 million, an increase of 27 percent. The company was boosted by live events, including WrestleMania 38, held April 2 and 3 in front of a total of about 156,000 fans at AT&T Stadium in Arlington, Texas.
“We’re pleased with the results for the quarter,” WWE President and Chief Revenue Officer Nick Khan said on a May 5 earnings call. “We’re confident the company’s momentum is strong coming out of WrestleMania 38.”
Consumer spending, in fact, is so strong that the Federal Reserve is trying to tamp it down in order to control inflation and give supply chains time to catch up. Fed Chairman Jerome Powell, in interviews with national media outlets including Marketplace, said in recent days that slowing demand is necessary to bring inflation back down to the target of 2 percent.
But the spending spree continues, including with Connecticut’s largest consumer-goods makers.
At New Britain-headquartered toolmaker Stanley Black & Decker, the No. 209 firm on the Fortune list,
first-quarter revenues grew 20 percent to about $4 billion — an uptick largely attributable to outdoor power equipment acquisitions.
“Customer demand remained strong across many of our global markets,” Stanley Black & Decker CEO Jim Loree said on an April 28 earnings call. “The volume could have been higher, but for the supply-constrained environment that we continue to make progress on resolving.”
E-commerce also remains robust, contributing to the rising revenues of Stamford-based shipping-and-mailing firm Pitney Bowes, Greenwich-based goods transporter XPO Logistics and Greenwich-based warehouse operator GXO Logistics.
GXO was spun off last year from XPO, with the latter ranking No. 190 on the Fortune list.
“In the short term, as physical retail reopens, we have seen some shifts from e-commerce back to brickand-mortar retail,” GXO CEO Malcolm Wilson said on a May 5 earnings call.
“However, our customers continue to invest heavily with us in developing their direct-to-consumer channels. When you combine this with our high revenue retention levels, we have great confidence in the robust nature of our growth trajectory in 2022 and the coming years.”
Despite the inflation spike — highlighted by the consumer price index increasing 8.5 percent in March, the
largest year-over-year increase since 1981 — many customers can still spend because they have accumulated significant savings since the start of the pandemic.
The personal saving rate — which refers to income left after people spend money and pay taxes — surged to a record of nearly 34 percent in April 2020, according to the U.S. Bureau of Economic Analysis. The rate then dropped, before surging back to about 27 percent in March 2021. Those jumps reflected the impact of federalgovernment stimulus packages.
In the past year, the saving rate has plunged, running at 6.2 percent in March 2022.
Among other key indicators of personal finances, Synchrony’s net charge-off rate for debts that it does not expect to recoup totaled 2.73 percent in the past quarter, compared with 3.62 percent in the same period in 2021.
“When you look at consumers, they are very healthy,” Wenzel said, referring to finances. “There are historically low delinquency rates, low unemployment, a number of open jobs and rising hourly wages across the board to combat inflation.
“Then, for some, they have excess savings they’ve built up during the pandemic. They’re operating from a position of strength.”