SEEKING A MINIMUM WAGE DEAL
Local business owners and advocates of raising the minimum wage are struggling to find common ground amid conflicting studies and political posturing.
“This has been a long time coming,” Rep. Robyn Porter, D-New Haven, announced before attending a Labor and Public Employees Committee’s public hearing on a bill that would increase Connecticut’s minimum wage to $15 by 2022.
It’s been roughly five years since Connecticut gradually phased in the $10.10 hourly minimum wage that’s been in effect since 2017.
“This legislation ... will help bring much-needed revenue back into the state economy by putting more disposable income into the pocket of workers — money that goes back into our communities and produces more revenue for the state,” she said.
Argued Eric Gjede, vice president of government affairs for the Connecticut Business and Industry Association, “That’s a significant increase and it doesn’t give business time to figure out how they are going to adapt or how they are going to be able to afford those increased labor costs.”
If passed, the bill would increase Connecticut’s hourly minimum wage to $12 by Jan. 1, 2020; $13.50 in 2021; and $15 in 2022, with future increases automatically tied to a rise in the consumer price index.
Business advocates said that three-year plan would place added pressure on employers’ bottom lines and lead to staff cuts. Gjede said the CBIA would rather extend the full increase to about seven years out.
“The workers are the customers and the consumers and if we are not paying them enough, then it stands to reason that all of the industries that they would be spending disposable income on are also going to suffer.”
Lindsey Farrell, executive director of the Connecticut Working Families Party
Potential job loss
The CBIA posted on its website a study by the Employment Policies Institute, a Washington, D.C.,-based think tank that describes itself as non-partisan, that looked at minimum wage legislation similar to Connecticut’s already proposed in California.
It estimated that raising the minimum wage would result in a loss of almost 400,000 jobs, with half coming from the retail trade and accommodation and food service industries.
It also said that companies would rethink their hiring practices, opting to hire two more-skilled workers instead of three non- or lower-skilled workers.
“It will eliminate a lot of jobs,” said Doug Wade, CEO of Wade’s Dairy in Bridgeport. Wade has long been a proponent of raising the federal minimum wage but opposes the amount that lawmakers are looking to get for Connecticut workers.
Gjede, along with other industry observers, said the higher wages could result in an increase in automation in certain industries.
“Businesses are always looking for ways to find efficiencies and some level of automation would occur anyways,” Gjede said. “As hourly wage continues to go up, that automation becomes more and more of an affordable alternative to personnel.”
Chain brands like McDonald’s are transforming thousands of restaurant locations nationwide, adding kiosks and other technology with a goal of fewer human workers and more self-service formats.
“Bigger companies like McDonald’s will look at machines to do a lot of the jobs that people are doing now, so it could have the adverse effects that they are describing in California,” Wade said.
A similar move at Stop & Shop, which already has experimented with robots that roam aisles on cleanup work, has played a role in a standoff between the grocer and its workers. More than 600 Stop & Shop employees voted to go on strike this week following the company’s most recent contract offer, which includes cuts to
hours and benefits and increased automation, among other things.
A hard sell
Advocates for workers said they are not buying EPI’s study.
“It’s incredibly cynical that we have to pay human beings less than it costs to run a robot for their work to be valuable and paid,” said Lindsey Farrell, executive director of the Connecticut Working Families Party.
According to Farrell, the EPI study’s findings are flawed.
“The question of automation is a huge topic, and the reality is tech
marches onward and it always does,” Farrell said. “We make decisions about what to automate and what tech to embrace for a variety of reasons.”
In a state that is looking to overcome ongoing economic woes, supporters of higher wages think raising the minimum is a step in the right direction.
Another study, this one conducted by the University of California Berkley, estimated that a higher minimum wage would reduce worker turnover and increase worker purchasing power.
The study found that a $15 nationwide minimum wage by 2024 would ultimately increase living standards for about 41.5 million workers and their families without causing too
much damage to employment at a small price increase borne by all consumers.
The study estimated that businesses could absorb the remaining payroll cost increases by increasing prices by 0.6 percent through 2024 without causing waves among consumers.
“The workers are the customers and the consumers and if we are not paying them enough, then it stands to reason that all of the industries that they would be spending disposable income on are also going to suffer,” Farrell said.