Ef­fect of state’s new $15 an hour min­i­mum wage un­cer­tain

The News-Times - - FRONT PAGE - By Alexan­der Soule Dan Haar con­trib­uted to this re­port. In­cludes re­port­ing by CTNewsJunk­ie. [email protected]; 203-842-2545; @ca­soul­man

As Sen. Eric Berthel told it Thursday on the state Se­nate floor, he stopped off at a Star­bucks he fre­quents dur­ing a trip to Hartford that morn­ing, where work­ers make the state min­i­mum wage of $10.10 that was the fo­cus of de­bate this week.

Three em­ploy­ees fa­mil­iar with the se­na­tor came around the counter to im­plore him not to vote for the in­crease, Berthel, R-Water­bury, told his Se­nate col­leagues, which he said caught him by sur­prise.

“Each one of these three em­ploy­ees un­der­stood — be­yond any rea­son­able doubt, by look­ing at what has hap­pened to Star­bucks stores in other states in the coun­try where the min­i­mum wage has al­ready gone up — they know ... that they can be re­placed by a ma­chine,” Berthel said.

The state Se­nate voted

21-14 to pass a bill that would in­crease the min­i­mum wage for most em­ploy­ers to $15 an hour. The vote came de­spite warnings by some busi­ness owners and trade groups that they can­not ab­sorb higher pay­roll costs and main­tain their current work­force em­ploy­ment.

Gov. Ned La­mont has sig­naled his in­tent to sign the leg­is­la­tion into law.

From $10.10 to­day, Con­necti­cut would lift the min­i­mum wage in in­cre­ments over four years to $15 in June

2023, be­gin­ning this Oc­to­ber when it would rise to $11. The bill in­cludes a cir­cuit­breaker of sorts giv­ing the state the op­tion of re­vis­it­ing the law if Con­necti­cut ab­sorbs two straight quar­ters of de­clin­ing eco­nomic out­put once the in­creases take ef­fect.

Un­der current Con­necti­cut law, wages are set be­low the $10.10 min­i­mum for staff at restau­rants, ho­tels and bars who re­ceive tips in addition to their reg­u­lar pay. The bill await­ing en­act­ment would re­quire the state Depart­ment of La­bor to study the im­pact of in­creas­ing min­i­mum wages on that sec­tor, with min­i­mum wages re­main­ing frozen for the time be­ing at $6.38 an hour for restau­rant and ho­tel work­ers, and bar­tenders get­ting at least $8.23.

In any in­stances in which tips do not make up the dif­fer­ence with the es­ca­lat­ing gen­eral min­i­mum wage, then in­di­vid­ual em­ploy­ers would be re­quired to in­crease what they pay to cover the gap.

In a study two years ago of the ef­fects of a sim­i­lar hike in Seat­tle, Har­vard Uni­ver­sity re­searchers de­ter­mined that min­i­mum wage in­creases had per­haps the big­gest im­pact on low­er­rated restau­rants that were al­ready near the tip­ping point of un­prof­itabil­ity or go­ing out of busi­ness.

The study es­ti­mated that a dol­lar in­crease in the min­i­mum wage in­creased the like­li­hood by 14 per­cent for restau­rants to close that were given rat­ings by Yelp users near the me­dian. The Har­vard re­searchers found no im­pact of an in­crease on top-rated restau­rants in Seat­tle.

Yet an an­a­lyst from a Washington, D.C., think tank, speak­ing dur­ing a March hear­ing of the state leg­is­la­ture’s la­bor com­mit­tee co-chaired by Sen. Julie Kush­ner, D-Dan­bury, cited stud­ies that sug­gest most busi­nesses adapt to in­creases in min­i­mum wages as they do any other costs.

“Rather than sim­ply cutting staff or hours, busi­nesses are typ­i­cally able to ad­just through a va­ri­ety of chan­nels such as re­duced turnover, higher pro­duc­tiv­ity (and) in­creased con­sumer de­mand re­sult­ing from the wage in­crease,” said David Cooper, a se­nior an­a­lyst with the Eco­nomic Pol­icy In­sti­tute, in his March tes­ti­mony. “Low wage work­ers are con­sumers — and when they have more in their pay­checks they go out and spend it right away.”

A Manch­ester restau­rant owner named Keith Beaulieu dis­agreed, cal­cu­lat­ing that had a $15 min­i­mum wage been in ef­fect last year, it would have swung his bottom line to an $80,000 loss on the year.

And a restau­rant industry lob­by­ist noted that in prior min­i­mum wage hikes, in­creases never topped 50 cents an hour in any given year, giv­ing all small busi­nesses time to make ad­just­ments to what they charge cus­tomers and bud­get for ex­penses.

State Sen. John Kis­sel, R-En­field, revisited that is­sue dur­ing the marathon Se­nate ses­sion on Thursday that pre­ceded the vote.

“Bet­ter to have a wage that’s go­ing up less dra­mat­i­cally over a longer pe­riod of time and have a job, than this dra­matic, fast-paced in­crease and lose a job,” Kis­sel said. “Even if that were the case, I don’t think our state at this point in time can af­ford this. Right now these busi­nesses are talk­ing to me say­ing, ‘We’re barely mak­ing it.’”

But law­mak­ers heard both sides of the is­sue in March, in­clud­ing from Cal­ixto Cornejo, who re­layed his own ex­pe­ri­ences in com­ing to Stam­ford sev­eral years ago, ini­tially scrap­ing by with a jan­i­to­rial job with UBS pay­ing the $10.10 min­i­mum be­fore hook­ing onto a union job in the city that pays him $15.50 an hour.

“I can­not say strongly enough how much of a dif­fer­ence this dif­fer­ence in a ba­sic wage has meant for me,” Cornejo said through a trans­la­tor. “At that time, my wife had trou­ble find­ing work — all we could af­ford was a sin­gle room apart­ment where the three of us slept. I had to take the bus ev­ery­where.

“Now I am able to af­ford a sim­ple but re­li­able car,” Cornejo con­tin­ued. “We were able to move into a slightly bet­ter apart­ment so my (son), now at age 13, can have his own room. It has made a tremen­dous dif­fer­ence in the dig­nity of my fam­ily life.”

Chris­tian Abra­ham / Hearst Con­necti­cut Me­dia file photo

A waiter col­lects an order in March 2017 at Piz­zaco in Strat­ford. Un­der Con­necti­cut’s new min­i­mum wage law that es­ca­lates the hourly rate to $15 an hour, a lower rate for wait­ers and other work­ers who make tips will be frozen, but with em­ploy­ers hav­ing to cover the dif­fer­ence if those tips do not push to­tal com­pen­sa­tion above the gen­eral min­i­mum wage.

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