Regional Leaders Greet Minimum Wage Increase


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The Connecticut State Capitol (Credit: Michelle Lee/ Creative Commons)

On May 28, Gov. Ned Lamont fulfilled a campaign promise and signed a bill to raise the minimum wage in Connecticut. As of Oct. 1, 2019, the minimum wage will increase from $10.10 to $11.00 per hour. By June 1, 2023, the minimum wage in Connecticut will reach $15 per hour.

Connecticut is the seventh state to pass the $15 per hour minimum wage, neighboring Massachusetts voted for the increase last year.

“As a business owner, I’ve thought long and hard about this issue, and I decided it was important enough to bring up the lowest-level pay for employees because I believe getting people to a higher wage is critical for the health and welfare for the State of Connecticut. It’s the fair thing to do,” said State Sen. Norm Needleman, who supported the increase, and owns Tower Laboratories, which is headquartered in Essex and employs 150 people in Connecticut.

Unlike previous minimum wage bills, this bill is adjusted to the employment cost index each January starting in 2024. That means that future increases will not require a vote in the assembly.

“I wish the minimum wage had been indexed since I entered the workforce so we wouldn’t be dealing with an abrupt change right now,” Needleman said. “I suspect the minimum wage would be significantly higher had we done that, and we wouldn’t be fighting this battle right now. I’m glad this bill addresses that going forward.”

Other businesses owners – especially those in the food service industry – are more concerned than Needleman.

“Small businesses are the lifeblood of our economy and the pressures that this assembly is putting on small businesses is making it difficult for them to make the profit necessary,” to survive, said State Sen. Paul Formica during his address to the assembly on May 16. Formica has owned and operated a restaurant since 1983.

Formica mainly expressed concern about employees in the back of the house who are often paid at or close to the minimum wage. He called the increases — about $1 per hour every 11 months — “aggressive.” Previous increases between 2014 and 2017 were about 45 cents per hour per year.

According to Jordi Viladas, a chef at a restaurant in Old Saybrook, the fact that the wage increase does not affect tipped employees will help fine dining restaurants weather the change.

“Where I work, already the back of the house people are being paid $15 or more,” Viladas said. “I just don’t see that in the fine dining area it is really going to be an issue. I just think that there has been a lot of fear mongering about this and whether that’s even founded is yet to be seen.”

Viladas said the increase in the minimum wage will have a much bigger impact on fast food restaurants where almost all employees are paid at the minimum wage.

“Fast food and businesses that have low-skill positions that can be automated certainly will be,” Viladas said. “They aren’t going to go tomorrow, but someday soon.”

The President and CEO of the Eastern Chamber of Commerce, Tony Sheridan, agrees with Viladas that the increase will certainly impact small businesses, which may result in the fewer jobs initially.

“These things tend to balance themselves out in the long run, but there will be pain felt,” Sheridan said, “and anyone who doesn’t think that is kidding themselves.”

With the lowest worker pay increasing to $15 per hour, full-time employees currently making $15 per hour are likely to begin demanding higher wages, causing an upward ripple and a general wage inflation.

One study after the wage increases began in Seattle published in Social Work & Society showed that a significant minimum wage increase resulted in tuition increases and reduced hours for staff, both practices that could negatively impact low-income workers and families.

Sheridan said he believes the additional cost to employers for higher wages will be passed on to consumers. Larger companies – like grocery store chains – will likely be able to handle the cost without raising prices, according to another Seattle study.

Currently Washington has a tiered wage increase that requires companies with more than 500 employees globally to pay $16 per hour, while businesses with fewer than 500 employees must pay $15 or $12 per hour depending on if the workers receive tips.

For Southeastern Connecticut with a substantial portion of businesses dependent on summer labor during the tourist season, an exception in the bill for employees under the age of 18 who work for less than 90 days is significant. For towns with large parks, beaches and public amenities, this exception will allow them to sidestep some of the increased cost.

When the bill was first in discussion Old Saybrook First Selectman Carl Fortuna asked his director of Parks and Recreation what the effect of a $15 minimum wage would be on the town budget. The added cost for Parks and Recreation amounted to an increase of $40,000.

“If any department came into me and said they needed a 7 percent increase you’d get laughed out of the park, but that’s what we’re talking about here,” Fortuna said. “The good news is we can plan for it.”

Or at least they can plan for it starting next year. Old Saybrook, just like Old Lyme and most other Connecticut towns, passed their 2020 budget at the beginning of May, but the first increase to $11 will take place during this year.

“The legislature is fantastic at passing legislation after most towns have already passed their budget,” Fortuna said.