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Connecticut’s minimum wage will increase by 4.6% to $15.69 on Jan. 1, the first annual increase required by a recent state law tying the minimum wage to the federal government’s employment cost index, a gauge of inflation. Governor Lamont celebrated the increase the other day. “This is a fair, modest increase,” the governor said, “and the money earned will be spent right back into our own economy and support local businesses.”
Most businesses are not as enthusiastic as the governor implied they should be. For while minimum-wage earners can use the raise, its presumption is that businesses can afford to pay it and many don’t think they can. While President Biden is campaigning for re-election on what he calls “Bidenomics,” polls show the public thinks the economy is weak and many economists anticipate a recession.
The prompt for the increase in the minimum wage is inflation, which has been soaring for several years at a rate far higher than the rate calculated by the government, which long has been fiddling with price measurement criteria to manipulate the official inflation rate downward. The necessities of life in Connecticut — food, housing, fuel, insurance, and such — have been rising much more than 4.6% per year. For many people living standards are falling.
Since the increase in the minimum wage is just a reflection of inflation, it is nothing to celebrate. Indeed, inflation should be a major political issue, but no one in authority in Connecticut, from the governor to the state’s congressional delegation on down, seems to be inquiring into inflation’s causes. It’s as if inflation is a force of nature, like the weather, beyond human control.
Meanwhile those elected officials constantly announce government’s distribution of new goodies or propose new goodies and programs without also specifying how they are to be financed. The assumption is that no taxes are necessary because everything now can be financed simply by money creation. There is no official acknowledgment that if money creation exceeds the economy’s increase in production of real goods, it might have something to do with inflation and the demand for an increase in the minimum wage.
While the federal government says a family of four is impoverished if its income is below $30,000 per year, this month the United Way of Connecticut said that inflation has been so high lately that to avoid poverty a family of four in the state needs an annual income of $126,000. Of course criteria for calculating poverty are arguable, but given current prices, even a single person would find it hard to survive in Connecticut on $30,000 a year, and the political clamor about how difficult life is becoming here suggests that living standards in the state are going in the wrong direction.
That’s what is really signified by the increase in the minimum wage – not prosperity but government’s failure to achieve it.
WHY SUBSIDIZE COMMUTING?: With ridership failing to recover on Connecticut’s section of the Metro-North Railroad between New Haven and New York as well as on the Shoreline East railroad between New Haven and New London, the state Transportation Department plans to reduce the frequency of service and to increase fares, which are heavily subsidized by state government.
Of course running fewer trains and charging more to ride them may reduce ridership even more. It’s not the way to build the railroad and get people out of their cars and into mass transit.
But with people increasingly working from home rather than commuting, there is no longer as much need for trains. Working from home already has emptied much office space in the cities. Why should rail service be immune from such changes?
Indeed, why should state government keep subsidizing people to live so far from their places of employment in the first place? Hasn’t daily commuting long been blamed for the impoverishment of the cities as government, with highways as well as trains, has subsidized the middle class to move out?
Passenger rail has some big advantages but it may have to be rebuilt on trips longer than commuting.
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Chris Powell has written about Connecticut government and politics for many years. (CPowell@cox.net)