$15 Minimum Wage Bad For Connecticut
Author: Michael Saltsman
Publication Date: December 2016
Newspaper: The Hartford Courant
Topics: Minimum Wage
After nearly a year of study, Connecticut’s Low Wage Employer Advisory Board recommended that the Connecticut General Assembly pass a $15 minimum wage law. As the board’s biased name would suggest, this conclusion was foregone, but it doesn’t mean legislators need to act on it.
Connecticut has had a front-row seat to the launch and growth of the Fight for $15 campaign. It originated in New York City in late 2012. In 2016, it has spread to cities across the country, at a cost to the Service Employees International Union of over $70 million, according to the Center for Union Facts, which describes itself as a union watchdog. New York is one of the only states to have aggressively acted on the campaign goals of the fighters for $15. Employers there now face a mind-boggling system of 12 different minimum wage levels, depending on the business type, size and location. By the end of 2018, a $15 starter wage will be law in parts of the state.
It’s so far been a costly experiment. The New York Times has chronicled the closure of diners and local grocery stores in the state’s largest city, many of which find that their business model is no longer compatible with New York City. One diner in Bensonhurst, Brooklyn, shut down this summer as a direct consequence of the state’s coming $15 wage mandate. Elsewhere in the state, the spike in wage requirements for full-service restaurants has created havoc. Numerous restaurants reduced their hours of operation, eliminated staff positions or closed entirely.
Preliminary data from the Bureau of Labor Statistics show that the number of food service establishments fell roughly 3 percent between the first quarter of 2015 and 2016.
None of this should come as a surprise, considering the widespread opposition among economists of both political parties to the $15 policy. A 2015 University of New Hampshire survey of leading labor economists — a bipartisan group that consisted of 60 percent Democrats — found that nearly three-quarters opposed a broad $15 wage mandate. The former chief economist in President Bill Clinton’s Labor Department went so far as to call a $15 minimum wage “extremely risky.”
The wage board report is heavily influenced by a small number of research products provided by pro-$15 advocacy organizations, and doesn’t address the substantial research consensus that would urge caution in pursuing $15. Incredibly, the board cites in defense of its decision a list of economists who supported a $10.10 federal minimum wage — while neglecting to mention that roughly two-thirds of these signers declined to sign on in support of $15.
The board’s report appears to place the greatest weight on a hypothetical estimate of the impact of New York’s minimum wage, from a team of researchers at the University of California-Berkeley that the Albany Times-Union reported had a cozy relationship with labor unions. Even that report acknowledges that roughly 78,000 jobs will be lost from $15 in the state, before trying to spin the “net impact” as positive.
In short, the board volunteered Connecticut’s economy for a risky economic experiment based on little more than the word of researchers who work closely with unions and advocacy groups supporting the Fight for $15. As our president-elect might say, that’s a very bad deal.
A state in strong economic health might be able to afford a policy misstep or two, but Connecticut is not that state. The old mill towns that populate its valleys continue to struggle with job creation; Connecticut’s unemployment rate of 5.1 percent is still higher than the national average of 4.6 percent. The state suffered an employment hit and reinforced its “bad for business” reputation earlier this year when GE announced it was leaving for Massachusetts. On top of all this, Connecticut’s minimum wage will already be raised to $10.10 in 2017 due to a 2014 wage law, which is far above the historical inflation-adjusted minimum wage average at the federal level of $7.40 an hour.
In June, I traveled to Hartford to speak with this board about the negative effects of an extreme increase in Connecticut’s starter wage. It appears as if they did not take my advice into consideration. It now falls to the legislature to read and rebut their bad recommendations. Nothing less than the state’s economic future is at risk.