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February 17, 2019

Why $15.00 an hour Will Be Bad for Connecticut


Governor Ned Lamont made it one of his rallying cries during the election to pass a $15.00 per hour minimum wage.  Democrat legislators were already on board and Lamont gladly embraced this partisan issue to drive people to the polls.  He painted Bob Stefanowski as heartless for not wanting to help Connecticut’s lowest wage workers earn more money.

The arguments against raising the minimum wage usually center around how it’s bad for business and will raise costs to consumers.  While these factors do play a role in making the state more expensive and harder to do business, the most insidious aspect of these increases is that workers lose jobs.

The standard as of late for data on raising the minimum wage to $15.00 per hour have centered around the City of Seattle who was the first to mandate such a wage.  Conflicting reports have been put out by the University of Washington first saying that it would be good for the city and then after data was actually complied, after implementation, that it was indeed hurting workers.  Several economists disputed the claims by the university in a 2017 report saying that workers were actually making less money because hours were cut.  Researchers at the school then tried to backtrack a bit and said that long time workers in low wage jobs were making $84.00 more per month but that the wage increase was hampering employment for people not previously employed.  They theorized that employers did not want to hire inexperienced workers at the higher wage.  Much has been said on both sides of the argument that the booming Seattle economy was skewing results.

CT Chronicle decided to look at labor statistics provided by the Board of Labor Statistics for the U.S. Department of Labor to determine what effect the increase to a $10.10 minimum wage had on Connecticut’s labor force.

In 2014 Connecticut passed legislation mandating that employers pay a minimum wage of $10.10 an hour graduated over three years.  As illustrated in the chart below, this did have the intended result of increasing workers’ wages in a sector that employs well over 250,000 people. The largest of these sectors are fast food, other food service and retail workers.

 

 

 

 

 

 

However, in Connecticut this increase also cost the state 6,110 jobs in these sectors alone.  This is in contrast to a drop in the overall unemployment rate in the state.  It would seem that the rise in rate was more detrimental to low wage workers as far as employment prospects go than in all other sectors of the labor market.

 

 

 

 

 

 

Additionally, Connecticut fell further behind in the national average of employment in these sectors. This last data ratio further illustrates how the labor force has been affected by an increase in the minimum wage.

 

 

 

 

 

 

The data is conclusive that in Connecticut, with our fragile economy, we cannot afford to increase the wage to $15.00 an hour.  The state needs to be working on methods to help lower the cost of living for all residents as a means to spur our economic development.

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