Minimum wage increases; Local businesses may experience setbacks

By Lisa Capobianco
Staff Writer
Minimum wage workers throughout the state will see an increase in their paychecks. As of January 1, the state raised the minimum wage from $8.25 to $8.70, the first of two scheduled increases as a result of a new law Governor Dannel Malloy signed last year. By 2015, the minimum wage will increase to $9, according to a press release from Gov. Malloy.
“This gradual increase over two years is a balanced approach to helping hard working men and women without adversely impacting the business community,” said Gov. Malloy in a press release. “Studies have shown that increasing the minimum wage is one of the best ways to get children out of poverty.”
Currently, it is estimated that 70,000 to 90,000 workers earn the minimum wage out of Connecticut’s workforce of 1.7 million people, according to a press release. An employee working 40 hours a week earns $17,160 per year under the current rate of $8.25 an hour.
“This small increase will make a real difference in the lives of 100,000 Connecticut residents that earn minimum wage,” said House Majority Leader Joe Aresimowicz in the release. “Raising the minimum wage isn’t just good for workers. It’s good for business too. A higher minimum wage would inject dollars in our economy as folks spend increased earnings at local businesses.”
Although state leaders say a higher minimum wage will help improve the lives of low-wage workers, local businesses may experience setbacks from the increase.
Art Secondo, the president and CEO of the Southington Chamber of Commerce, said the increase in the minimum wage has become a sensitive issue for local small and medium-size businesses in Connecticut’s economy.
“Overall, businesses will ultimately survive, but will have to depend on lawmakers to re-examine the $250 Business Entity Tax that is imposed upon most businesses each year as well as this latest increase in the minimum wage,” Secondo said. “Business owners traditionally feel that lawmakers do not have a sense of the struggles that small or medium business employers have to endure to make a decent living.”
Assistant Counsel Eric Gjede, who serves on the Government Affairs Team of The Connecticut Business and Industry Association (CBIA), the largest business organization statewide, said the new law for the minimum wage has good intentions, but will hurt the state overall.
“It is a well-intentioned bill that does not help the folks it is designed to help,” said Gjede, adding that the new minimum wage will not help bring local residents out of poverty as the prices of consumer goods and services may increase as a result.
Besides hurting consumers and businesses, the new minimum wage may also have a negative effect on minimum wage employees themselves. The Employment Policies Institute, a non-profit research organization that studies public policy issues surrounding economic growth, reported on its website that employers may hire workers with “higher skill levels” as they endure increased labor costs, resulting in a reduction of low-wage workers and even teenagers. According to the 2012 U.S. Bureau of Labor Statistics, among working teenagers paid hourly, about 21 percent made the minimum wage or less, compared with about 3 percent of employees age 25 and older.
“It will reduce opportunities, especially for teens and people looking for a second job to supplement another income,” Gjede said.
For the Southington Community YMCA, the new minimum wage had a direct effect on the 2014 budget by a cost of $45,000, reported Executive Director John Myers. Although the increase may not cause a reduction of staff members at the YMCA, Myers said it will make an impact on staff members who do make just above minimum wage too. Myers reported that the 45-cent increase will directly affect 220 staff members, and about 20 percent of those staff members are camp employees who work during the summer. He added that a higher minimum wage may also mean an increase in the cost of the YMCA’s classes and activities in the summer.
Despite these changes, Myers said the Y as a whole saw them coming, and will be prepared throughout the year.
“We are moving forward,” Myers said. “We have to be proactive.”

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