Labor advocates and business associations disagreed Tuesday over a proposal to fine large employers if they do not pay their employees at a least a standard wage.
Progressive groups and labor advocates are billing the proposal as an effort to “hold large corporations accountable for low wages.” The legislation would fine employers with more than 500 workers $1 per hour for any workers who are not being paid a standard wage in addition to health care benefits or a 30 percent pay differential. The standard wage is calculated by the federal government by geographic area and occupation.
While announcing the bill, advocates targeted employers who pay their workers low wages. They argue that by not paying their employees better and offering them adequate benefits, large companies are passing costs on to taxpayers who foot the bill when those low wage workers receive state assistance.
Under the bill businesses, would have the option of either raising wages or paying the fees to help offset what their employees cost the state in subsidies, Tom Swan, executive director of the Connecticut Citizens Action Group, said at a Tuesday press conference.
“We just think the employers, if they’re going to pay their employees such a low wage that they’re eligible for these [programs], should be paying their fair share to help offset the costs instead of relying on the rest of us,” Swan said.
However, by citing the standard wage, business associations say labor advocates have proposed legislation that will impact far more than what is traditionally considered “low wage” employers. That’s because standard wage rates exist for every hourly occupation in the state—even those you might consider good paying jobs.
That means if the state’s utility companies or large manufacturers have some hourly employees who are working for less than what the standard wage rate is for their occupation, those businesses will either have to suddenly give those employees raises or get hit with a potentially hefty fine, Eric Gjede, an assistant counsel with the Connecticut Business & Industry Association, said.
“This bill dictates directly to employers the exact pay and wages they have to pay their employee. What is that going to tell businesses about Connecticut being a place to do business,” he said.
Paul Filson, political director of the Service Employees International Union, said the current language of the bill is not what advocates intended when they proposed the concept.
Instead, he said they were looking to impact only employers who are paying their workers less than the lowest standard wage rate in the state, which works out to about $11.31 an hour when the benefit differential is added. Basically, labor advocates want the minimum wage rate for large companies raised to $11.31 or impose penalties on them.
The bill comes as the state legislature is considering a proposal by the governor to raise the minimum wage for the second time in two years. If passed, the law would require that Connecticut workers be paid at least $10.10 per hour by 2017.
Several workers spoke at the press conference Tuesday and planned to testify at a public hearing of the Labor Committee later that day. Tina Conners, a 21 year-old McDonald’s employee, said it has been difficult to get by on the wages she earns and she often can not get enough hours. She said minimum wage is not enough to survive on.
“I’m currently living out of my car between Manchester and East Hartford because I can’t afford a place of my own. Most of my money goes to paying for gas to get to work or to stay warm on these cold winter nights,” she said. “Generally, I can only afford to eat McDonalds and some days I go without eating at all.”
The standard wage for fast food workers in the Hartford area like Conners is currently the minimum wage, according to the Labor Department, but the bill would fine her employer unless she was offered benefits or paid more money to buy them herself.
The law would be the first of its kind. The state of Maryland passed a similar concept that was more specifically aimed at the large retailer Walmart. That law was struck down by a federal court judge in 2006.
Advocates are hoping the proposal raised by the legislature’s Labor Committee will avoid the same pitfalls by applying to a wider group of employers. The bill does include exemptions for nonprofit employers as well as part time, seasonal workers.
Tim Phelan, president of the Connecticut Retail Merchants Association, said the proposal seemed aimed his industry, which he said makes up for one out of every five jobs in the state.
“It would send a fairly chilling message that our contributions to the community and economy aren’t being appreciated,” he said.
In addition to the direct impact on retailers, Phelan said the bill would also hurt their businesses indirectly.
“Bills like this are introduced if other businesses decide Connecticut’s not a good place to do business, that harms us if they don’t want to do business here,” he said. “We depend on a vibrant Connecticut economy. We need people with disposable incomes.”