Three weeks ago, a bill that would fine large employers who don’t pay their employees $15 an hour may have been dead on arrival, but a new study and a fiscal note say it would net the state hundreds of millions of dollars.
Those hundreds of millions of dollars have many lawmakers giving the bill a second look because the revenue it raises is more attractive than some of spending cuts proposed by Democratic Gov. Dannel P. Malloy. That’s why a group of 30 Democratic lawmakers have signed a petition calling for the concept to be included in the revenue package being negotiated as part of the final budget.
How much money could a fine of $1 per employee, per hour raise?
A study released by Jobs With Justice Education Fund — and authored by a University of Connecticut economist and other scholars — found that the state could see an annual revenue gain of up to $189.7 million if employers with more than 500 employees simply pay the fine, instead of boosting the wages of their employees. The Office of Fiscal Analysis was more optimistic about the Senate bill. OFA’s fiscal note says the state would get up to $305.1 million annually from the fee charged to corporations.
Jobs With Justice Education Fund researcher Erin Johansson said Thursday that they contacted OFA to understand the methodology it applied to reach the $305.1 million annual figure, but OFA did not provide any additional information. She said she’s confident in the methodology her organization employed based on publicly available data.
Regardless of whether it’s $189 million or $305 million, Rep. Peter Tercyak, D-New Britain, said the revenue stream is “too significant to ignore.”
He said “economic urgency keeps this bill alive.” And even if the research shows corporations are more likely to pay the fee than boost wages for their employees, Tercyak said he doesn’t believe he “can get over the hump just fighting for poor workers.”
The Senate bill and a similar bill in the House received the support of 30 Democratic lawmakers who have signed a petition to make sure it gets raised or included in the revenue package.
The petition says that “too many of these large corporations make enormous profits by paying extremely low wages and passing the costs of their workers’ health care, child care, and other programs off to taxpayers. It is time for our state to stop writing blank checks, with taxpayer dollars, to these in many cases, multi-billion dollar companies.”
The bill is based on studies that have found workers at large corporations with more than 500 employees often have to use publicly funded programs, such as Medicaid and food stamps, in order to survive. Advocates say the state is subsidizing these large corporations to the tune of about $480 million annually.
Sen. Marilyn Moore, D-Trumbull, said the bill may be raised in the Senate as soon as next week.
“I’m not going to talk about what might happen. It needs to happen and it needs to happen now,” Moore said Thursday at a press conference.
This is the third year the concept has been raised, but it’s the first year it may make it to the floor for a debate.
The bill has the support of religious leaders who said momentum for this legislation is growing.
Rev. Josh Pawelek of the Manchester Unitarian Universalist Church said it would be better if corporations just paid a living wage to their workers, instead of wondering what the market will bear.
“What does a moral market demand? And what does a just, economic community require? It requires a living wage,” Pawelek said.
The Rev. DaVita McCallister, an associate conference minister with the United Church of Christ, said the promise of America is that hard work will bring success, but for too many of our neighbors that promise has been hollow.
”It appears that we value work in this country, right up until big box corporations have to pay for it,” McCallister said. “In the absence of a living wage, our workers have to depend on aid programs such as Medicaid and food stamps and child care supplements.”
She said the corporations benefit from their labor and all the taxpayers of the state have been forced to subsidize those “profitable corporations.” She said all they’re asking for is the corporations to do their “fair share.”
Eric Gjede, assistant counsel at the Connecticut Business & Industry Association, said the legislation likely will lead big businesses to cut back workers’ hours and move toward more automation. He said he agrees with the finding in the Jobs With Justice Education Fund that corporations are likely to pay the fine and not increase the salaries of their workers.
But in addition to paying the fine, he said corporations are going to automate. Restaurants are going to install electronic tablets for customers to place their orders and stores are going to go to move toward more self-checkout lanes.
If that happens quick enough the state is going to see its share of the revenue go down, Gjede said.
“It’s dangerous looking for easy fixes, if you’re not mindful of the long-term consequences,” he added.