Is Connecticut one of the richest states in the nation? It depends on who you ask.
The Nutmeg state has one of the nation’s highest per-capita incomes, but the majority of residents have seen their real incomes decline since the Great Recession. It has the largest gap in the U.S. between the top 1 percent of taxpayers, and the bottom 99. Though it ranks as one of the hedge-fund capitals of the world, the state also contains cities like Bridgeport and Hartford, which are among the nation’s poorest. That a state with so much wealth fails to provide for its neediest citizens isn’t just a moral issue — it’s bad public policy.
Proposed legislation making its way through the General Assembly is a pioneering attempt to change the status quo. Its premise is simple: Highly profitable corporations should pay employees a living wage, because when they don’t, those employees use state-funded healthcare and childcare. Connecticut’s taxpayers, in effect, subsidize large corporations. So this new bill gives corporations a choice: Either pay employees at least $15 per hour, or pay Connecticut a fee that will go toward providing healthcare, childcare, and other services for those workers.
Connecticut spends $486 million in public assistance a year to fill the gap between low wages and basic costs of living. Nationally, state and federal governments spend more than $150 billion annually on anti-poverty programs. According to a recent New York Times article, about half of all employees in the home healthcare, childcare, and fast-food industries need public assistance. Of all minimum-wage workers in the U.S., two-thirds are women. And in Connecticut, the vast majority of low-wage employees are adults with families who rely on those wages as their only source of income.
To a remarkable degree, Connecticut residents agree on how to fix these problems. In a recent poll, voters agreed by a 3-to-1 margin that Gov. Dannel P. Malloy and the state legislature should call for more accountability from “big, profitable corporations that pay low wages.” The idea of a Low Wage Employer Fee had the support of 60 percent of voters, and among women of both parties, the idea was especially popular, with 64 percent in favor. These statewide numbers mirror a broad national consensus, including everyone from prominent economists to Mitt Romney, that the minimum wage should be raised.
The truth is that the Low-Wage Worker Fee stands to benefit everybody in Connecticut, not just minimum-wage workers. When taxpayers are forced to fill the gaps left by stingy corporate policy, that helps contribute to Connecticut’s ongoing budget gap, currently estimated at $2.5 billion over two years. Gov. Malloy’s most recent budget proposal makes cuts to social programs such as Medicaid and mental-health services, and will result in a drastically reduced quality of life for the families that rely on these programs to get by.
Business leaders from companies like Wal-Mart and McDonald’s will say that they simply can’t afford to pay higher wages, but research shows otherwise. If Walmart, for example, used the $6.6 billion it spent on repurchasing stock in 2013 to instead invest in the 825,000 workers making less than $25,000 per year, it would have put an extra $5.13 an hour into the pockets of its lowest-paid employees. When low-wage employees are paid living wages, we grow more jobs and create a better, more prosperous economy for all. This bill serves notice, loud and clear, that we’re not going to excuse their inaction anymore.
Heather McGhee is president of DEMOs
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