This year’s version of a bill that would fine large employers who don’t pay their workers at least $15 an hour is slightly different than last year’s.
This year’s bill, which received a public hearing Tuesday in the Human Services Committee, would phase in the fine for companies based on the number of employees who weren’t being paid $15 an hour. The fee would work its way up from 10 cents an hour for companies with 500 employees up to $1 per hour for companies with 750 employees.
While supporters of the legislation admit they would rather see large corporations pay their employees $15 an hour, the legislation will help raise the necessary funds to offset the $486 million the state pays in Medicaid and other benefits to workers unable to live on low wages.
Unlike last year’s bill, this year’s would allow the Low Wage Advisory Committee to track the cause and effect of businesses paying low wages and public assistance usage by Connecticut workers. It will also make recommendations about how to use the money collected from these large companies.
The money, which will go back to the general fund, could be used to offset the services being used by low wage workers. The bill doesn’t have a fiscal note yet, but the Office of Fiscal Analysis estimated last year that a similar bill would raise $305.1 million annually.
Like last year, many workers making minimum wage were unable to attend Tuesday’s hearing or had to leave to get to work before their names were called to testify.
It’s estimated that about 80,000 individuals in Connecticut make the minimum wage, which is currently $9.60 an hour.
“Too many underpaid families, like mine, are left unable to survive without the help of publicly funded assistance,” Destiny Rodriguez, 20, said. “Some of Connecticut’s largest and highly profitable corporations continue to get richer while the taxpayers are left to foot the bill.”
Rodriguez, who makes $10.50 an hour working for McDonald’s, said it shouldn’t be like that.
“It’s time to hold these employers accountable and the Low Wage Employer Fee is the right start,” she said. “This bill will ensure that companies like McDonald’s are no longer able to get away with paying poverty wages while working families pick up the tab.”
Lori Pelletier, president of the AFL-CIO, said that over the next eight weeks lawmakers are going to be looking in the “proverbial couch cushion for every nickel and every dime to balance this budget.” So, this legislation and the revenue it could raise “should not be ignored.”
She said wages have been stagnant for a long time and the current system is “really nothing more than a tax break for these profitable companies.”
But opponents of the bill warned lawmakers that if the state implements this law these entry level jobs will disappear and companies will move out of the state.
Suzanne Bates, policy director for the Yankee Institute, said the bill would levy a “tax on entry level jobs.” And that would mean there will be fewer jobs.
Bates added that businesses are unlikely to absorb the fee.
“Instead, they would either cut costs by cutting jobs or benefits or they could raise prices,” Bates said. “Again, those who can least afford to pay would be most hurt by the rising cost of goods and services.”
At least two representatives who represent franchise businesses like McDonald’s and Dunkin’ Donuts, which would be included in this legislation, voiced their opposition to the bill.
Scott Fanning, the president of the Connecticut Franchisee Association that represents about 400 Dunkin’ Donuts restaurants, said he represents small business owners who are being asked to pay a minimum wage that’s 50 percent more than any other small business.
“This legislation is deliberately coercive in that it requires small businesses to choose between paying wages higher than what the law currently allows or to pay a tax that also effectively increases personnel costs. There is no other way to characterize the intent of this legislation,” Fanning said in his written testimony.
The Human Services Committee has until March 22 to forward the bill to the Senate.