As anyone who owns a business in Connecticut can attest to, the high cost of doing business in our state and genuine fear of superfluous policy decisions driven by pressing budget problems, is no recipe for success or growth.
The Legislature is currently considering a bill to raise the state’s minimum wage above the current $10.10 per hour. For Connecticut’s grocery stores and restaurants, whose combined workforce consists of tens of thousands of hourly employees, the costs are steep.
With this backdrop, before state government mandates a minimum wage increase this session, we in the business community ask legislators to consider the following:
Now is not the time: Connecticut’s economy has never fully recovered from the 2008 recession, add to that two of the largest tax increases in state history over the last six years. State government is strangling businesses, putting up the going out of business sign through excessive taxes and regulation.
Outmigration: Connecticut is losing population year over year at an alarming rate. Many of the state’s most affluent residents are transferring personal wealth to competing states with lower taxes. This loss of consumer foot traffic, so devastating to any business entity and subsequent outmigration, is a direct result of high taxes and mandates such as minimum wage.
Small business at risk: Along with the highest energy costs in the country and higher than average business costs, some local businesses will be forced to close their doors when minimum wages go up. Forced labor rates squeeze profits and in some instances are the tipping point for a small employer.
Jobs at risk: Employers will be forced to reduce hours and eliminate jobs to cover increased labor costs. Many of these jobs are part-time students, retirees, special needs associates and people supplementing their income.
Food prices will rise: Consumers will pay more for food at grocery stores and restaurants as businesses look to absorb costs due to forced labor increases. This will happen in grocery stores and all eating establishments.
Shrinking margins: Traditional brick & mortar retailers are under attack from online entities outside of the state. Most grocery stores and restaurants work on profit margins that are less than 4 percent. A rising minimum wage affects a grocer’s ability to invest in technology and infrastructure to compete successfully.
Let the market decide: As the economy and job market slowly improve, competition in the labor market is driving rising wages. Walmart and Target have already raised starting hourly wages to $11.00 per hour.
Current research: Researchers at the University of Washington studied Seattle’s phased-in increases — first from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016 — and found the second wage increase reduced work hours in low-wage jobs by 9 percent while wages increased only 3 percent. They concluded that the reduction in hours cost the average employee $179 per month, while the wage increase added only $54.
In a previous editorial it was reasoned that recent announcements of local job creation by United Technology Corporation, Stanley Black & Decker and Infosys were exactly the kind of jobs needed to kick start our state’s economy. The economic climate in Connecticut is beginning to show signs of life. Allowing businesses to decide how best to put their profits back into the market is not a bad thing. Our economic recovery is fragile and right now is not the time for increasing the cost of doing business in Connecticut.
Wayne Pesce and Scott Dolch are the executive directors of the Connecticut Food Association and Connecticut Restaurant Association respectively. Both organizations are included among the sponsors of this website.
DISCLAIMER: The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.