Statement from our Executive Director, Jim Horan, on House and Senate Passage of a Raise to the Minimum Wage (Senate Bill 32)
Hartford, CT - Today, both chambers of the Connecticut General Assembly passed SB 32, a bill which increases the state's minimum wage to $10.10 by 2017 and provides a meaningful raise to our lowest income families. With these votes, SB 32 is now being transmitted to the Governor, and once signed, the State of Connecticut will have the highest enacted minimum wage in the country. We applaud our state lawmakers for their leadership on this issue, and for providing a strong example to the rest of the country and Congress.
This increase in the minimum wage will directly help 140,000 workers, many who are women with children, move out of poverty. Under Connecticut's current minimum wage of $8.70, a minimum wage worker working full time, 52 weeks a year, earns only $18,096 a year. The federal poverty level for a family of three (for example a mother, and two children) is $19,790. With the increased minimum wage of $10.10, this same mother will now earn $21,008 a year. This higher wage means greater financial stability for families, reduced need for government safety net programs, and higher earnings for students who are working to pay for college.
We thank Governor Malloy for his leadership on raising the minimum wage to $10.10 and the members of both the House and Senate for passing Senate Bill 32. Connecticut is a leading state in addressing poverty and promoting economic success through progressive policy change, including the state EITC and paid sick days, and now this increase in the minimum wage.
The Connecticut Association for Human Services (CAHS) is a nonprofit policy and program organization that promotes family economic security strategies to empower low-income working families to achieve financial independence. Our mission is to end poverty and engage, equip, and empower all families in Connecticut to build a secure future.
As we continue to follow Governor Malloy's proposal to raise the state minimum wage to $10.10, and the President's effort to do the same on the Federal level, we wanted to share with you some great work that is being done by our friends at the Economic Policy Institute (you can read some of our previous blog coverage on the minimum wage campaign here).
One of the most pervasive myths about the minimum wage (second only to the fear that a raise is a job killer -- in a previous post we shared a number of resources that debunk this misconception) is that it is mostly being earned by teenagers who need spending money. This infographic produced by EPI shows us that this is not the case:
A 2012 analysis produced by EPI told a similar story; in that year EPI determined that if the minimum wage had been raised to $9.80 here in Connecticut over 80% of the effected workforce would have been individuals over age 20.
These minimum wage earners are also disproportionately women. This map from the National Women's Law Center shows that nationally almost two-thirds of minimum wage workers are women, while here in Connecticut, women are six out of every ten minimum wage earners.
So as we can see -- a minimum wage increase is a targeted reform that will help women and families in Connecticut, and across the country, move out of poverty and towards economic stability. Continue to follow us here on the blog, as well as on Twitter and Facebook, for updates on the state and federal campaign.
President Obama came to Connecticut March 5 to boost his proposal to increase the minimum wage to $10.10/hour. It was heartening to see the President speak passionately at Central Connecticut State University in New Britain about his “common sense” proposal to ensure that someone working full-time won’t earn wages below the poverty line.
President Obama was joined by Governor Dannel Malloy and three other New England governors who are proposing to raise state minimum wages. While the federal proposal faces an uphill battle in Congress (despite support from 71% of the public nationally), the state efforts in Connecticut and nearby states have a much better chance to become law.
Governor Malloy proposes to raise Connecticut’s minimum wage, which rose to $8.70/hour January 1 and rises to $9.00 in 2015, to $10.10 by 2017. Nationally, the minimum wage is stuck at $7.25. Even an increase to $10.10 per hour would only bring the minimum wage to the buying power it had in the late 1960s. Still, this is an important step in the right direction.
There is some concern, including a recent Congressional Budget Office report that an increase to $10.10 nationally could result in the loss of 500,000 jobs nationally. That report shows 16.5 million workers would benefit from an increase in wages, and bring 900,000 people above the poverty line. Despite the CBO report, most economists think that increasing the minimum wage has no discernable impact on jobs, as noted in this blog post by Doug Hall of EPI.
At CAHS, we’re particularly excited that Governor Malloy and the General Assembly are leading the way—combined with creation of a state EITC, paid sick days, moves toward universal access to pre-K, and post-secondary education proposals—to create a “two generation strategy” that boosts education and employment for low-income children and families. These are the policies Connecticut needs to reduce poverty and create a sustainable, long-term future that benefits all residents.
The minimum wage is one of the most hotly debated topics on economics, and there is an extensive literature on the subject to rely on. Here is what we know on the effects of a minimum wage increase, and why it is good policy for Connecticut:
- Low wages have a direct cost from the state: we end up subsidizing employers as workers have to apply to government benefits to make ends meet. Wal Mart is probably thebiggest welfare queen in the country, in many ways.
- This graph is still the best reason to raise the minimum wage. Right now, most economists think raising it is a good idea.
- From last year: Wade Gibson and Matt Santacroce´s report on who earns the minimum wage in Connecticut, and how it will help the state´s economy.
- There is a widespread consensus that raising the minimum wage reduces poverty, according to this literature review by Arin Dube at UMass Amherst.
- The classic study on how minimum wage increases affects jobs is this one by David Card and Allan Kruger. The found that the evidence that it killed jobs was almost non existent.
- Since then, further research has shed some additional light on the effects of the minimum wage. Mike Konczal has a good review here. Most evidence still points in the same direction: minimum wage increases raise incomes and reduce poverty without destroying jobs.
- For the truly dedicated, the operational word on why this happens is monopsony. The labor market is "special" as "buyers" of labor (that is, employers) have more market power than sellers (that is, workers). Follow the link to see some basic economic modeling.
- The CBO recently published an analysis on the effects of raising the minimum wage to $10.10 at the Federal level. Their take is that it would increase the earnings of 16.5 million workers, and move 900.000 individuals out of poverty. The only families that see a (very modest) drop of income are those making six times the federal poverty level. The report does say that the increased minimum wage might eliminate some jobs (500,000, to be exact), but the tradeoff in terms of families with higher incomes (and which families get those incomes - mostly working poor) is probably worth it.
We at CAHS support the increase - any potential costs are modest, and the benefits greatly outweigh the drawbacks. Any economic policy has trade offs. An increase in the minimum wage greatly favors those that are the most in need.
Barry Ritholtz, in Bloomberg, ask a a simple question: What should it mean to be employed full time in America?
He is interested, specifically, in Wal Mart, and why a huge, profitable, wealthy mega corporation does not pay its workers enough to makes ends meet. First, let's go over how large Wal-Mart is:
Wal-Mart has 2.2 million employees, including 1.3 million hourly workers. It employs 1.2 million people in the U.S. alone. Gross revenue is $475 billion, generating profits of $17.20 billion. It dominates the discount retail space, and according to Bloomberg, has a 66.70 percent market share (...). . Each week, it has 200 million customers at more than 10,400 stores in 27 countries. If the company were an independent country, it would be the 25th largest economy in the world.
The problem is, this gigantic economic colossus does not pay its workers enough to make ends meet. In fact, Wal-Mart Employees receive $2.66 Billion in government help every year.
Wal-Mart's low wages have led to full-time employees seeking public assistance. These are not the 47 percent, lazy, unmotivated bums. Rather, these are people working physical, often difficult jobs. They receive $2.66 billion in government help each year (including $1 billion in healthcare assistance). That works out to about $5,815 per worker. And about $420,000 per store.
Here at the CAHS blog we talked about this issues last November - a family of four with two adults working full time at Wal-Mart in Connecticut would only get less than two thirds of their income and benefits from the company; the state and federal governments would be footing the bill for the rest, with SNAP, Husky, Care 4 Kids and other benefits.
Can Wal-Mart increase its wages? Ritholtz does the math, and yes, it can:
Can Wal-Mart afford to increase employees’ salaries? Let's crunch the numbers. The retail giant does $474.88 billion a year in sales; across their 2,200,000 employees, that nets out to $213,255 sales per employee. Given a 5.93 percent operating margin, that nets out to $12,646.02 profit margin per employee. Adding $3 per hour per full-time employee would consume almost half of that profit. But that before any potential increase in productivity, reduced turnover costs and higher revenues.
The full article is here, with plenty of links showing why low wages are one of the reasons why Wal-Mart has very high staff turnover and very low productivity per employee. His analysis of McDonalds, another large corporation prone to dumping part of its labor costs on the tax payers, is here.
The obvious solution is, of course, an increase of the federal minimum wage, something that we have advocated for years. The economic benefits of an increase would be immediate, but Congress doesn't seem to eager to move in that direction.
There has been plenty of talk these past few days on how many jobs in our state and across the country simply do not pay enough. This was put into focus on a very stark, glaring way when one Wal-Mart in Ohio hosted a food drive for its own employees, seemingly oblivious to the fact that they needed this sort of charity because Wal-Mart is not paying them a living wage on the first place. That coming from a company that is spending $7.6 billion a year repurchasing its own stock to prop up share prices and make stock holders happy.
Leaving food drives aside, these low wages are also a drag on public budgets. Wal-Mart, as many other big employers, not only do not pay much to their workers, but also encourage them to apply for public benefits to fill the gap. Instead of offering a living wage, their workforce is forced to rely on SNAP (Food Stamps). Instead of providing health insurance, workers have to rely on Medicaid or Husky. As a result, a two-income working class family in Connecticut can end up receiving almost as much money in public, taxpayer-funded benefits as they receive in wages.
In our new policy brief, we have a look at the data to see who are these workers, and what is the cost for the state's budget. You can download the policy brief here. Worker's share of the national income pay has been steadily dropping for the past two decades. It is time to change this.
While CT News Junkie reports that the "tide is turning against winning the minimum wage this year," support continues to be strong among progressives and House leadership.
- A new poll shows most Connecticut residents support increasing the minimum wage: 64% of all voters, 86% of Democrats, 54% of Independent voters and 45% of Republicans.
- Rachel Maddow reminds us that minimum wage is a winning issue. 76% of voters favored increasing the minimum wage in a referendum: "You can thank the minimum wage being on the ballot for putting Claire McCaskill over the top....common wisdom says economic populism does not win elections: Missouri has proved that wrong."
- Connecticut's minimum wage of $8.25 per hour is just not enough to live on - and we are asking people to do the impossible when we ask them to pay their bills and raise their kids with what they earn at minimum and low-wage jobs. The Permanent Commission on the Status of Women's new Basic Economic Security Tables examines the actual costs of living to show that a true "BEST" wage is twice minimum wage.
Minimum wage means $17,160 per year for someone working 52 weeks a year --no vacation. Even after that family gets a federal and state Earned Income Tax Credit, they are paying far too much for necessities to have enough let over for a reasonable quality of life. Let's give workers enough income to pay their bills, contribute to the economy and care for their kids. The proposed increase is far below what economists say would cost the state jobs, and it would boost the economy by injecting more consumer dollars into local businesses.
The time IS now.
Minimum Wage Speakers Needed
Several advocates and legislators are working on legislation to raise the minimum wage. A press conference is set for next Tuesday, January 31, at 1 pm.
Organizers are looking for minimum wage workers to testify about how an increase would impact them. If you or anyone you know or work with works for minimum wage, and is willing to speak and available at that time, please have them contact me at (203) 667-5956 or firstname.lastname@example.org