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A Misinformed Senate Fears A Minimal Minimum Wage Hike

By Dan Haar

May 01, 2012

A rise in the minimum wage might hurt Sara Tewolde, a New Haven mother from Ethiopia who spent years in refugee camps after her husband was killed in 1999, the year her younger son was born.

That's because Tewolde, 42, hasn't been able to find a job for more than a year, since she injured her shoulder in a fall. It's possible that raising the minimum from the current $8.25 would make it even harder for Tewolde to find work, perhaps as a home-care companion.

Then again, it's possible that a minimum wage increase would have no effect whatsoever on her search — the murky art of economics does not provide clear answers.

Regardless, Tewolde is part of a small group from New Haven called Mothers for Social Justice, which is among the many groups pushing for the state Senate to pass the modest minimum wage bill adopted by the House last week.

Strangely, Senate Democrats are divided and don't have the votes to pass the common-sense measure — even though it would do nothing but keep working poor people right where they've been for decades, with no real threat to the state's economy.

Under the compromise version, the wage would rise by 25 cents in January, then by another 25 cents a year later, at the start of 2014. There will be no $1.50 rise, as House Speaker Chris Donovan wanted, an increase that could have catapulted Connecticut over Washington state as the highest in the nation.

And there will be no automatic future raises based on inflation, a measure that would have done away with the charade we go through every couple of years trying to make sure the bottom rung of the pay ladder stays at about the same distance out of the gutter.

What we have here is a proposal that would, at best, keep the minimum on more or less the same track it's been for 60 years in Connecticut.

A look at the pattern since the wage was 75 cents an hour in 1951 shows that, in real buying power, the wage was higher in the '60s and early '70s, then fell lower in the '80s and '90s. The 50 cents worth of raises in 2013 and 2014 would amount to a 6 percent increase over four years, since the last boost in 2010 — a meager raise in this shaky recovery.

And yet, precisely because of the shakiness of the recovery, lawmakers are resisting the change.

A business lobby that speaks for a tiny percentage of local businesses argues, correctly, that some small employers, typically community retailers, would be hurt by the higher wage at a time when they are barely making ends meet.

It's not just the minimum wage, said Kia Murrell, lobbyist for the Connecticut Business and Industry Association, which opposes the hike. It's the higher wage plus a thousand other forces conspiring to prevent businesses from doing what they're supposed to do — hire.

On the other hand, in retail and food service, many employees making the lowest wages work for larger firms such as Wal-Mart and McDonald's, which obviously can afford to keep their workers on level ground. A report this year by Connecticut Voices for Children and the Economic Policy Institute estimated that 57 percent of the 195,000 retail employees in Connecticut work at firms with more than 500 employees.

That's the trouble with this whole debate: Among workers, a higher minimum wage is crucial for some, such as Tewolde, who has now seen the monthly bus pass rise to $54, but not to others — namely, the suburban, middle-class kids gaining experience in summer jobs.

And among employers, a higher minimum is truly hurtful to some — such as Quassy Amusement Park, as documented by my colleague, Rick Green — and not to others. A 2011 report by the National Employment Law Project showed that just five giant employers — Wal-Mart, Yum Brands (Taco Bell, KFC, Pizza Hut), McDonald's, Target and Sodexo, the food service firm — account for 30,000 low-wage workers in Connecticut.

I won't bother here with an accounting of profits and CEO pay at those companies.

Tewolde, meanwhile, just wants to work. "I apply everywhere," said Tewolde, who worked in a restaurant and boutique in Ethiopia. "Even if it is outside, cleaning, I will do anything."

Why does she support a higher wage that could make an employer decide not to bother hiring her? "If I get a job, it helps me," she said.

And where does that leave us? At $1.50 an hour, which would have been an 18 percent raise, the increase was a tough call. At one-third of that, with no raise since 2010, it's more than a fair compromise.

It ought to pass in the Senate without ado. Raising the wage to keep up with inflation is not "sending the wrong message," as many lawmakers claimed in a three-plus-hour debate last week in the House before the measure passed. It's not sending any kind of message at all. It's just maintaining business as usual.

How about the argument that it's tinkering with the free market? Excuse me; we have no free market when it comes to business handouts such as the state's $50 million-a-year booty for small businesses. Why are the two or three taxpayer-financed jobs created by a dry cleaner better than the economic activity that's spurred by spending among the working poor?

Every penny of wages that go to the working poor is returned to the economy instantly. Keeping people below poverty wages costs us more in the long run. Yes, a few jobs will be lost, but studies show it's far, far less than opponents fear.

The shame is that we're doomed to go through this idiocy again in a couple of years, just because we can't put into law the inflation indexing that has been happening since the first baby boomers were in nursery school.