The minimum wage debate is once again heating up, with cities, states, and the federal government all debating pay increases for low-income earners.
The hot button issue should resonate with Connecticut businesses: on Jan. 1 the state’s minimum wage will increase for the first time since 2010 to $8.70, from $8.25 previously. The minimum wage will increase again to $9 on Jan. 1, 2015.
Make no mistake, the cost increase will hurt some Connecticut businesses. The timing of the wage hike isn’t good either, as the state’s economy continues its snail’s pace recovery. Will it send Connecticut back into recession? Probably not, but at a time when the state needs to add jobs, arbitrarily increasing businesses’ costs isn’t a good idea.
To be fair, the economics around a minimum wage hike are complex. There are some pluses and minuses that can result from it. In nearly all cases, arguments for or against a minimum wage hike are presented through a political lens.
To support a minimum wage hike, many Democrats, including President Obama, point to a growing wage gap between the country’s lowest and highest earners. Meanwhile, many Republicans argue that the minimum wage is only meant to be a temporary starting salary for young and inexperienced workers who can gain important skills and move into higher paying jobs.
Both sides have reasonable points, but the minimum wage hike hurts small businesses, which tend to operate on thin margins and whose owners aren’t necessarily on the higher end of the income spectrum. Proponents of higher wages can criticize the profits, executive pay, and cash hoarding by larger companies, but corporations typically have few minimum wage employees.
In a few weeks, Connecticut will have one of the highest minimum wages in the country. That won’t make the state more economically competitive.
Fight upwind pollution
Gov. Dannel P. Malloy and seven other governors from nearby states took the bold and bright step last week telling other state leaders what to do.
Specifically, Malloy joined Massachusetts, New York, Rhode Island, Delaware, Maryland, New Hampshire, and Vermont in not-so-politely asking upwind states to Connecticut’s south and west to significantly reduce their pollution, since it carries downwind to New England.
Connecticut, and other New England states, has taken a number of measures to reduce in-state generated pollution, such as seeking more renewable power and installing a cap-and-trade system, while businesses and residents paid the costs of the expensive policies.
In reality, though, Connecticut is such a small state that these actions have minimal impact on a national scale, much less the global stage where pollution must be addressed. So what Connecticut does to reduce these problems is largely symbolic.
When you’re trying to be a symbol for the rest of the nation and the world, you better make sure your example is followed. The people of Ohio, Pennsylvania, and other Midwest and Southern states might not like being told what to do (or have any obligation to follow it), but Malloy is right in making the impolite request for the benefit of the region’s breathable air.
