There is a lot to like in President Obama’s State of the Union address and several of the issues that top his agenda should resonate with public policy makers here in Connecticut.
Finding a way to avoid the sequestration cuts to defense spending would evoke cheers in East Hartford and Groton.
A focus on funding infrastructure projects could go a long way toward helping the beleaguered Department of Transportation keep up with bridge and road repairs. And, of course, it would be great news for the still wounded construction industry.
But perhaps the most immediate takeaway for Connecticut lawmakers comes on the subject of raising the minimum wage.
As we’ve opined in this space previously, this is a complex issue that wraps fairness for the working poor around competitiveness issues for small business.
It’s not purely a federal issue because regional costs vary. It simply costs more to serve a cup of coffee in San Francisco or New Haven than it does in Biloxi, Miss., or Texarkana, Texas. But a fresh look at a federal baseline would give high-cost states like Connecticut a fresh chance to position themselves with an eye toward being competitive within their region.
Obama came out for a level of $9 an hour, up from today’s $7.25, yet short of the $9.80 proposed by progressive members of his own party.
“We know our economy’s stronger when we reward an honest day’s work with honest wages,” the president said. “But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we’ve put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong.”
That’s a compelling argument up to a point. What concerns us is the competitiveness argument. If one state has a $9 an hour law and another has a $10 an hour law, where would you like to start your business? It’s not rocket science to calculate that if a company can hire 10 workers at $9 an hour, it can only hire nine workers at $10 an hour.
Hartford Mayor Segarra is already making the rounds talking up summer jobs for youths. How many opportunities will be lost if the minimum-wage rate soars?
In Connecticut, the likely result of a federal adjustment of the national minimum wage will be a rush to adjust our rate even higher. That’s predictable, and, given our high costs, it’s even fair. But how high can the minimum be without putting Connecticut back at a disadvantage with other states? Today, Connecticut’s minimum wage is higher than New York, New Jersey, Massachusetts and Rhode Island. That’s a problem. And now is the time to fix it as all those states go through a similar debate.
There are proposals in the legislative hopper now to raise Connecticut’s minimum by $1.50 in two steps to $9.75. In the context of today’s federal minimum of $7.25, a rate of $9.75 is uncompetitive. Against a federal rate of $9, a local rate of $9.75 doesn’t seem too bad.
But can we contain the labor-fueled urge to layer that extra $1.50 on top of the federal $9 rate, creating a killer rate of $10.50? Now that would be a neon billboard saying Connecticut remains unfriendly to business.
Last year, lawmakers wisely avoided a rate hike in the depths of the Great Recession. This time around, they need to resist a double dip increase on this important issue.
