While Connecticut legislators take the summer off to campaign for re-election, some continue to tout potential future legislation that can only be described as anti-business. As General Electric relocates to Boston and Aetna leaves the door open to departure from Hartford, lawmakers should be very cautious about doing anything in the next session that would make it more difficult to run a big or small business in Connecticut.
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While Connecticut legislators take the summer off to campaign for re-election, some continue to tout potential future legislation that can only be described as anti-business. As General Electric relocates to Boston and Aetna leaves the door open to departure from Hartford, lawmakers should be very cautious about doing anything in the next session that would make it more difficult to run a big or small business in Connecticut.
The Connecticut economy has not fully recovered from the Great Recession and state government still does not have its own fiscal house in order.
One of the signature items on the agenda of some anti-business legislators is an increase in the minimum wage to $15 an hour. While everyone supports higher wages, a quick increase of this magnitude would almost certainly have immediate negative effects on small businesses that rely on entry-level and part-time workers and the employees themselves.
This is more than conjecture; hard evidence is already coming in from Seattle where the campaign for a nationwide $15 an hour minimum wage has had one of its most significant victories to date.
A University of Washington survey has found that 30 percent of Seattle employers have either reduced staff, or intend to reduce staff, as a result of the wage increase requirement. The Federal Reserve Board of San Francisco has also reported “a higher minimum wage results in some job loss for the least skilled workers — with the possibility of larger adverse effects than earlier research suggested.” Both findings were included in an article published by Michael Saltsman of the Employment Policies Institute.
The same report found additional evidence of small business closings and a reduction in hours for minimum-wage employees in markets around Seattle where similar wage laws have been put into effect. Clearly this is not just a matter of forcing employers to reduce their profit margins. This dramatic boost in the minimum wage is obviously hurting many of the people it was specifically designed to help. Low-wage workers are losing their jobs completely or being forced to reduce their work schedules.
Common sense also tells us that another way for employers to recoup the cost of forced wage hikes is by raising prices for consumers. The impact of sudden minimum-wage increases is so profound that a survey of labor economists by the University of New Hampshire found that 72 percent oppose the idea of a $15-an-hour mandate.
Voting to mandate artificial wage increases in the private sector may seem like an easy “yes” vote for many in the Connecticut legislature, but given the fragility of our state's economy, coupled with evidence and experiences from elsewhere, it would be a decision fraught with real-world consequences.
Government leaders from the governor on down have already warned that the state budget is only temporarily in balance and that deficits of more than $1 billion a year are on the horizon at least through 2018. It is time for our state government to focus first on securing Connecticut's own financial future before meddling in the private sector, where government mandates — from wage hikes to paid-leave mandates — can do real harm, especially among small businesses.
The smartest thing lawmakers can do to improve the Connecticut business climate is to stabilize government finances for the long term.
Kevin Maloney is the owner of Northeast Express Transportation Inc. in Windsor Locks, and serves as chairman of the state Leadership Council for the National Federation of Independent Business.
