Monthly Archives: January 2013

The Annual Minimum Wage Debate, With A Twist

by Categorized: Jobs, Labor, Poverty Date:

The year’s first hearing on Connecticut’s minimum wage is happening at the state Capitol Thursday afternoon, and the battle lines are unchanged from 2012, with a twist.

Again this year, advocates — led by Connecticut Working Families, which rolled out its coalition before the hearing — are pushing for more than they will get.  The main bill calls for the minimum to rise from the current $8.25 an hour to $9, then $9.75 a year later. Then it would be indexed for inflation.

The minimum wage has basically tracked inflation since 1950 but as each year passes without an increase, the wage falls behind. The two increases shown on the far right were last year's proposals, which failed -- not the actual wage.

The minimum wage has basically tracked inflation since 1950 but as each year passes without an increase, the wage falls behind. The two increases shown on the far right were last year’s proposals, which failed — not the actual wage.

That would catapult Connecticut ahead of Oregon, at $8.95 the state with the highest minimum. As it stands now, just 16 states have pay floors higher than that of the federal government, which is at $7.25 for the fourth straight year.

It’s more likely that the debate at crunch time will come down to more modest raises of 25 cents a year, and even that will be a battle, just like last year when the votes fell short in the state Senate.  States are falling over each other to squeeze low-wage workers and pour money into the hands of businesses, and the business lobby won’t let Connecticut lawmakers stand as outliers.

The difference this year is pressure that can’t be resisted any longer. We’ve now had the same minimum for four years, and Massachusetts is into its sixth year at $8.  New York and New Jersey, which match the federal level,  are also due for increases and the pressure will be great in those states.

(Click here for the state-by-state chart going back to 1968.)

 

So, even if you believe in keeping low-wage workers right where they are, a 25-cent raise would do exactly that because costs are rising.

Economically, it makes sense to raise the minimum to a level that allows people to get by, for obvious reasons.  We’re not talking about raising taxes here, so there’s no argument that it would drain the economy.

On the contrary, everyone knows that poor people spend every dollar they have, boosting the economy, while companies have to be begged, bribed and cajoled to invest even if they have huge troves of cash.  You can’t blame them, but there comes a time when we have to think about the economy.

There’s no viable argument that raising the minimum creates an onerous burden for businesses. That’s just silliness, disprovable with simple math. The trouble, of course, is that no state can afford to be too far out front on the wage, so economic logic falls flat when we give companies one more little reason to flee, or to not come here.

So it’s a game of chicken.  That the hearing came at the same moment when Gov. Dannel P. Malloy was in East  Hartford announcing $1.5 billion for science, math and technology at UConn, is a pairing that should be lost on no one. We spend freely to build up crucial strengths in some areas but not others.

What’s needed is a raise in the federal minimum, which would narrow the penalty on Connecticut for doing the right, and smart, thing.  And we could end this recurring idiocy by indexing the minimum wage to inflation once and for all.

A New Look At CT Poverty, With Some Surprises

by Categorized: Jobs, Poverty Date:

If someone told you the total number of Connecticut residents living under the poverty line rose by 21 percent between 1990 and 2010, and that Hartford was by far the poorest city in the state, you’d figure the capital city led the way in the growth of poverty.

Wrong.

In fact, Hartford’s number of residents under the federal poverty line, 37,495, was up by 1,098 in 20 years. There were six cities and towns in Hartford County that had larger increases — including East Hartford, 4,784; West Hartford, 1,592; and Newington, where an increase of 1,168 very poor residents tripled the local poverty rate.

Overall, Connecticut had just under 725,000 people living in households with double the poverty rate or below in 2010, or 21 percent of the state — up from 519,000, or 17 percent, two decades earlier.

Why are all these numbers important? They’re in a report released Friday by the Connecticut Association for Community Action and the Connecticut Center for Economic Analysis that tries to paint a clear picture of poverty and of the working poor in the nation’s richest state.

The report, titled “Meeting the Challenge: The Dynamics of Poverty in Connecticut,” offers four main recommendations, including one — cutting back on job credential requirements — that’s likely to draw controversy among industry groups.

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New Haven Business Owner Fights Robber Who Appeared To Be Armed

by Categorized: Retail Date:

 

If you’re looking for heroes in downtown retail, here’s a good one from Paul Bass at the New Haven Independent. 

The owner of Nim’s jewelry shop on Chapel Street appeared to comply with a robber’s demand to empty the cash register into a sack. Then he went after the much bigger intruder, who appeared to be armed, and brawled until the cops showed up.

Bass edited the security video from the store owner, who wanted to remain anonymous — but is still a hero in our eyes.

It’s especially poignant since the next day, on Tuesday, a clerk in a New Haven market was shot to death by a robber.  The Independent reported that the clerk, Abdul L. Rawas, 55, had “tussled” with the robber. 

Connecticut Fares Badly In Rise of Working Poor

by Categorized: Jobs, Poverty Date:

We talk a lot about poverty rates and about the ratio of incomes between the rich and the not-rich, but those measures miss a key view of the lives of working poor families.

In 2011, there were 83,000 families in Connecticut with children living at home and an adult working — but with income under 200 percent of the federal poverty level, a new report shows.

That was 21 percent of the 389,000 families with children and jobs — making Connecticut the fifth-lowest state by that measure of the working poor.

But it was up from 16 percent in 2007, making Connecticut one of the nine fastest-growing states when it comes to the percent of working families at 200 percent of poverty, a crucial measure of low income.

The report by the Washington, D.C.-based Working Poor Families Project,  from Census data, doesn’t  account for the cost of living in Connecticut.  There’s only one poverty level, and in 2011 it was, for example, $14,710 for a family of two and $22,350 for a family of four — a lot less buying power in Connecticut than in Mississippi.

So the fact that we were the 5th lowest state in low-income working families, bested only by New Hampshire, Maryland, Massachusetts and New Jersey, says less than the fact that we joined such recession-wracked states and Florida, Michigan and Nevada in getting much worse between 2007 and 2011.

The data included only families with an adult who worked at least 39 weeks in each year, or who worked 26 weeks and looked actively the rest of the time.  That means the measure is about quality of jobs, not government supports, which tend to muddy up poverty rates.

(Hard core data fans, click on this WPFP link and then on any of the excel links on the right for a flood of interesting metrics.)

“Connecticut needs to invest in human infrastructure. We need to make sure our citizens can work hard and earn a wage that sustains housing and health care and lets them provide for their children,” said Jim Horan, executive director of the Connecticut Association for Human Services, which released the report in this state.

“More action is needed now to ensure that all families in our state can build a secure future,” Horan said.

There is no data for the percent of those 389,000 families who were under the federal poverty level in 2011.  But in 2010, 5.1 percent of working Connecticut families with children were in poverty, up from 4 percent in 2006 — an increase roughly equal to the rise in the number of low-income families.

Nationally, there were 10.4 million working families with children that were under 200 percent of the poverty level in 2011, or 32 percent — up from 28 percent in 2007, a smaller percentage rise than Connecticut saw.

What all this suggests is that the value of work is falling everywhere, and the number of decent jobs paying wages that approach the middle class is shrinking in Connecticut.

“Family budgets were impacted by high transportation and child care costs at a time when often the only jobs that could be found tended to be in…occupations that do not pay wages adequate for supporting a family – including cashier, cook and health aide,” the CAHS report said.

“Clearly there have been positive signs over the past two years that the broad economy is improving, but the gains are not helping these low-income working families,” said Brandon Roberts, co-author of the analysis for Working Poor Families Project.

In Connecticut, where the earned income tax credit was enacted in 2011, it may not be reasonable to look for more taxpayer support for low-income families this year.  But this report shows that further cuts in social services are unwise, and measures such as a long-overdue increase in the minimum wage would make sense.

Reports: Boeing 787 Dreamliner Grounding Could Last ‘Weeks If Not Months’

by Categorized: Aerospace Date:

Inquiries into the battery systems of the grounded Boeing 787 Dreamliner could take a long time, and the fix could be expensive, according to news reports citing experts and investigators.

The Japanese agency investigating a badly damaged lithium-ion battery that caused an emergency landing earlier this week are focusing on possible overheating from excessive electricity, Reuters reports. That could be similar to the cause of a battery fire in a 787 in Boston a week earlier.

There have been no reported direct links to United Technologies Corp. components, including the auxiliary power unit, made by Pratt & Whitney, and electrical systems made by UTC Aerospace Systems, formerly Hamilton Sundstrand.

“UTC Aerospace Systems will fully support Boeing and the Federal Aviation Administration on the review of the 787 in-service issues. Our systems are designed with several redundancies to ensure safety and we look forward to assist in any effort to resolve in-service issues,” UTC Aerospace spokesman Dan Coulom said Friday.

In an interview with Bloomberg TV Friday, Robert Crandall, the retired CEO of American Airlines, said the the cost to Boeing could be significant. “This is probably larger in scale for both Boeing and for the airlines because of the cost of the airplane,” he said. “This is Boeing’s largest and most important product probably for the next 15 years.”

The Dreamliner, with a base price of more than $200 million, is the first plane made almost entirely of composite materials. There are 50 in service but Boeing has orders for 850, Reuters reported.  The aircraft’s development was delayed for more than a year due to various operational problems.

Industry consultant Gerhard Fasol told Forbes that a return to flight could take a long time because the FAA is requiring that Boeing and airlines “must demonstrate…that the batteries are safe,” and the battery, made by a Japanese firm, has never been used on commercial aircraft before.  “It could be weeks, if not months, before they get to the bottom of this,” Fasol told Forbes.

 

 

Subway to N.Y. Post: A Foot-Long Sandwich is a Foot Long

by Categorized: Consumer, Retail Date:

The Milford-based company that franchises Subway restaurants fired back Thursday after a New York Post story said the franchiser is shorting its famous foot-long sandwiches.

“It’s 12 inches if done correctly,” said Les Winograd, spokesman for Doctor’s Associates Inc., which has 38,609 Subway franchises worldwide, 25,618 in the United States.

The Post had a screaming page 1 headline in Thursday’s editions, “Honey, they shrunk the Footlong!” with a photo of a Subway sandwich and a tape measure showing it was 11 inches. Four of seven sandwiches the newspaper bought in the city were less than 12 inches, the Post reported.

subway

Two Subway Footlongs bought in Hartford measured up fully.

The Post’s report followed a photo from Australia that was posted on Facebook, showing an 11-inch Footlong.

Sandwiches may have measured short, but the amount of bread — delivered in portions by the company — is the same for all footlongs, Winograd said, and there should not be shrinkage.

“Going by the picture we looked at, it kind of looks like it wasn’t baked correctly,” he said. “We tell them how do you do it with all the instructions….they should really have this down but there’s the human factor, I guess.”

Winograd also said a charge by an anonymous Manhattan franchisee in the Post story, who said meat portions have gotten smaller, is not true.

In Hartford, two footlong sandwiches bought Thursday evening at the Subway on Broad Street and Capitol Avenue — a cold-cut combo on honey-oat bread and a ham and cheese on whole wheat — measured a full 12 inches, slightly more for the whole wheat.

In a written statement, the company said, “We are committed to providing a consistent product delivering the same amount of bread to the customer with every order…We are reinforcing our policies and procedures in an effort to ensure our offerings are always consistent no matter which Subway restaurant you visit.”

Meriden Firm Receives Long-Awaited Approval for Revolutionary Flu Vaccine

by Categorized: Consumer, Health Care, Technology Date:

The U.S. Food and Drug Administration has approved Flublok, the flu vaccine made by Protein Sciences Corp., setting the stage for the Meriden-based company to launch large-scale manufacture of the first-ever flu vaccine that’s not made from cultured eggs.

The approval allows Protein Sciences to sell the vaccine for people ages 18 to 49. Anticipating the decision, Protein Sciences is setting up manufacturing space in Pearl River, N.Y., which was previously used by Wyeth and was closed after that company was bought by Pfizer in 2009.

Final approval is a major landmark for Protein Sciences, which began early clinical trials in 1993. The potential, said Dan Adams, the executive chairman, is huge.

“Next year we’re looking to sell three to five million doses,” he said, at prices higher than traditional flu vaccines.

Flublok is made using recombinant DNA and an insect virus, with the advantage that it doesn’t require time-consuming egg cultures that are easily contaminated. “The vaccine can be made quickly and without any of the infectious risk traditionally associated with vaccine manufacture,” the company said in its announcement.

Approval came at the end of business hours Wednesday, and although it was expected, “You don’t know until you get it,” Adams said.

Protein Sciences completed development of Flublok and a related vaccine aimed at pandemic flu outbreaks in collaboration with the U.S. Department of Health and Human Services.

On Thursday, Assistant Secretary Nicole Lurie issued a statement saying the approval “stands as one of the most significant improvements in flu vaccine technology in the past 50 years.”

“The process is nimble enough to be used for seasonal as well as potentially for pandemic flu vaccine because the technology does not depend on an egg supply or on the availability of modified influenza virus for production like traditional egg-based vaccine manufacturing does,” Lurie said in the release.

Protein Sciences was founded in 1983 as MicroGeneSys Inc., and was the first firm to test an AIDS vaccine — but that drug did not reach the market. Approval of Flublok was originally expected as early as 2008, but the company lost three years, Adams said Thursday, fighting off a takeover deal from Emergent BioSolutions Inc. that soured and became hostile.

Approval comes in a year when the flu epidemic is especially severe in the United States, and is still worsening in Connecticut, according to a state report Thursday.

Some Flublok manufacturing will be in Meriden, where Protein Sciences recently expanded to a second building, and Adams said last month that the company could expand further at its home location — although the Pearl River complex has room for significant growth.

Gun Industry Mostly Mum on Assault Weapons Ban

by Categorized: law, Manufacturing, Politics Date:

A day after Obama’s call for sweeping gun safety reforms, the firearms industry remains mostly mum — as thousands remain in Las Vegas for the annual trade show.

In Connecticut, as elsewhere, the firearms industry continues to portray the problem as access to firearms, rather than the equipment itself, in the few statements that are out there.

“The central issue involved in violence where a firearm is misused is the unauthorized access to the firearm. We believe it is critical to first focus on the unauthorized access to firearms by irresponsible persons and those not legally qualified to possess them,” a statement on the web site of the National Shooting Sports Foundation said.

The foundation, based in Newtown, sponsors the annual Shooting, Hunting, Outdoor Trade Show (SHOT show) and conference, which has attracted 60,000 industry professionals this week.

Local companies that make and market variants of the AR-15 rifle, such as Colt Defense, Colt’s Manufacturing Co.,  Sturm, Ruger & Co., Stag Arms and Springfield-based Smith & Wesson have said little or nothing about the debate. NSSF, for its part, is avoiding the sort of divisive comments and advertisements deployed by the National Rifle Association, which angered many with its “elitist hypocrite” advertisement calling attention to armed guards at the school that Obama’s children attend.

“All Americans share the goal of wanting to make our communities and children safer by reducing violence in our society, like the tragic incident that occurred last month in our community of Newtown, Conn.,” NSSF said in its web site statement.  “We are reviewing Vice President Biden’s recommendations with an open mind in hopes they will offer real means of achieving our shared goal.”

It added that it supports expanding the criminal database system to include mental health records — but did not directly address the three bans Obama proposed.

Clearly, defining “military-style assault weapons” will be a stumbling block as it was in the 1994-2004 federal ban — when manufacturers easily got around it.  I listed that and several other problems with equipment bans in a column right after the Dec. 14 Newtown tragedy.

A ban on high-capacity magazines should be easier to enact for two reasons: The magazines are not a big money-maker for manufacturers and it’s easier to define what they are in the law.  Still, privately, some people in the industry believe they can’t be out-front supporting any kind of equipment bans, for fear of a backlash from customers.

The industry is “misunderstood,” said NSSF President and CEO Steve Sanetti, in his “state of the industry” speech at the SHOT show.  “We all must recognize that those who don’t agree with us share in our desire to rid the world of such monstrous acts; and they must recognize that we are not the evildoers. Ours is a responsible industry that makes and sells lawful products to law-abiding citizens.”

 

Electric Grid Operator’s Move Could Fetch $4 Million From State in Questionable Deal

by Categorized: Energy, Public finance, Utilities Date:

ISO New England, the nonprofit business that runs the region’s electricity grid, is in line for $4 million in state assistance for a $39 million back-up control center that’s under construction in Windsor.

The control center would replace a smaller back-up facility in Newington, which ISO-NE — the Independent System Operator, based in Holyoke, Mass. — said will soon be outmoded and can’t be expanded.  It will have 25 employees at first, with room for as many as 145 people in a state-of-the building off Day Hill Road, and it will act as a simulator for the Holyoke control room.

ISO New England’s local expansion is good for the Connecticut economy and it performs a crucial function. But it raises serious concerns.

The state assistance deal, a forgivable loan that could be approved by the Bond Commission as soon as Jan. 25, was uncovered by my colleague Brian Dowling, who also learned from federal documents that ISO will use Connecticut’s borrowing power to finance as much as $36 million at phenomenally low interest rates.

ISO, one of seven regional electric grid operators in the United States, is established and regulated by the Federal Energy Regulatory Commission, which must approve the ISO budgets.  The money comes from fees levied on generators such as Dominion Resources, owner of the Millstone nuclear station, and transmission companies such as Connecticut Light & Power.

Since we pay for all of this through electric rates that are regulated by the state, and since ISO is a regulated, sole-source provider, the company is, in essence, performing a government function.  That’s partly why it’s able to borrow through a quasi-government agency, Connecticut Innovations.  It’s similar to the shadow government that includes such agencies as the Metropolitan District Commission and the Port Authority of New York and New Jersey, although unlike those groups, ISO has an independent board, not publicly appointed.

Using public borrowing power makes sense, since that saves us money. But why should the taxpayers hand over $4 million for an outfit that walks and quacks like a quasi-public agency? The agency should locate its offices where it makes the best sense for us, the region’s ratepayers, without considering greenmail from one or more states.

ISO, in fact, didn’t wait for the $4 million loan through the state Department of Economic and Community Development. It went ahead and bought the land and started the work because Windsor made the most sense under ISO-NE’s own criteria, including distance from Holyoke and highway accessibility.

This is especially nettlesome since Connecticut  state officials — the Public Utilities Regulatory Authority under Chairman Arthur H. House; Attorney General George Jepsen; and state Consumer Counsel Elin Swanson Katz — formally opposed ISO New England’s $165 million budget for 2013, and persuaded FERC to hold a hearing on it.  The budget is up by nearly 10 percent from last year and the payroll has ballooned from 180 in 1997 to a proposed 563 today.  More than half of all staffers earn at least $100,ooo a year, and, the Connecticut officials said, received bonuses averaging 9 percent in 2012.

All of this might be fully justifiable and the Jan. 24 hearing could show that. ISO-NE has the vast role of creating and managing a daily and long-term market for power, a job that became much more complex after 1998 when utilities were forced to sell generation plants. And ISO must plan for and coordinate the region’s electricity needs, all of which it appears to do smoothly.

Still, this business is financially accountable to the public and probably ought to be more so — perhaps with a publicly appointed board, for example, or, as the Connecticut officials suggest, with annual, public budget hearings. And part of that means it does not participate in the sort of corporate relocation greenmail that is unavoidable in the true private sector — and which costs the taxpayers dearly, for better or for worse.

Jim Watson, spokesman for the state Department of Economic and Community Development, said Connecticut was in a competition with Vermont and Massachusetts, and acted wisely by offering the money.

“Our primary focus is making sure that this investment and those jobs stay in this state and not a neighboring state,” Watson said.

The loan forgiveness terms are easy for ISO to meet: It must reach 25 jobs within three years and keep them here for at least a year.  At $160,000 per job, $4 million is a steep price to pay, but Watson and ISO expect the number of employees to rise higher. So, why not set a higher target for the money?

The broader question is whether the ratepayers of New England need a facility that costs $465 per square foot on top of the $6 million in computer equipment that will live there.

“This new facility is needed to ensure we can continue to provide these essential services without interruption and meet federal power system reliability requirements,”  ISO spokeswoman Marcia Blomberg said in an email.

As with ISO-NE’s staffing and budget, that may well be true.  The Newington location is smaller and inferior to all six other ISO back-up sites across the country, ISO-NE  documents show.  ISO-NE is not guilty of hiding its plans, as this has all been filed publicly and has been the subject of open meetings.

Still, it ought to be a more public process, akin to CL&P rate cases.  And it ought to deploy site location methods that exclude greenmail pitting taxpayers against ratepayers.

 

Trillion-Dollar Coin: The Joke That’s No Joke

by Categorized: Economy, Politics, Public finance Date:

Ever since Obama said he wouldn’t negotiate over the debt ceiling, talk of the trillion-dollar coin has heated up.  On Wednesday, White House spokesman Jay Carney declined to dismiss the ploy as an option, furthering the economic joke that isn’t a joke.

What is the trillion-dollar coin? It’s a technicality that could save Obama from having to cajole Congress into raising the debt ceiling, which must happen in March if the federal government is to pay its bills.

 

The Trillion-Dollar Coin, envisioned by Wes Rand of The Courant's staff
The Trillion-Dollar Coin, envisioned by Wes Rand of The Courant’s staff

The basic idea is that Congress controls the purse strings and the Federal Reserve controls the printing of paper money, but the president retains the right to mint coins through the U.S. Treasury.

So, if Congress won’t cough up the dough, Obama needs only to crank out a trillion-dollar coin or two, also dubbed a platinum coin or a jumbo coin, deposit it at the Fed, and presto! The reserves are in place and he can write checks against the asset.

Constitutional scholars say the idea is sound, sort of — coins of this nature are meant to be commemorative but that rule is not explicit. Some experts believe Obama would be in constitutional violation either way, if he couldn’t reach a deal with Congress and failed to spend money that was already allocated.

Naturally, we want to know whose face would adorn the coin — and there’s no shortage of suggestions, from Obama (our pick) to Paul Krugman to Charles Ponzi, as one coin designer told Marketplace radio.

Jack Balkin, the Knight Professor at Yale Law School, wrote that Obama actually has a handful of ways to get around Congress on the debt limit, including selling land options to the Fed for $1 trillion and letting them expire.

And Greg Ip, economics blogger for the Economist, showed why the transaction works without expanding the money supply and risking inflation.

As March approaches, this bit of silliness will grow less and less silly. Krugman explains it best in the New York Times: It’s an artifice that allows for business as usual. It is, as he says, undignified but at least it would avoid economic disaster.