Connecticut is already one of the three states with the highest minimum wages and it’s the only one with mandatory paid sick days. Now advocates for the working poor are pushing for a novel plan to address the crisis of below-poverty wages: Penalize employers that pay too little.
The controversial plan isn’t in effect in any state and was narrowly defeated in Washington D.C., where Wal-Mart threatened to pull out. The idea is to extract money from low-paying retailers and fast-food companies to help the state compensate for the income supports that low-wage workers receive.
Fair is fair, the logic goes. Why should taxpayers subsidize Wal-Mart, McDonald’s and Dunkin’ Donuts?
Care to get upset? A recent report by the Connecticut Association for Human Services showed that a family of four with two adults working a total of 60 hours a week at $10 an hour would be eligible for $29,147 a year in public assistance — much of it Medicaid. And that wouldn’t even include the earned income tax credit, which would push the total higher.
That means you the taxpayer are subsidizing you the shopper to the tune of thousands of dollars for every low-wage sales employee. Still feel good about those 12-packs of socks for $6?
Under the Connecticut version of the wage penalty bill, which had a hearing Tuesday before the legislature’s labor committee, any company with at least 500 employees in the state would have to pay $1 per hour per affected worker into state coffers if it paid less than the “standard wage” for its lowest job classification. For a minimum wage worker in fast food, for example, the standard wage is $11.31 an hour — 130 percent of the $8.70 minimum.
The idea has big problems, illustrated in the story of Tina Conners, who’s from Manchester and told lawmakers and Gov. Dannel P. Malloy Tuesday, in a meeting in his office, that she lives in her car. Conners, 21, works between 10 hours and 20 hours a week at a local McDonald’s. She’d like to have more hours but can’t get them.
Conners was at the Capitol to push for the low-wage penalty and a higher minimum wage, which Malloy wants. But what she needs more than a slightly higher wage is many more hours. She told me she’d prefer to log 20 to 30 hours a week, leaving her time and money to go to college and eventually, a career as a dentist.
The $1 an hour penalty wouldn’t come close to paying for the public subsidies that we the taxpayers have to shell out for low-wage workers, but it would be a start. And it wouldn’t help Tina Conners add hours to her workweek; if anything, it could lead to fewer hours.
Another problem: Franchisers such as McD’s and Subway are not the employers. No worry, advocates say. Franchisers would be liable even if they didn’t own the stores in question.
Bills like this come up precisely because low-wage employers are abusing the public trust. We as greedy, shortsighted consumers are the ones letting them do it — all the worse in the case of the poison we’re buying and ingesting from the fast food industry.
And so the bill is politically brilliant if only for the point it makes: The fines would not go to the workers, in effect an enforced wage; rather, the money would go back to the taxpayers. “Politically, it’s a no-brainer. It’s a home run,” said Tom Swan, executive director of the Connecticut Citizen Action Group and a leader of the effort. “Morally, it’s the right thing to do.”
It’s not a home run for the Connecticut Retail Merchants Association and the Connecticut Business and Industry Association, who argue that the bill would raise costs in the state and drive out retailers that pay property taxes and offer opportunity to workers. “Our employers do the best job they can,” said Tim Phelan, president of the retail merchants group.
Well, no, they don’t. He can say that about his small retail members that are just getting by, but not about the big national chains and franchises that are transferring billions of dollars from taxpayers to shareholders by shortchanging workers. McDonald’s employees alone receive $1.2 billion a year in public assistance, an October, 2013 report by the National Employment Law Project showed.
Phelan and CBIA advance the idea that low-wage jobs are entry level. “They provide the learning experience,” said Eric Gjede, assistant counsel at CBIA, the state’s largest business group.
Certainly any specific worker can get ahead, but by definition the system will screw most people, simply because the wage structure at many big retailers is so bottom-heavy.
Both sides flash numbers showing why states should, or should not, force employers to pay higher wages or penalize those that don’t. But ultimately, the states are just bystanders in a private-sector pay system that creates opportunity for a few and poverty for the many, to the benefit of us the consumers.
Maybe we should try the penalty. Flawed as it is, nothing else is working.