Labor committee co-chair tells businesses they “need to pay” for $15 minimum wage, low-wage employer tax

A contentious public hearing before the Labor and Public Employees Committee went late into the night Thursday as lawmakers heard testimony on a number of bills that could have big impacts on hiring in Connecticut.

A group of lawmakers and union representatives led the charge for a $15 minimum wage, the low-wage employer tax and a new paid family medical leave system.

But employers pushed back, saying these bills will drive down employment, drive out business and hurt the economy.

Committee co-chair, Rep. Robyn Porter, D-New Haven, told Eric Gjede of the Connecticut Business and Industry Association that “those who can afford to pay, need to pay.”

The hearing began at 2 p.m. but ran well past 11 p.m. and brought out a crowd to debate bills before for the committee.

Among many other bills, the committee heard testimony on the repeated effort to tax large employers $1 for every hour an employee works for less than $15 per hour and paid family medical leave which would charge employees an extra tax to fund their time off from work.

This is the second year in a row that lawmakers raised the low-wage employer tax – sometimes called the “working class tax.” A 2016 study found the tax would mean fewer jobs and actually cause lower wages over time.

CBIA’s Gjede testified against a number of the bills under consideration, including the minimum wage increase. “Being that we’ve only recovered 70 percent of the jobs lost during the recession, I would just encourage the committee to think about what we’re doing,” he said. “We should be making hiring employees easier for businesses.”

Connecticut’s minimum wage just went up to $10.10 per hour in January. This was the final step in a multi-year increase. The $15 minimum wage, which has strong support among unions in the state, was taken up by the labor committee in 2016 but never made it to a floor vote.

Labor unions have continued the push, mounting protests and strikes outside McDonalds restaurants in Hartford and other cities. Representatives from the unions and the Working Families Party both testified in support of the increase as well as the low-wage employer tax and paid family medical leave.

Gjede testified that the paid family medical leave system would be insolvent as soon as it began.

Under the paid family medical leave proposal, employees would pay a tax on a small portion of their income. Those funds would then be used to pay the employee up to $1,000 per week when they take family medical leave.

Gjede made the point that even for a person making $52,000 per year, the numbers wouldn’t add up and would force higher contribution percentages from employees. “This thing would be insolvent before the ink dried,” he said, referring to the governor’s signature on the bill. “This thing is going to cost a lot more money.”

The low-wage employer tax sparked a contentious back and forth between Michael Seid, managing director of MSA International, a consulting group representing franchise businesses, and Sen. Edwin Gomes, D-Bridgeport.

Seid argued that the tax and a significant increase to the minimum wage would adversely effect Connecticut franchises.

The low-wage employer tax would only apply to companies with 500 or more employees. Franchises like McDonalds are independently owned and employ far fewer people but are still included in the bill, which ignores the distinction between franchise and franchisor.

Seid also testified that the bills repeatedly introduced in Connecticut contribute to the negative business climate that keeps franchises out of the state. “I can tell you that no franchises are targeting Connecticut right now. We’re targeting internationally but we’re not targeting here,” he said. “It’s a pretty small world today, it’s not what it was 20 years ago.”

Seid argued that increasing automation has changed the minimum wage argument. “For $25,000 right now – we’re not talking about in the future, we’re talking about right now – McDonalds, Wendys are able to replace three employees with a robot.”

Gomes responded that he found Seid’s testimony “hard to believe” and said, “with all the rhetoric that has come out of your mouth, you have left people, low-wage workers, between a rock and a hard place.”

To which Seid replied, “No, sir. You have.”

Joe Horvath, assistant policy director for the Yankee Institute, also testified in opposition to many bills before the labor committee. He offered support to proposals that would make employment and entrepreneurship easier in the state such as workforce development, updating workforce training and occupational licensing reform.

Included in his list of potential solutions was a bill sponsored by Rep. Melissa Ziobron, R-East Hampton, which would allow anyone under 19 years of age to work for below minimum wage for up to 1,000 hours per year. The bill is meant to encourage businesses to hire young people so they can get work experience.

“These are things that are going to be more targeted, more effective and more realistic options to allow people to do better for themselves,” Horvath said.

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