‘Capitol Connection’ – Debate to Focus on Wages

May 15, 2013

Serving on your behalf in Hartford, I have been working to keep state spending under control, limit tax increases and encourage economic development and job creation. While I am hopeful that our state economy will fully recover, there are many factors at play that could help or hinder this fragile situation, including taxes and regulations, the minimum wage and the workforce.

In this week’s column, I would like to share some information with you about the state’s role in determining the wages earned by Connecticut workers. This year, several proposals have been discussed at the state legislature to increase the state’s minimum wage or make changes to two other regulated wages that may not be as familiar. These two wages are called the standard wage and the prevailing wage.

First, the minimum wage is the most well-known wage that is determined by the state. Currently, our state’s minimum wage is $8.25 per hour. This wage affects most hourly employees with the exception of those who earn tips, such as restaurant servers, or minors who work in agricultural or governmental positions. The federal government also has its own minimum wage of $7.25 per hour that the states must match or exceed.

This year, the governor and several legislators have vowed to raise the state’s minimum wage to $9.00 per hour. However, there are also concerns that an increase would slow our state’s economic recovery and stifle job growth. Small business owners have said that the increase would complicate their efforts to hire employees, especially seasonal workers.

Second, the standard wage is less well-known. It applies to certain service workers who are under contract with the state for the delivery of food, building, property or equipment services and maintenance. The Labor Commissioner determines the standard rate of wages for hourly employees by adopting the minimum hourly wages that are outlined in the federal Register of Wage Determinations under the Service Contract Act, as well as a 30 percent surcharge that would cover the cost of health, welfare or retirement plans. For example, the standard wage of a custodian is currently $14.48 plus a health and welfare contribution of $4.95.

Third, the prevailing wage applies to workers of construction projects that are financed by the government for the benefit or use of the general public. This could include highway construction, public housing or other public works projects. According to the state Department of Labor, the prevailing wage is “the minimum rate that is equal to the rate customary or prevailing for the same work in the same trade or occupation in the town in which such public works project is being constructed.” Since 1977, the Labor Commissioner has adopted the prevailing wage rate determinations that have been made by the U.S. Secretary of Labor.

While these higher wages provide more income to workers, they can also increase the costs associated with various projects. In an effort to lower the cost of local projects for municipalities, I introduced an amendment to exempt a state-funded program called the Small Town Economic Assistance Program, or STEAP, from the prevailing wage.

These grants are used for capital projects, including constructing or rehabilitating commercial and industrial buildings, road repairs, social service-related projects, housing projects and other economic and community development projects. In our district, the communities of Avon, Barkhamsted, Canton, Colebrook, Granby, Hartland, Harwinton, New Hartford, Norfolk and Simsbury are eligible for STEAP grants and could realize savings by exempting these projects from the increased costs.

While we are all familiar with the minimum wage, the state has the authority to establish several other wages for employees who work under state contracts for construction projects or providing services. Over the next few weeks, there will likely be a rigorous debate focusing on one or more of these wages. Ultimately, we must understand these complex issues and consider the potential opportunities and consequences of changing the state’s several minimum wages.