Fasano: Wage Penalty Bill in Not Reflective of Reality [Courant]

May 15, 2015

Article as it appeared in the Hartford Courant

Preachers and politicians took to the podium Thursday at the state Capitol to sing the praises of a bill they say would help low-wage workers, a press conference with the soaring cadence of a prayer meeting, complete with benediction imploring the Lord to intervene.

The bill would fine large employers $1 for every hour their employees worked at wages under $15 an hour, raising as much as $305 million a year for state coffers. It would be the nation’s first law of its kind.

“We can lead this country in challenging huge corporations to do what?” asked Bishop John L. Selders Jr. of Amistad United Church of Christ in Hartford. The gathering responded in unison, “The right thing!”

But as it’s drafted, the bill would do little to help working poor people at targeted companies such as Wal-Mart, McDonald’s and Target. Those and other employers would pay the fine or find ways to reduce their workers’ hours rather than give raises from the $10- to $12-an-hour range to $15.

And yet the bill — still a long shot by most accounts at the Capitol — remains a part of the state budget talks for one simple reason. Make that 305 million simple reasons.

“Economic urgency keeps this bill alive,” said Rep. Peter Tercyak, D-New Britain, a key supporter. “The money that’s raised … is too significant to ignore … this is money for us to spend.”

With the state facing a $1.4 billion budget shortfall for the fiscal year that starts July 1, lawmakers and Gov. Dannel P. Malloy will have to make some nasty choices — raising taxes and cutting services, in many cases services that help the very same poor families whose low wages force them to seek help.

So the wage penalty bill, while dressed in moral clothing, is in many ways just another budget chip on the table. It has no chance of coming to a separate vote as a bill on its own, Capitol insiders said, but as Malloy and legislative leaders hammer out a taxing and spending plan behind closed doors, it’s part of the discussion.

“I would like to see it in the budget,” said Joe Aresimowicz, majority leader of the House of Representatives.

That endorsement, combined with the backing of Sen. Martin Looney, D-New Haven, the state Senate president pro-tem, is enough to keep the wage penalty on the table. Aresimowicz, who spoke of the idea in flowing language Thursday along with Sen. Marilyn Moore, D-Bridgeport, said he has not gauged the support of House Speaker Brendan Sharkey, but added, “obviously it’s a bill that requires a lot of work.”

As drafted, the bill would affect employers with at least 500 employees in Connecticut, or, in the House version, 250 employees. Tercyak conceded that he’d rather see the threshold set at a lower wage than $15 an hour, like last year’s version, which pegged the trigger at 130 percent of the minimum wage, or $11.90 in 2015.

That would help more workers, as employers might actually boost pay to avoid the penalty. But it wouldn’t raise as much money — and that’s what counts as lawmakers look to plug a huge hole.

The $305 million bounty in the bill was the estimate of the legislature’s nonpartisan Office of Fiscal Analysis. The bill would raise $189 million a year, according to a study released this week by a UConn professor of social work and two retired state economists.

That study, funded by labor-backed advocacy group Jobs With Justice, also said the measure would add as many as 1,388 new jobs, many of them in the form of state employees, to the Connecticut economy, even after accounting for the effect of the fine on consumers and businesses — providing a boost to the bill.

Malloy has said nothing in support of the bill, and Republicans and the business lobby remain firmly opposed to it, saying it would hurt an already lame business climate in the state.

“It’s ludicrous. It’s ridiculous. It’s absurd,” said Senate Minority Leader Len Fasano, R-North Haven. “It’s not reflective of reality. It is illogical.”

Fasano said that despite the hundreds of millions of dollars in potential revenue, he could not foresee a compromise budget that includes a wage penalty. If it takes effect, he said, “Who do you think is going to stay in this state?”
The business argument vs. the moral argument is the stuff of florid prose. Highly profitable, low-wage employers are hurting the economy by sending their own employees onto the state dole, or they are helping by employing low-skill people and keeping consumer prices down.

But the fiscal argument is the one that could carry the day in the tense budget talks if it comes down to a choice between, say, a wage penalty or a vast expansion of the sales tax.