Shock Report: Recipients of Connecticut’s Minimum Wage Increase Say It’s Not Really Helping

Posted by on May 27, 2014 at 6:54 am

Gee, who could have seen this coming? It’s not as if making minimum wage is designed to help raise a family, nor do any of the hack politicians that are always pushing this ever take into account that employers reduce hours and number of employees accordingly. It’s as if some people never learn from history.

Minimum-wage workers in Connecticut got a 45-cent raise on Jan. 1, the first step in a process that will eventually set their wages at $10.10 an hour.

“It helps a little bit, I guess,” said A. Segui, 20, who works at a Dunkin’ Donuts. She wants to go back to school so she can get a job doing billing at a hospital. But that’s going to have to wait until she can save up some money.

The minimum wage is set to tick up in various states this summer, including California, but the experience of people like Segui presents a sobering reality: Raising wages may not make that much of a difference in workers’ lives. It also might encourage employers to stop hiring or cut back the hours employees work.

Hmm. Perhaps those Democrats exploiting low-wage workers should have considered this. But the fact remains they could care less as long as it buys them votes from the gullible.

The District of Columbia will see its minimum wage go up to $9.50 from $8.25 on July 1. On that date in California, the minimum wage will change to $9 from $8, and will rise again to $10 the following year.

But before those efforts, Connecticut provided an early illustration of what many economists have been saying for years: Raising the minimum wage is not the most effective way to reduce poverty.

It would make more sense to not tax minimum wage earners than to increase their pay, but such an idea would have people calling you a wild-eyed radical. Meanwhile, in another shocking development, hiring has lagged in Connecticut. Imagine that.

Employment growth in Connecticut has lagged behind the nation since December, data show. Nationally, employment grew 0.62% from December through April, while employment in Connecticut fell 0.19% over the same time period.

Much of that drop-off was related to the elimination of 10,900 jobs in January, the month employers had to start paying 45 cents more. In the previous three years, Connecticut had added an average of 4,000 jobs over the same time period.

More job cuts wouldn’t surprise economists. If companies have to pay more for labor, they’ll try to save somewhere else, said Keith Hall, a research fellow at the Mercatus Center at George Mason University.

“Because you’re raising the cost of hiring, you can get this unintended consequence where some of the people on the margin have their hours reduced,” he said.

It’s not an unintended consequence. It’s an entirely predictable result. Every time. And you’ll never guess what else is contributing:

Other factors may be dampening the effect of the minimum-wage increase on workers’ pocketbooks, including the new federal healthcare law, which may be motivating large employers to scale back the number of full-time employees.

Thanks, Obama!



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14 Responses to “Shock Report: Recipients of Connecticut’s Minimum Wage Increase Say It’s Not Really Helping”

  1. sunny-dee on 27/27/14 at 9:33 am

    I would oppose not taxing minimum wage people. First, because we are all part of society, and we should all contribute to that society. Second, because adults in wage already thing that money comes from someone else — onerous taxes (that we all pay) is a gentle reminder that you are “someone else,” and that money has value.

  2. Crowley on 27/27/14 at 10:21 am

    I agree, Sunny-dee. To borrow a cliché, people need to have skin in the game. However, I appreciate the point being discussed, as it will spur people to consider the impact of taxes on paychecks.

  3. Geraldine Ferraro on 27/27/14 at 11:09 am

    The only problem is that they didn’t raise the minwage high enough! If they made the minimum wage $100,000 per hour, everyone in America could have a truly livable wage and would only have to work 1 hour per year!

    Think how many problems that would solve!

  4. tgr on 27/27/14 at 11:22 am

    Crowley, too add to that – let’s stop payroll deduction as well and make people pay quarterly – THAT’S skin in the game and people will now pay close and strict attention to the amount of their labor being confiscated.

  5. red speck on 27/27/14 at 11:22 am

    I think there should be a whole bunch of “minimum” laws. Minimum wage ($100k/year, please), Minimum car allowance (make mine a Mustang GT), Minimum house (2000 sq ft, with at least a half-acre), Minimum spouse (is Kate Upton spoken for?)…

    After all, isn’t the pursuit if happiness guaranteed in the Constitution or something?

  6. Chi-Town Jerry on 27/27/14 at 11:35 am

    Minimum wage people are already not taxed. A full-time position making $9 per hour will make less than $19k per year, which effectively pays no income taxes for a single earner household.

    If you mean payroll taxes (FICA taxes, etc.) that is a different story and would mean a 7% increase for these workers.

  7. doug on 27/27/14 at 11:51 am

    I’m sure they mean FICA taxes and I would be all for that. Heck, expand it to state and federal unemployment and worker’s comp taxes as well.

    If $10 was minimum wage, then McDonald’s is likely paying $13 an hour counting all those taxes. How many more people can they hire if they got rid of those taxes?

    Yes, there would be a minimum wage employment boom as a result.

    Oh wait, you just want the employee to be free from taxes but the job provider has to make up for that with higher taxes? Yeah, that’s not going to reduce unemployment.

  8. Rob in Katy on 27/27/14 at 12:47 pm

    Minimum wage increases are just tax increases. The Feds get to take more out of your payroll taxes and at the end of the year. Unions get more because many of their contracts are based on the minimum wage. Everyone passes the wage increase down stream to the buyer that eventually gets screwed.

    Here is a freaking crazy idea, pay people what a job is worth, nothing less, nothing more. Want more money, elevate yourself to be able to work in a higher paying job.

  9. Cheech Marin on 27/27/14 at 2:34 pm

    The adults who are on minimum wage jobs for an extended time were the ones at the school that I could get their lunch money.

  10. Cheech Marin on 27/27/14 at 2:37 pm

    The adults that are in minimum wage jobs for an extended time were the ones at school who I could get their lunch money.

  11. 6 Lined Race Runner on 27/27/14 at 4:04 pm

    So the increase gets the gullible to vote for them.
    Then when people cannot find work due to employers not hiring, they go on the dole. Who is all for keeping people in poverty and feeding at the govt. trough? The dems. Win-win for them.