To the editor:
After Malloy managed to chase large businesses from our state, the government has now targeted mid-size companies and franchises.
The initiative comes from the Democrat-ruled Assembly (Senate Bill 391) and is euphemistically titled “The Economic and Fiscal Impact of Connecticut’s Proposed Statute to Recoup Costs Attributable to Low-Wage Employers.”
It should be called “Tax on Jobs.” That is shorter, more transparent and more accurate.
The proposed law requires Connecticut employers to pay the state a tax of between 10 cents and $1 per hour for every hour worked by an employee who earns less than $15 an hour. The tax will be imposed on employers of 500 or more workers and on smaller companies if they belong to a franchise with 500 or more employees.
As the National Federation of Independent Business has testified “many small businesses may potentially be impacted by the provisions that aggregate employees of franchises. Connecticut’s already tarnished reputation as a place to own, operate and grow a business is certainly not helped by the burdens and the stigmas that will be imposed by this bill.”
The bill will affect dozens of franchisees in Stamford, Norwalk and Darien, as well as hundreds of their employees.
This is also a back-door attempt to establish a $15 minimum wage. Many studies have shown that raising minimum wages may be well intended, but is counterproductive.
For one, many wage earners are students or early and returning entrants in the job market; it has been demonstrated that job losses as a result of government mandated higher wages hit this group most severely, a large number of them minority workers. The latter group experiences a double whammy from higher prices which are the inevitable result of rising labor costs.
Last year, the Justice Education Fund issued a report on SB 391 that shows the state could lose between 500 and 1,300 private sector jobs because of this tax. And this is a study done by supporters of the tax; actual numbers may come in much larger than that.
The Fund’s report also expects state employment to go up substantially as a new layer of administration is created. But it is a social, economic and fiscal folly to reduce entry-level positions in the private economy and add costly government administrators when the state’s budget is in crisis.
On March 15, the Human Services Committee approved SB 391 in a 10 to 8 vote along party lines, with our Representative Terrie Wood dissenting with the minority Republicans. The supporters of Senate Bill 391 claim that it is aimed at helping lower paid employees and at subsidizing the state treasury with much needed lucre.
The bill will do neither. There is no free lunch. When cost and prices rise, customers will shop elsewhere, workers will lose their jobs, and the Connecticut economy and its tax base will suffer.
This bill now moves to the State Senate. Write to Senate Majority Leader Bob Duff or call him — and ask him if he is aware of the impact that SB 391 may have on Norwalk, Darien and Stamford small franchise businesses and the Connecticut economy.
Are the Democrats in the Assembly really unaware of the damage that Senate Bill 391 may inflict on Connecticut businesses and jobs? Or is this yet another effort by the Democrats to please the unions, no matter the impact on the rest of the citizens?
Many workers under union bargaining agreements benefit directly and contractually from minimum wage legislation even if aimed at non-union employees; and all union members benefit when the lowest salary levels rise. Because of job guarantees, union members enjoy the fruit of higher mandated wages without the risks that private sector personnel bear.
When minimum wages jump, union labor and state employees enjoy higher pay – the rest of us are getting a pink slip. Tellingly, the proposed Tax on Jobs doesn’t apply to employees under a contractual bargaining agreement, giving union labor an advantage over private workers, perhaps forcing many companies to unionize.
This is just one more piece of legislation where the Democrats in the Connecticut Assembly become the agents of Big Labor. There is no clearer evidence of the unions’ strategy than the orchestrated, self-serving liberal and union testimonies at the time of the hearings on SB 391 in front of the Human Services Committee. It was the Yankee Institute in Hartford which introduced a rare rational voice into last week’s hearings: “We already tax too many things in Connecticut — we shouldn’t tax jobs too.”
Bert von Stuelpnagel
Darien Republican Town Committee Treasurer