The nation’s least business-friendly state is about to get even more hostile to the private sector.
Mere months after legislation was enacted raising the state’s minimum wage to $9 an hour over two years, Gov. Dannel P. Malloy is once again looking to increase the hourly pay rate, this time to $10.10 by the year 2017 (see story, page 1).
Like the minimum wage that took effect January 1 of this year, this latest proposal, SB 32, would be incremental. It changes last year’s law by establishing a $9.15 per hour minimum wage beginning January 1, 2015, raising it to $9.60 the following year, and to $10.10 on January 1, 2017.
One can only observe that the solons in Hartford who support this measure have never managed a business or met a payroll. What is more troubling is that apparently Malloy and his Democrat allies in the General Assembly have never talked to those who manage companies and meet payrolls in Connecticut to ask for their input.
If they had, here’s what they would have heard: Hiking the minimum wage yet again is a job-killer and a body blow to the state’s woeful “recovery” from the 2008-09 recession.
It’s not hard to see why: Faced with a mandate to pay workers more than their labor is worth on the open market, employers simply won’t do it. They will compensate by cutting workers’ hours and benefits, curtail employee training and raises prices on the goods and services they sell.
Supporters of the measure argue that raising the minimum wage provides workers more money to buy things. Actually, the opposite is true: SB 32 would in fact deal a double dose of economic poison to those it is intended to help. Jobs for teens and low-skilled workers would evaporate, making them less able to afford to buy goods and services made more expensive by the minimum-wage mandate.
In its February government affairs report, the Connecticut Business & Industry Association observed that “Since the last minimum wage increase passed, little has changed in Connecticut’s economic health: Employers are still struggling with the high costs of doing business in the state, and some perceptions persist that Connecticut is not a good place to locate, or expand businesses.”
There is a pernicious presumption at work here: That workers somehow are forced to toil in low-paying jobs at, say, fast-food restaurants or retail stores. But they’re not indentured servants; workers are free to sell their labor for the highest wages they can get. If they deem that compensation too low, there are myriad avenues to enhance the value of their labor through education, training and the like.
That’s only if trusts the wisdom of free markets to strike an equitable balance between what companies can afford to pay for labor and what employees can sell their labor for. But increasingly, the politicians who control the commanding heights of Connecticut’s economy do not trust the marketplace.
The political narrative of the left, unquestioned by a pliant “mainstream” media, goes something like this: Most working Americans are naïve sheep, easily fooled into selling their labor for less than its actual (read: government-mandated) value by rapacious business owners. Only shining-armor progressives — politicians, lawyers, ”community organizers” — can save workers from themselves.
Until this predominating narrative changes, Connecticut’s economy will never improve, and companies will continue to look for greener pastures elsewhere.
In early December Yale School of Management (SOM) Professor Barry Nalebuff challenged his colleagues at Yale University to increase their giving to the United Way of Greater New Haven.
Rhodes scholar Nalebuff has published multiple management books on everything from business strategy to game theory over his 23-year career at Yale. He has been a leader at Yale and SOM on many initiatives.
In 1998 Nalebuff founded Honest Tea with Harvard Professor Seth Goldman. The pair built the company into a multi-million-dollar enterprise and what they called a “values-based business” characterized by generous philanthropy. In 2008 they sold Honest Tea to Coca-Cola, the company that helped finance its expansion.
Nalebuff’s academic and private-sector leadership place him in an ideal position to understand the role of employer- and employee-based support for local non-profits. He heads the UW drive at SOM, and has agreed to personally match donations.
Yale University’s $1 million United Way goal already represents twenty percent of the United Way of Greater New Haven donations.
Nalebuff isn’t the first Yale person to challenge his colleagues to increase their United Way commitment. Many credit John Pepper Jr., the former Procter & Gamble (P&G) chairman and Yale Corporation member for jump-starting a more aggressive United Way campaign on campus.
P&G is well known as a major supporter of the United Way. The Cincinnati-based consumer-products giant has helped that region’s United Way chapter achieve a $60 million-plus goal in a metro area of 2.2 million.
Since 2002 Yale’s annual contribution has increased significantly from $400,000 to more than $1 million. Nalebuff, however, has set the bar much higher, saying the Blue Mother could eventually raise as much as $5 million annually. He has invoked comparisons with Quinnipiac and the University of New Haven, which have greater faculty participation though far lower total contributions ($57,000 and $35,000, respectively).
We thank Nalebuff for raising an important issue. While the greater New Haven community generously supports many non-profits through both monetary and volunteer contributions, we agree that the employee community could support the United Way far more significantly.
The culture of community fundraising in a large corporate environment is what allows communities like Cincinnati or Hartford or New London to mount larger UW campaigns. Pfizer employees alone have raised as much as $5 million annually for the United Way’s New London chapter.
But New Haven’s major “meds and eds” employers are different and at least for now do not have the command-and-control structure that can “incent” employees to give at comparable levels. What many see as heavy-handed approaches in larger corporations produce great results for some United Way campaigns, but likely are not workable here.
What does work in New Haven — and what Nalebuff has begun — is a discussion, education and inspiration to highlight the needs and available resources of greater New Haven.
We urge the United Way, as well as the leaders of major area employers to see this as an organic opportunity to more vigorously communicate to their employees the importance of structured giving within their organizations. The value realized in building a cohesive community will be even greater than the dollars raised.