Money Talk with Angela Carter
Live Chat, New Haven Register, 7/29/2009

2:01
NHR Multimedia: Good afternoon everyone and thanks for joining us on this Live Chat. Register business and public policy writer Angela Carter will be hosting and she invited a quality cross-section of panelists to join her today.
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Thanks again and now I'll hand the floor over to Angi for the next hour.
Welcome all and welcome, Angi.
2:02

NHR Multimedia: We will start in two minutes.
2:04
NHR Multimedia Editor:
We’re fortunate experts with us today, to help guide the conversation and enlighten us on the experiences of both businesses that pay the minimum wage or must make up the difference between their pay rate and the minimum and employees who earn the minimum wage. We will also gain insight on how the increase last Friday in the federal minimum wage to $7.25 per hour could affect the national economy. Connecticut’s minimum wage rose to $8 in January and will increase again to $8.25 in January 2010.

Starting us off will be Peter Gioia, vice president and economist for the Connecticut Business & Industry Association.

Peter, can you give us your perspective on how the increase to $8 has impacted CBIA members and other employers around the state and the possible effects of raising the minimum wage for the state economy?
2:06

NHR Multimedia: Since Paul Filson is with us, why don't we jump to Paul.
2:08
NHR Multimedia Editor: Hi Paul, while we're waiting for Peter, can you give us SEIU's perspective on the minimum wage, the federal and state increases and historically, how wages have differed for unionized workers compared to those who are not organized?
2:08
NHR Multimedia: While we're waiting on Paul, Pete Gioia has joined us and and answered Angi's question.
2:09
[Comment From Pete Gioia CBIA Economist]
The state minimum is already higher than the federal minimum. So, there is no real affect from that, but obviously when increases in minimum wage, a few things happen. First people who arelady have jobs do indeed get more money. But at the same time, especially with a recession, increasing min. wages has an impact on companies to decide whether they want to invest in more equipment or in low-skilled workers. And those workers, say with supermarket check out people can easily be replaced by technology such as self check out lines. which leads to fewer jobs created in the economy.
2:10
[Comment From Paul Filson]
Hi. Well most union members earn more than the minimum wage and nearly all have decent health and retirement benefits, but the minimum wage is an important floor. The fact is that while incomes have risen for the high earners those at the bottom have only recently seen the minimum wage increase. Thousands of families depend on the minimum wage as an integral part of their income.
2:11
[Comment From Lori Pelletier]
Look the hard cold facts are that if the minimum wage kept up with inflation, it would be about $18.00/hour today. SO they way I look at it we still have a ways to go to keep workers out of poverty. Threatening workers with automation has been going on since the minimum wage was first intoduced in the 1930's. The fact is there has been a HUGE wealth shift and having a floor is not unreasonable.
2:11
[Comment From Chris]
Peter, do you have data showing that this happens? Historically, what's the job shed CT sees when the minimum wage increases?
2:12
NHR Multimedia Editor: We thank Lori J. Pelletier for chatting with us as well. She is the Secretary-Treasurer of the Connecticut AFL-CIO that represents 225,000 union members in the state. She has held the elected position since 1999. She is the chief lobbyist for the Connecticut AFL-CIO. Lori is a member of the International Association of Machinists and Aerospace Workers, Local Lodge 700 representing the workers at Pratt and Whitney
2:13
[Comment From Margot Dorfman]
The Business owners supported by the US Women’s Chamber of Commerce already pay a living wage citing higher productivity, decreased turnover, lower recruiting and training costs, decreased absenteeism and increased worker morale from paying higher wages.
2:13

NHR Multimedia Editor:

Margot Dorfman is chief executive officer of the U.S. Women’s Chamber of Commerce. Margot, how did chamber members and other small businesses react to the increase Friday?
2:14
[Comment From Pete Gioia CBIA Economist]
Most people who get minimum wage are not family bread winners. They tend to largely be teenagers or people with no prior job experience trying to break into their first job. The minimum wage is really a training wage. Many companies that do pay minimum wage, after a trial period, generally bump people above that. But, of course a lot of unskilled first-time job seekers have few skills and companies are always taking a risk in hiring them. So when you bump up the minimum wage you provide greater disinsentive for companies to take chances on these people.
2:14
[Comment From Chris]
Lori and Peter ... is it fair to say you have differing views of the increase?
2:15
[Comment From Douglas Hall]
I think it's critical to recognize that an increase in the minimum wage is an important piece of the puzzle required to help lift up lower income earners. There are other things that Connecticut should be doing to put the state on a level playing field with our neighboring states. One great example would be to adopt a state earned income tax credit, which each of Connecticut's neighboring states currently has.
2:15

NHR Multimedia Editor:

Doug Hall, director the Economic Analysis and Research Network (EARN) for the Economic Policy Institute, is also here and can tell us about EPI’s research on the effects of the federal increase. Is your estimate that it will generate $5.5 billion in spending over the next 12 months – am I remembering that correctly?
2:15
[Comment From Douglas Hall]
EPI research on the federal minimum wage shows that following the 1996-97 increase in the minimum wage, the low-wage labor market performed better than it had in decades! Hardly the doom and gloom that we hear so often from opponents of a raised minimum wage.
2:16
[Comment From Margot Dorfman]
This increase was introduced in 2006. They planned for it so we have not heard anything adverse.
2:16
[Comment From Joachim Hero]
I think that Paul and Loris points ring especially true for Connecticut. Connecticut Voices has monitored trends and wages and income in the state for many years through our State of Working Connecticut and Pulling Apart reports. While Connecticut as a whole is a state of great wealth, our lowest-income (bottom 20%) residents have been falling further and further behind. This is an unconscionable trend and a higher minimum wage--or in this case, making sure that at the very least it does not ERODE--is one way to stem it.
2:16
[Comment From Lori Pelletier]
Maybe we should think of this increase in the minimum wage as a mini-stimulus for those at the low end of the wage scale. This increase will go right back into the economy, helping small business, and communities.
2:16
[Comment From Margot Dorfman]
Additionally, Women Business owners pay fairly and play fairly.
2:16
[Comment From Pete Gioia CBIA Economist]
Yes, we have differing veiws. Ninety percent of economists surveyed agree that increasing the minimum wage increases unemployment among low-skilled workers.
2:16
[Comment From Douglas Hall]
That's right, Angi. The increase to the federal minimum wage will have a significant positive impact on the national economy, including a $5.5 billion increase in consumer spending.
2:17
[Comment From Guest]
A full time minimum wage worker would earn only $15,000 per year. This is still poverty pay. Most minimum wage earners also receive few if any benefits.
2:17
[Comment From Thomas]
Margot, don't you think that's a very general blanket statement?
2:18
[Comment From Lori Pelletier]
Fair...yes we do differ. But the fact is nearly 50% of "minimum wage earners" are bread winners, and the ripple effect of these additional dollars in families pockets is good for the local economy. And I is it realistic to think that an additional $10 per week will stop an employer from hiring someone?
2:18
[Comment From Pete Gioia CBIA Economist]
Studies have shown that a 10 percent increase in the minimum wage drecreases teen employment by 1 to 3 percent, according to Brown University studies.
2:18
[Comment From Margot Dorfman]
As an American Tax payer I am tired of bailing out the Enrons and AIGs. And I don’t want to have to pay higher taxes to supplement the income of unfairly paid employees because a business owner has paid people so little that they can’t afford appropriate the basics.– We the taxpayers have to subsidize health care, food and housing. It is not up to me to pay someone else’s employees because they did not pay them fairly. People who pay at that level are expecting me to subsidize their businesses.
2:19
[Comment From Pete Gioia CBIA Economist]
We already know with unemployment hovering around 10 percent, the teen unemployment is thought to be almost double that.
2:19

NHR Multimedia Editor:

Joachim Hero, research fellow with Connecticut Voices for Children, has done extensive research on job trends and income trends in the state. Joachim, can you tell us a little bit more about what Voices has discovered and how developments with the minimum wage might fit in?
2:19
[Comment From Joachim Hero]
Sorry to sound data-y, but with regard to what research says about the minimum wage, Connecticut's own Office of Legislative Research did a report on the potential impact of a proposed increase to the minimum wage in 2005 from 7.10 to 7.65 and found the effect on employment would be minimal to non-existent and that the increase would most likely boost consumer spending.
2:19
[Comment From Douglas Hall]
I think it's also critical to note that those who are suffering most in the current recession also benefit most from an increase in the minimum wage. Visible minorities and single parents stand to gain disproportionately from an increase in the minimum wage. Our research shows that nearly half a million single parents with children under 18 will benefit from a minimum wage increase in 2009.
2:20
[Comment From Chris]
Lori, I think you're right ... $10 a week extra ($520 a year) wouldn't be enough to prevent from hiring. But at the same point, will it really help stimulate the economy as some of you have said? $10 a week is a movie ticket
2:20
[Comment From Chris]
Douglas ... when you say "benefit" ... how? They won't be getting health benefits and the small increase won't really help them with savings, will it?
2:20
[Comment From Douglas Hall]
We also know that ADULTS make up the largest share of workers who will benefit from a minimum wage increase. The characterization of a minimum wage increase as a significant threat to teenage employment is not fully consistent with what the data show.
2:21
[Comment From Margot Dorfman]
Working women, particularly women of color, represent the greatest percentage of workers to benefit from the increase to $7.25. The typical minimum wage worker is an adult woman. Think of retail clerks and food preparers. Think of childcare workers taking care of our children and health aides taking care of our parents and grandparents.
2:21
[Comment From Margot Dorfman]
Working women make up 2/3rds of minimum wage earners. 9 million women (59% of all minimum wage earners) will benefit from the minimum wage increase.
2:21
[Comment From Guest]
Raising the minimum wage might add a penny or two to the price of a hamburger at a fast food restaurant. This is hardly an economic roadblock.
2:22

NHR Multimedia: We're going to put a live poll out there to see what people believe is a living wage for workers in America? The poll will stay up for the duration.
2:22
[Comment From Margot Dorfman]
And this increase will level the playing field so that small businesses can compete fairly with corporations that do not respect the worker and pay as little as possible.
2:22

What do you believe is a living wage for workers in America?
$8 an hour or less
( 13% )
$10-$12 an hour
( 13% )
$15 an hour
( 25% )
$20 or more
( 50% )

2:23
[Comment From lori pelletier]
Maybe individually $10 per week doesn't impact the economy, but multiply that by 1000 workers geting the increase, and that does.
2:24
[Comment From Douglas Hall]
Of course there are other things that we should be pursuing, both nationally and at the state level, to help families. Addressing the health insurance/health care needs, through a major health care overhaul is one critically important step. This EPI study emphasizes the point that a minimum wage increase alone is not enough. http://www.epi.org/analysis_and_opinion/entry/a_raise_but_no_health_ins….
2:24
[Comment From Joachim Hero]
Thanks Angela, as I mentioned previously, Connecticut is one only states where real income has been declining over the past two decades. Recent trends in wages point to a similar downward movement in the wages of the lowest income earners. A minimum wage that allows families to succeed is just one piece of severl things that we should be doing at the state level to bolster the lagging incomes of the of the lowest earners.
2:24
[Comment From Paul Filson]
Many minimum wage workers hold more than 1 job also.
2:25
[Comment From Pete Gioia CBIA Economist]
What would really impact the economy is to have a situation where instead of losing 70,000 workers, many of whom have been paid a lot more than $20 per hour, that we have an economy that encourages investment in the state, with better skilled and better educated workers coming out of our school systems who can command far above $20 per hour. This is what really would raise all boats.
2:26

NHR Multimedia Editor: Hi folks,

Keep an eye out for the Sunday Register, Mary O'Leary will have an article on Sustinet, the state's proposal for a universal health care plan.
2:26
[Comment From lori pelletier]
We've seen in report after report that people who are at the lowest earnings levels put more of their money back into the economy.
2:26
[Comment From Douglas Hall]
Connecticut also has a "self sufficiency standard" that informs the discussion of what it costs to get by in Connecticut. It reflects the fact that costs vary significantly by region. It's accessible through the PCSW website, and also through the following link: www.sixstrategies.org.
2:26

NHR Multimedia: Joachim, is there a study of some substance out there for our readers in terms of real income decline?
2:27
[Comment From Margot Dorfman]
The federal minimum wage was first enacted during the Great Depression to put a floor under wages and boost consumer spending, business and the economy. The economy is stronger when the middle class is growing, not struggling and shrinking.
2:27
[Comment From Steve]
Joachim: Everyone cites the real income declines in CT, but how can you deny the fact that this state has been hostile to business for decades. Businesses create jobs which are no match for a government handout. Which is what many leaders in this state seem to prefer. It seems that Peter would agree
2:27
[Comment From lori pelletier]
Well said Margot!
2:28

NHR Multimedia Editor: Welcome Steve,

Can you elaborate on the practices regarding businesses that seem hostile?
2:29
[Comment From Joachim Hero]
I can name a couple. Of course, the ones that come instantly to mind are ones that I've had a hand in. Ct voices' "State of Working Connecticut 2008: Wage Trends" is the most recent. We've also done a report that looks at income over a longer period of time called "Pulling Apart in Connecticut"
2:30

NHR Multimedia: Are there links for our readers, Joachim?
2:30

NHR Multimedia Editor: Thanks, Joachim.

I'll find our story on that and post
2:30
[Comment From Douglas Hall]
Of course Pete Gioia makes a good point that Connecticut needs to expand its investment in human capital, through accessible and high quality early care and education, a K-12 system that closes the achievement gaps, and significant investment in post-secondary education, including need based aid, so that EVERY student can achieve their full potential, regardless of their economic situation.
2:30
[Comment From Pete Gioia CBIA Economist]
Yes, I do Steve. We need to create an environment that promotes quality job creation. To do this, businesspeople need to feel comfortable investing and expanding operations in CT. We hear repeatedly from our members that CT is a business UNfriendly state and surveys that have been done by executives across the country agree with that assessment. Regarding hostile to business practices, the General Assembly introduced several hundred bills deemed anti-business this session.
2:31
[Comment From Joachim Hero]
Sure, for the State of Working CT: http://www.ctkidslink.org/pub_detail_426.html
2:31
[Comment From Joachim Hero]
For the Pulling Apart report: http://www.ctkidslink.org/pub_detail_408.html
2:32

NHR Multimedia Editor: Here's another one on employment trends

http://www.nhregister.com/articles/2009/05/06/business/doc4a01614728994…
2:32
[Comment From Margot Dorfman]
I signed the Business for a Fair Minimum Wage statement at www.businessforafairminimumwage.org along with 1,000 other national business leaders and small business owners from every state who believe strongly that raising the minimum wage is good for workers, business and the economy. Business lobbyists who tell you business is mostly opposed to the increase are wrong.
2:32

NHR Multimedia: Thanks, Joachim.
2:32
[Comment From Paul Filson]
An educated and trained workforce, affordable housing and good transportation and infrastructure all cost money. Who does CBIA think should pay for these things -- to make our state business friendly?
2:32
[Comment From Pete Gioia CBIA Economist]
We agree that education needs to be improved in CT. That's why the CBIA Education Foundation is actively involved in a number of programs including school-to-career and increasing Advanced Placement course participation for high-schoolers in low income communities.
2:34

NHR Multimedia Editor: Margot,

Was the statement sent to Congress?
2:34
[Comment From Pete Gioia CBIA Economist]
There are a lot of people who believe in carving up the exisiting economic pie. We advocate getting CT on a path to greater growth so that greater growth in the economy will lead to more resources, including government resources from the exisiting rates and types of taxation.
2:35
[Comment From Margot Dorfman]
We worked to get the legislation passed when it first came out in 2006. This is the 3rd stage of its implementation.
2:35
[Comment From Joachim Hero]
Thanks, Steve, for the question. In fact, (unsurprisingly) I WOULD deny that CT has been hostile to business. Connecticut may be a high cost state or businesses, but not a high tax state. In fact, in Ernst & Young's National Survey of State and Local Business taxation, CT was the second lowest taxed state for businesses as a share of private-sector GSP.
2:36
[Comment From Paul Filson]
Seems like a classic chicken and egg problem. How about a progressive income tax on both individuals and businesses to raise the money?
2:36
[Comment From Douglas Hall]
We seem to be in agreement that education is one area worthy of significant investment. Unfortunately, education alone does not prevent the dramatic pulling apart in wages and income that has occurred throughout the United States, and particularly in Connecticut.
2:37

NHR Multimedia Editor: Is the federal increase fully phased in now?
2:38
[Comment From Douglas Hall]
Yes it is, but clearly it will need to be revisited at regular intervals.
2:38
[Comment From Pete Gioia CBIA Economist]
Economy.com, Milken Institute, Business Institute in NY and many others, rate CT as one of the five most costliest states to do business in the U.S. A lot of that cost is derived from government mandates and CT laws that are more costly to comply with than many other states. These are part of the reason why we increasingly hear from companies that if they are going to expand or locate their business that they are going to do it out of state.
2:38
[Comment From Margot Dorfman]
Yes it is. This still has not met inflation however.
2:39
[Comment From Douglas Hall]
There has been a real disconnect between productivity gains and wages. Workers deserve to share more fully in the prosperity that their hard work has generated.
2:39

NHR Multimedia Editor: Pete,

Does CT do 'exit interviews' so to speak as businesses are leaving to assertain the motives?
2:41
[Comment From Margot Dorfman]
I wonder if the Department of Commerce has that information.
2:41
[Comment From Pete Gioia CBIA Economist]
DECD does not do these to my knowledge, but we regularly hear from our members, both in surveys and directly that they see little potential to investing in CT vs. other states or countries. They are constantly being recruited by other states and nations offering enourmous incentives and lower costs of doing business.
2:42
[Comment From Joachim Hero]
I think it's important to mention that many of the things that make CT a high cost state for businesses, also make it a high cost state of low-income workers. CT is one of the two costliest states to purchase groceries, and it is also one of the highest cost state for energy, housing, and child care. This puts particularly high pressure on us to ensure that families receive adequate compensation for their hard work.
2:42
[Comment From mary]
i have a question
2:42
[Comment From Douglas Hall]
I think it's also fair to note that Connecticut should revisit some of its economic development strategies to ensure the state is reaping REAL benefits from its investments. A great example of a misplaced focus is the Connecticut Film Tax Credit. Like film tax credits in other states (and most business tax credits generally), this "investment" reaps very little benefit to the state, while draining state coffers of over $100 million/year at a time when the state faces a dire fiscal situation.
2:43
[Comment From Joachim Hero]
In fact, if you adjust low-income wages for the cost of living here, they are among the least-well compensated in the country.
2:43
[Comment From Margot Dorfman]
Who is sitting on the economic boards and councils in CT? Sounds like we need some business owners there to get this changed.
2:43

[Comment From Margot Dorfman]
And it is interesting that the discussion of minimum wage increasing is pointing to a greater issue.
2:44

[Comment From Lori pelletier]
But if the federal minimum wage was higher than any individual state's minimum wage, there would be no incnetive to move out. Competing with slave nations such as China and Indonesia ...well lets not go there
2:46

NHR Multimedia Editor: Where do you all think CT's and the nation's minimum wage rates should be per hour?
2:48

NHR Multimedia Editor: This hour has gone too fast. I'm getting the signal to call for final comments.

Thank you all for logging in, this was a great discussion. Please feel free to contact me at any time at acarter@nhregister.com.
2:48
[Comment From Paul Filson]
Depends on benefit levels. You must factor in the cost of health care.
2:48
[Comment From Pete Gioia CBIA Economist]
Thanks Angi. I look forward to doing this again.
2:49

NHR Multimedia: If all our panelists want to add some parting words, a paragraph or so, that would be great - a sort of last call, final thoughts.
2:49
[Comment From lori pelletier]
Thanks Angi!
2:49
[Comment From Douglas Hall]
Angi, there are lots of ways to help families make ends meet, and lots of ways to ensure an appropriate public and private balance in meeting those needs. Adequate health insurance is one of those pieces, unemployment benefits that help folks transition from one job to the next, UP a job ladder, rather than DOWN to "working poor" status, a state earned income tax credit (based on 20% of the federal credit), and yes, a more generous minimum wage, are all important.
2:50
[Comment From Joachim Hero]
At the least I think that it's consistent with American values that a person who works full-time, all year, should make at least enough to lift their family out of poverty. At the moment we are not even doing this.
2:52
[Comment From Joachim Hero]
Thanks for inviting me Angela. Watch out for Connecticut Voices' labor day release of the most recent wage and job numbers in Connecticut in State of Working Connecticut 2009.
2:53
NHR Multimedia: Just to let everyone know, a copy of this chat will be left online and can be found under the business tab. Some great insight. Angi, do you want to sign off?
2:53
[Comment From Douglas Hall]
Angi, thanks for your attention to this critically important policy area. Connecticut is well placed to lead the nation, with one of the highest levels of educational attainment, and the highest per capita income. There are lots of reasons that an adequate minimum wage makes sense for Connecticut AND for other states throughout America. Thanks for giving us an opportunity to highlight some of those reasons.
2:56
NHR Multimedia Editor: Thanks everyone for joining us!
2:58