Connecticut Is Latest State to Raise Minimum Wage, but Is It Enough to Help?

It’s still really hard — if not impossible — to live on $8 an hour.

A close-up photo showing of the front of various US bank notes is seen December 7, 2010 in Washington, DC.
National Journal
Nancy Cook
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Nancy Cook
March 28, 2014, 5:20 a.m.

This story was up­dated on April 4, 2014.

Thir­teen states op­ted to raise their min­im­um wage above the fed­er­al level, start­ing this past Jan. 1. And so far, noth­ing dire (or amaz­ing, for that mat­ter) has happened to em­ploy­ers’ or work­ers in those com­munit­ies.

An­ec­dot­ally, busi­nesses have not slashed jobs or laid-off low-wage work­ers en masse. In­stead, pay­ing up to $1 more an hour is simply the latest head­ache for busi­ness own­ers like 45-year-old Peter De­Fe­lice. “The eco­nomy crashed. My taxes have gone up. The price of gas went up, and the [min­im­um-wage] in­crease will cost me more than $2,500 this year,” says De­Fe­lice, the own­er of two flower shops and a com­ic-book store in Sparta and Frank­lin, N.J. “We just keep chan­ging the way we do busi­ness to be­come more ef­fi­cient.”

And the min­im­um-wage work­ers them­selves? Well, they’re grate­ful for the in­crease, but the boost is not enough to lift any­one out of con­stant fin­an­cial dis­tress. “It helps me pay more of my bills,” says 22-year-old Naquasia Le­Grand, who works as a Ken­tucky Fried Chick­en cash­ier in New York for $8 an hour, up from $7.25 in 2013. “But, I still can’t do a lot.” Le­Grand has be­come an or­gan­izer and face of the multi-state cam­paign to raise min­im­um wages, ap­pear­ing on “The Col­bert Re­port” in Janu­ary to talk about those ef­forts.

Roughly three months after the in­creases went in­to ef­fect in more than a dozen states, in­clud­ing Cali­for­nia, Con­necti­c­ut, New Jer­sey, New York, and Rhode Is­land, this is the state-of-play for the min­im­um-wage de­bate. Eco­nom­ic data are not con­clus­ive enough yet to give ad­voc­ates hard evid­ence as to wheth­er the in­creases were a wise or fool­hardy de­cision. That has not stopped the polit­ic­al ac­tion from shift­ing largely to the state level, with Con­gress grid­locked and the pres­id­ent’s power wan­ing.

New Jer­sey work­ers saw some of the greatest in­creases head­ing in­to 2014; there, the min­im­um wage jumped from $7.25 to $8.25 an hour and also pegged fu­ture in­creases to the rate of in­fla­tion, meas­ured by the Con­sumer Price In­dex. Pres­id­ent Obama and con­gres­sion­al Demo­crats con­tin­ue to ad­voc­ate for a high­er na­tion­al min­im­um wage of $10.10 an hour as a key theme for the 2014 midterm elec­tions: a way to ex­press the em­pathy for hard­pressed Amer­ic­an work­ers on an is­sue that also hap­pens to poll well. And Con­necti­c­ut law­makers just voted Wed­nes­day to in­crease its min­im­um wage to $10.10 by 2017, in line with the pres­id­ent’s eco­nom­ic agenda.

Now, states are en­ga­ging in their own mini-eco­nom­ic ex­per­i­ments in real time to try to settle the age-old eco­nom­ic de­bate: Does in­creas­ing the min­im­um wage lead to less job cre­ation, or does it spur eco­nom­ic growth by giv­ing low-wage work­ers more money to spend? Eco­nom­ists have been fight­ing over this for at least the past 20 years, in­creas­ingly pro­du­cing more re­search on the top­ic and ar­guing amongst them­selves.

A re­cent sur­vey of min­im­um-wage re­search by the non­par­tis­an budget score­keep­ers, the Con­gres­sion­al Budget Of­fice, showed how in­con­clus­ive the aca­dem­ic de­bate re­mains. CBO es­tim­ated that 16.5 mil­lion work­ers would see a boost in their earn­ings if the fed­er­al gov­ern­ment in­creased the min­im­um wage to $10.10 an hour (high­er than any of the state in­creases that re­cently took hold). Such a move would also lift 900,000 fam­il­ies out of poverty, CBO says. At the same time, however, it could re­duce the num­ber of jobs that the eco­nomy cre­ates by roughly 500,000 po­s­i­tions. “The prob­lem is: There is no way to raise wages without win­ners and losers,” says Mark Killings­worth, a labor eco­nom­ist at Rut­gers Uni­versity. “It’s hard to do something that just in­volves win­ners.”

The aca­dem­ic re­search on the min­im­um wage re­mains as grid­locked as the de­bate with­in the halls of Con­gress, while the eco­nom­ic real­it­ies for Amer­ic­an work­ers have cer­tainly shif­ted. More and more adults now work low-wage, hourly jobs in re­tail stores, fast-food chains, air­ports, and as home health care aides to sup­port their fam­il­ies than they did in years past. “Pri­or to the 1980s, it was typ­ic­ally teens who were the min­im­um-wage work­ers,” says Wil­li­am Ro­gers III, a pro­fess­or of pub­lic policy at Rut­gers Uni­versity and a former chief eco­nom­ist at the Labor De­part­ment. “A typ­ic­al min­im­um-wage work­er now is not a teen­ager. This is how it fits in­to the in­come in­equal­ity con­ver­sa­tion.”

The oth­er, more subtle shift comes from the hol­low­ing out of the middle class. Amer­ic­an work­ers, par­tic­u­larly those without col­lege de­grees, are no longer as able to eas­ily move from low-wage jobs to bet­ter-pay­ing ones, thanks to the dearth of good man­u­fac­tur­ing jobs and oth­er blue-col­lar po­s­i­tions. This leaves work­ers stuck in a rut of min­im­um-wage work for longer than they per­haps ima­gined and without a clear es­cape lad­der.

Just ask Le­Grand, the KFC work­er. After taxes, Le­Grand takes home roughly $120 a week from work­ing 15 hours at the fast-food chain on the out­er edges of the Brook­lyn, N.Y., neigh­bor­hood, Park Slope. She used to make more money by work­ing a second job at a KFC branch in Queens un­til that store shut down in Oc­to­ber 2013. Now, she needs to find an­oth­er second job to bet­ter sup­port her­self, or pick up more hours in her cur­rent po­s­i­tion: a route that she’s tried with little suc­cess. She says she’s one of the lucky ones be­cause she at least lives with her grand­moth­er and pays little to no rent.

“Nobody has any money to sur­vive or buy any­thing,” she says about her fel­low min­im­um-wage work­ers. “Obama is do­ing the right thing as a lead­er, even if he doesn’t have as much au­thor­ity as I thought he would. That’s why some states are start­ing to change the min­im­um wage,” she adds.

One sem­in­al min­im­um-wage study from the 1990s showed how rais­ing the min­im­um wage does not ne­ces­sar­ily cause huge fluc­tu­ations in loc­al eco­nom­ies. The study, from eco­nom­ists Dav­id Card and Alan Krueger, com­pared fast-food res­taur­ants in New Jer­sey in the 1990s (where the min­im­um wage rose from $4.25 to $5.05 an hour) with fast-food chains in east­ern Pennsylvania (where the min­im­um wage did not go up that year). The eco­nom­ists found that the min­im­um-wage in­crease in New Jer­sey did not re­duce em­ploy­ment, as con­ser­vat­ives and free-mar­ket thinkers of­ten ar­gue. (Krueger later went on to be­come a top eco­nom­ic ad­viser to Obama.)

More re­cently, a 2010 pa­per out of the Uni­versity of Cali­for­nia (Berke­ley) ex­pan­ded on the ori­gin­al New Jer­sey fast-food study by show­ing that slight in­creases in the min­im­um wage across 337 counties and a broad­er sec­tor of in­dus­tries also did not lead to sig­ni­fic­ant job losses. For sup­port­ers of the min­im­um wage, eco­nom­ists, and low-wage work­ers, the ques­tion be­comes: How much can the fed­er­al gov­ern­ment in­crease that threshold without hurt­ing the eco­nomy and busi­nesses? Mean­while, con­ser­vat­ive eco­nom­ists like Mi­chael Strain of the Amer­ic­an En­ter­prise In­sti­tute and a hand­ful of Re­pub­lic­an law­makers are fo­cused in­stead on push­ing the al­tern­at­ive of an ex­pan­ded Earned In­come Tax Cred­it, a break for work­ing in­di­vidu­als.

The min­im­um-wage sweet spot, ac­cord­ing to the CBO over­view, may fall closer to $9 an hour than the pres­id­ent’s latest pro­pos­al. “The thing that is miss­ing from the CBO study is what hap­pens between the $9 and the $10.10 an hour be­fore we start to en­counter ser­i­ous un­em­ploy­ment prob­lems,” says Steven Press­man, a min­im­um-wage ex­pert and a pro­fess­or of eco­nom­ics and fin­ance at Mon­mouth Uni­versity in New Jer­sey.

Still, rais­ing the min­im­um wage by small in­cre­ments and state by state may not be a pan­acea for low-wage, less-edu­cated work­ers. Twenty-year-old Tayzia Tread­well knows this as well as any­one, hav­ing gradu­ated from earn­ing $7.25 an hour at a Pizza Hut in Eliza­beth, N.J., to mak­ing $10 an hour as a private se­cur­ity guard. (Like Le­Grand, Tread­well has got­ten in­volved in ef­forts to raise state min­im­um wages, lob­by­ing politi­cians in her state when they de­bated the wage hike.) “It was such a big deal to get that $10-an-hour job,” she says. Tread­well sup­ports her 2-year-old daugh­ter and pays her for school fees, di­apers, and food. She still must take care of her­self and her bills, and she can’t even af­ford to live on her own. In­stead, she saves money by liv­ing with her moth­er. Tread­well is grate­ful for the high­er wage of $10 an hour but also very aware, as someone on the lower end of the eco­nom­ic lad­der, that “$10 is still not enough.” That’s a tough mes­sage to hear for those hop­ing that any min­im­um-wage in­crease can solve a much great­er share of our coun­try’s cur­rent eco­nom­ic ills.

UP­DATE: An earli­er ver­sion of this story did not note that both Naquasia Le­Grand and Tayzia Tread­well are in­volved as speak­ers and act­iv­ists in the ef­fort to raise min­im­um wages at the state and fed­er­al levels.

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