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Wednesday, June 04, 2008

A Big Cheer for Minimum Wage Veto in Connecticut

Kudos to Connecticut Governor Jodi Rell for her veto of a minimum wage increase in late May.

The Connecticut legislation would have increased the state’s minimum wage from $7.65 per hour to $8.00 as of January 1, 2009, and then to $8.25 on January 1, 2020. Keep in mind that the federal minimum wage is $5.85, and is scheduled to jump to $6.55 on July 24, 2008, and then to $7.25 on July 24, 2009.

As reported by the Hartford Courant, Rell made some interesting points regarding why she chose to veto this minimum wage hike:

• "We cannot take a chance on hurting families or employers by signing another minimum wage increase into law at this time," Rell said in a written statement.

• Rell defended her veto during a live telephone interview with Neil Cavuto on Fox News, saying that business opponents were persuasive.

She read a letter from a Burger King franchisee, who complained that the higher minimum wage would cost him $123,760.

"It says, 'I have about 250 full- and part-time employees. Most of them make well above the minimum wage, but when I have to increase the minimum wage I have to do the same thing for all employees,'" she said. "You know, governor, that labor groups are going to come after you," Cavuto said. "That's OK," Rell replied. "I think they would much rather have jobs than to have people out of work right now."

In addition to the Burger King franchisee, the Courant’s article also noted: “Jerry Brick, the general manager of Lake Compounce theme park in Bristol, said he had calculated that the increase would have cost him $150,000.”

Hiking the minimum wage is one of those issues that sounds good politically, but makes no sense economically. Government mandating that business magically pay a higher wage means that the number of jobs for young, low-skilled workers will be reduced, and costs, one way or another, will rise for businesses, with smaller firms hit hardest.

By the way, Rell actually signed a minimum wage increase in 2006. So, here is an example in which an elected officials shifts positions on an issue, but, for a change, in the direction of sound economic policy. Now, the question is: Will a few state legislators see the economic light, and sustain Rell’s veto?

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