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Politics and probity of minimum wage

Published January 03. 2014 4:00AM

The increase in the Connecticut minimum wage Jan. 1 - rising from $8.25 to $8.70 per hour - was reasonable and measured. It will provide a bit more spending money for those dependent on low-wage, low-skill jobs for their living, but is not so sharp an increase that it will discourage job growth.

The state estimates the mandated pay hike affects about 21 percent of Connecticut's 1.7 million-member work force. The Connecticut minimum wage will bump up again to $9 on Jan. 1, 2015.

Yet the adjustment is, at best, a Band-Aid. The percent of individuals at or near the minimum wage indicates serious structural problems with the state economy. It shows that many workers do not have the adequate education or the proper skills to align with the bioscience, high-tech manufacturing, defense-production and other well-paying jobs the administration of Gov. Dannel P. Malloy is attempting to grow in the state.

Addressing these challenges will be far more difficult than simply boosting the mandatory pay for those on the lowest rungs of the wage ladder. To be fair, the Malloy administration has increased funding for job retraining and reforming public education, but it will take time.

Talk of a mandatory "living wage" of $15 per hour, as referenced by Democratic Sen. Catherine Osten of Sprague during a Hartford news conference earlier this week, more resembles wishful thinking and political pandering than it does good public policy. The senator's 19th District includes Ledyard, Montville and Norwich.

The intent of a minimum wage is to place a floor on wages and prevent market abuses, not to magically assure everyone can make enough to support a family, regardless of a lack of marketable skills. The contention that all can be made well by mandating a "living wage" is as much voodoo economics as is the concept that big tax cuts to the most wealthy will trickle down to the middle and lower classes.

Economists have long disagreed over the efficacy of a minimum wage since Congress first created one - 25 cents per hour - at the federal level in 1938.

Critics say setting an artificial minimum increases unemployment because business owners, forced to pay more, will hire less. Young people, particularly in a poor economy, are particularly vulnerable to this consequence. If forced to pay more for unskilled labor, why not hire an experienced adult desperate for work, rather than a teen desirous of spending money. Fewer teens working means that there are fewer developing a work ethic.

Pro-minimum wage economists, note that the United States economy is largely driven by consumer spending. Increasing the minimum wage puts more money in the pockets of people who, by necessity, will have to spend it and that will boost jobs, goes the argument.

All agree, however, that the topic is extremely complex with countless variables. Inarguably, the federal minimum wage has not kept up with inflation. The 1978 minimum wage of $2.65, if adjusted for inflation, would be $9.47 today. Instead, it is $7.25.

The minimum wage has always been politically contentious, once again evident in the debate about to take place in Washington. President Obama and the Democrats are about to make a strong push for a federal minimum wage hike, with legislation proposed to increase it to $10.10 by 2015. A reasonable adjustment, if not to that level, is necessary.

A recent CBS news poll found strong support for a federal minimum wage increase, including among 70 percent of self-described moderates, 64 percent of unaffiliated voters and even 57 percent of Republicans. Democrats seek to put Republicans, who have traditionally opposed increases as anti-business, in a tough political spot.

One path to an increase would be to tie a minimum-wage hike to small-business friendly tax reform. Unfortunately, that is unlikely to happen, both because Democrats hope to use the minimum wage as a wedge issue in 2014 congressional campaigns and the improbability that the Republican House would even entertain the idea.

In other words, more politics than policy will continue to emanate from Washington.

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