March 14, 2012
Connecticut's Pro-Worker Measures Leave Business Feeling Resentful
By John Gramlich, Staff Writer
But last year, when it came time to vote on a bill that would make Connecticut the only state in the nation to require paid sick time for private-sector employees, Cafero and most of his fellow Republicans voted no. "Timing is everything," Cafero explains of his decision, which did not prevent the measure from becoming law . It has been in effect since January.
The way Republicans and many business owners in Connecticut see it, lawmakers could not have chosen a worse moment to impose the law, a step previously taken only by individual cities, such as San Francisco and Washington, D.C. Not only did Connecticut approve the measure as the state was beginning the long climb out of a recession, it passed it alongside the largest tax hike in state history, with the Democratic-run General Assembly raising income, sales and a host of other taxes by more than $1.5 billion. Businesses also have seen their unemployment taxes go up this year, since Connecticut is one of many states that has borrowed money from the federal government and now must pay interest on its federal loan.
The combination of tax increases and a broad new mandate on businesses during a nascent economic recovery is "the worst message that could ever be sent to the investment community," says Mark Soycher of the Connecticut Business and Industry Association, the main business lobby in Hartford. Soycher, a human resources lawyer, has been advising companies about the sick leave law, which requires most private employers with 50 or more workers to provide up to five days of paid sick leave each year — a burden they predict will cut into their profits and create administrative headaches. Companies have been calling Soycher and the Connecticut Department of Labor to ask whether and how they are affected by the law.
But while Republicans and many of their allies in the private sector may feel besieged by some of the economic policies that have come out of Hartford over the last year, Democrats make no apologies for their agenda, even if it upsets those who write the paychecks. In effect, they are making a counterargument to the policies favored by Republican leaders in other states. They say helping the working class will do more to boost the economy than providing tax cuts to businesses or individuals at the top of the income ladder.
This year, House Speaker Christopher Donovan is spearheading an effort that would raise the state's minimum wage from $8.25 an hour to $9.75 an hour by 2014, even though Connecticut already has the second-highest wage floor in the Northeast, after Vermont. Donovan is teaming up with Democratic House speakers from New Jersey and New York to pursue a unique, regional push for increased minimum wages, hoping to fend off attacks from Republicans who say that raising just one state's wage would make it less competitive economically. Donovan, who is running for Congress, says the broader economy will benefit if those with lower incomes have more money in their pocket.
"If we want to rebuild a strong economy, we need jobs that can support families and get consumers back into stores, purchasing goods and services again," the speakers wrote in a recent op-ed published in all three states . "Strengthening the buying power of low-wage workers is especially critical given that the majority of jobs that have been created in the wake of the recession are concentrated in low- and mid-wage occupations."
Meanwhile, Dannel Malloy, this state's first Democratic governor in two decades, proudly points to other efforts to help the workforce in Connecticut, including the creation last year of an earned income tax credit that will provide more spending money to an estimated 190,000 workers, even as lawmakers raised a host of other taxes. Like Donovan, Malloy frames the tax credit as a boon to the state economy, telling Stateline in a recent interview that the money returned to the working poor through the credit — and its federal companion — "will pump $500 million into our economy."
As for paid sick leave, the governor contends it is a "pro-business thing to do" to give workers the protection of sick days, since he believes restaurants, child care centers and other employers will not benefit if their workers show up sick. On the question of timing, Malloy has little patience with those who say that the state should have waited for the economy to stabilize before enacting the law. "In Connecticut, we haven't had much (job) growth in the last 20 years," Malloy told Stateline . "Was I supposed to wait another 20 years?"
Employees vs. employers?
Few people in Connecticut would accuse Malloy of waiting too long to pursue his legislative priorities. The governor with the narrowest winning margin in the nation in the 2010 elections — 6,400 votes, out of more than a million cast — had a first year in office that recalled some of the contentious debates playing out at the same time in the Republican Midwest.
Malloy infuriated businesses by raising taxes and signing the paid sick leave law, which was approved by the General Assembly by the slimmest of margins. But he also alienated public-worker unions by requiring deep concessions to balance the state budget. This year, he is further stoking tensions among another key Democratic constituency — teachers — by seeking to hold them more accountable, including by overhauling tenure rules.
Malloy says he prefers to take a balanced approach to governing, spreading out the pain of difficult policy decisions so one group is not affected disproportionately. That applies to the private sector as well. While businesses did not approve of the tax hikes and paid sick leave law, many of them cheered a bipartisan, $626 million jobs bill that Malloy signed late last year, one he touts as "the most comprehensive jobs package that any state legislature has passed." The plan invests heavily in infrastructure and in tax credits for emerging industries, including rewards for large companies that create jobs in Connecticut.
Republican lawmakers voted for the jobs plan almost unanimously, but Cafero contends that Democrats are sending a "schizophrenic message to business" by simultaneously pushing policies such as paid sick leave and a higher minimum wage. Cafero says those measures pit workers against their employers and inject the state into the private sector at a time when the private sector should be left alone.
Cafero is not the only one accusing the state of an arbitrary and unpredictable approach. Nicole Griffin, executive director of the Connecticut Restaurant Association, questions why the paid sick leave law affects only businesses with 50 or more workers. "If I own a restaurant with 10 employees, they're allowed to come to work sick, but if I own a restaurant with 50 or more, they're not?" she asks.
Signs of a rift
A common argument around the Connecticut Capitol is that Democrats know some of their policies could have a negative effect on businesses, but that they are more interested in winning the support of their political backers in the blue-collar segment of the electorate.
Donovan, for instance, faces an August primary in his race for Congress, and he has made support for the minimum wage his leading issue this session. Malloy, for his part, made paid sick leave a campaign promise during his run for governor, and wasted little time putting it on the agenda after winning office. Voters in Connecticut's Working Families Party, which had supported the proposal for years, provided Malloy with 26,000 votes , or more than four times his margin of victory.
But there are signs of a rift in the Democratic alliance this year. Malloy and Senate President Pro Tem Donald Williams have been cool to Donovan's push for a higher minimum wage, suggesting that frequent Republican criticisms of Connecticut as "anti-business" may be turning into a political problem and that the issue of timing may be a real concern. Raising the wage floor "is not my proposal," Malloy pointedly told Stateline , declining to say whether he would sign the legislation if it reaches his desk.
At the same time, Malloy accuses Republicans and industry groups of coordinating with one another to hammer home the message that Connecticut is unfriendly to business, even though the state's unemployment has declined from 9.3 percent to 8.0 percent on his watch . "If you have a political party (that) is heavily invested in telling people why they should be unhappy," Malloy says, "then we shouldn't be surprised at the results we get."