Entry-level workforce falls into hiring crosshairs as new minimum wage surpasses $16

NORTH CANAAN — Each summer, Bob Riva looks forward to hiring a half dozen high school students to work the front counters at CA Lindell ACE Hardware.

“I like to bring in those kids from the high school and train them and work with them. They are very cheerful,” as they gain entry-level skills and bring their enthusiasm to the job and to customers, said the Canaan business owner.

But the 4.2% increase in the minimum wage, from $15.69 to $16.35, that went into effect Jan. 1, has reduced the number of summer jobs Riva will be able to offer to students this year.

“We end up getting a lot of kids, but does it make sense to pay someone in high school that large a minimum wage? It comes down to making decisions that you never had to make before,” said Riva.

“You get a little pickier and end up scrutinizing the people you are paying minimum wage to. We want our employees to make a good living, but the kids don’t have a house and are still in school. And for this new minimum wage right now, they’d better be moving, they’d better be doing a good job,” said Riva.

Five minimum wage hikes in four years

In 2019, Gov. Ned Lamont signed Public Act 19-4, which implemented five minimum wage increases over four years’ time, followed by subsequent adjustments tied to the percentage change in the federal Employment Cost Index (ECI).

In making the announcement, Lamont said the new law “ensures that as the economy grows, the wages of low-income workers can grow with it. This is a fair, modest adjustment for workers who will invest their earnings right back into our economy and support local businesses in their communities.”

According to Connecticut Labor Commissioner Dante Bartolomeo, the ECI increased by 4.2% over the 12-month period ending on June 30, 2024, accounting for the 66-cent hourly wage hike on Jan. 1.

“Minimum wage increases help ensure that no Connecticut worker gets left behind,” Bartolomeo said.

From 2022 to 2023, average salaries in Connecticut rose 3.1%, with the state having the fifth-highest average wage in the country, according to the Connecticut Business and Industry Association (CBIA).

State officials estimate 10% of the state’s workforce, about 169,000 workers, earn the minimum wage.

More harm than good?

Several Northwest Corner employers described the state’s method for doling out wage increases as burdensome and broken, and that they have little choice but to shift their hiring focus to employees whose productivity levels match the higher minimum wage.

As a result, the most vulnerable, especially those who may lack on-the-job training and have a lower literacy or disability and are most in need of employment, training and experience, will be negatively impacted.

Others are at risk of losing, or have lost important benefits such as health insurance, food and energy assistance, or even affordable housing because their new raises push them over the maximum income limits to qualify for benefits.

Carolyn Piccirelli, founder of Honeychurch Home in Salisbury, said although her business is not affected by the minimum wage hike as all employees are paid above that level, she supports efforts to increase wages.

However, she said she is aware of people who are being bumped off assistance programs because the latest minimum wage hike put them over the maximum income limit.

“What they have to do is find a work-around like reducing their hours” to maintain assistance, said Piccirelli. “As a result, employers have to hire more people.”

Piccirelli, who is expanding and relocating her business to Lenox, Mass., said she is in favor of a higher minimum wage, even though she feels lawmakers were oblivious to the negative impact the raises would have on small businesses.

“I don’t think any minimum wage is enough, frankly,” she noted. “It’s very common for the government to do things and not consider the fallout. The affected small businesses have to be part of the solution,” she said.

Lindell’s Riva had this warning for Connecticut lawmakers: “You are putting a lot of businesses out of business,” as California did when it raised its hourly minimum wage to $20. “Now you have many businesses that can’t make the next payroll and the economy hasn’t been strong.”

A better solution, said Riva, would have been to limit the wage increases only to workers age 21 and older and reserve a lower minimum wage for those ages 16 to 21, giving that younger age group time to gain experience and hone their work skills.

Minimum Wage Threat

According to the nonprofit Employment Policies Institute (EPI), which focuses on issues that affect entry level employment, research shows that raising the minimum wage hurts the least-skilled and least-experienced job seekers the most, “while having little to no effect on poverty rates.”

The EPI noted that a new survey conducted by CorCom Inc., a data management firm, and Carnegie Mellon University asked economists about their reaction to a $15 minimum wage. “It finds that 62 percent of U.S.-based economists oppose a $15 federal minimum wage,” EPI reported.

Three-quarters of respondents (75%) said that a $15 federal minimum wage “would have harmful effects on youth employment levels” and 81 percent of respondents said that a $15 minimum wage would make it more difficult for small businesses to stay in business.

Additionally, research conducted by economists from Miami and Trinity University found that as many as 1.2 million jobs could be lost with a $17 minimum wage

“Sixty-two percent will be among women, and 63 percent will be lost among 16- to 24- year-olds,” EPI reported.

Ryan Craig, owner of the Berkshire Country Store in Norfolk, said the rising minimum wage has negatively impacted his business, as well as some of his workers. Debra A. Aleksinas

‘I can’t be a first job anymore’

On a recent weekday in Norfolk’s quaint business center, Berkshire Country Store owner Ryan Craig greeted vendors, met with customers and assisted his bare-bones staff.

During a quick break, he recalled not so long ago when he had two store locations and 18 employees, 12 of them in Norfolk and a half-dozen in Canaan, which has since closed. Now he has six employees working full- and part-time.

Just days earlier, Berkshire Country Store marked its eighth anniversary, but its owner said he fears for his business’ future, as well as other small businesses in Northwest Corner, with no end in sight to the wage hikes.

“I think small towns are going to be in a world of hurt,” Craig predicted.

“When we opened the minimum wage was less than $10 an hour. That kind of stayed put for a while, and now it is $16.35,” he noted. To survive, the entrepreneur has raised costs and reduced hours of operation and staff. But it’s still a struggle, he said.

Like Riva in Canaan, Craig said he has stopped hiring high school students because “I can’t be a first job anymore.”

The Norfolk business owner said he is not against better pay for workers. He just thinks the system for handing out the raises is broken.

“Look at the cost of living here, and the struggle to find employees. They can’t afford to live in Norfolk,” said Craig, whose current staff commutes from Winsted. “And, soon, they may not be able to afford to live in Winsted.”

“If we are giving them a raise and they do better, that would be one thing. But because of the rising minimum wage, some of them are getting pulled off state benefits. So for that $1 an hour raise, they are now paying $500 a month for insurance, and also the deductibles.”

Craig said he feels like workers are being set up to fail.

“I feel like I’m doing something for the employees that is not helping them. And if it’s not helping me, then who is it helping?