Local employers brace for 2026 minimum wage increase

Business owners in the Northwest Corner are preparing for another mandated wage hike as Connecticut’s minimum wage is set to increase to $16.94 an hour beginning Jan. 1, 2026, the latest adjustment under the state’s automatic cost-of-living formula.

The raise — up from the current $16.35 per hour — marks another step in Connecticut’s plan to link wage increases directly to inflation and employer labor-cost trends.

While workers facing rising housing costs and growing grocery costs applaud the wage hike, business owners across the region are bracing for extra pressure, especially in sectors where profit margins are already razor thin.“It certainly is a struggle,” said John Auclair, owner of Norbrook Farm Brewery in Colebrook. “It’s tough for us to pass those costs along because we are in a competitive industry.”

Auclair said while he supports fair wages, the cumulative impact of higher labor costs has forced him to make difficult business decisions.

“The solution? You cut back on hiring and do more yourself. Unfortunately, you can’t always give your customers the best service. We’ve had to do with fewer servers and fewer employees.”

Norbrook Farm Brewery currently employs about eight full-time workers and 25 part-time employees, many of whom are tipped staff, which allows the business to offset minimum wage rules in that category.

The rising cost of living

Labor advocates argue that raising the minimum wage is necessary given Connecticut’s high cost of living. According to the Economic Policy Institute, a living wage for a single adult with one child in Connecticut exceeds $36 per hour, well above the new minimum.

Chris Exum, a maintenance worker at McDonalds in Winsted for the past eight years, said minimum wage hikes make little impact due to soaring living expenses.

“Everything keeps going up also. Groceries are up, gas is up, rent. I am barely staying afloat, and rarely take time off,” Exum said.

Bottom-line pressure

Kendra Chapman, proprietor of The Black Rabbit Bar & Grille in Lakeville, said rising wages are adding to a difficult cost-environment.

“Every year it seems like it’s getting tougher,” she explained. “We’re losing money this year where we haven’t before. We were always able to bank and save money for the winter months.”

The impact also extends to nonprofits.

At the Housatonic Child Care Center in Salisbury, Director Tonya Roussis said the upcoming wage hike could further squeeze childcare providers already struggling to balance affordability for families with fair pay for teachers.

“We start at minimum wage, increasing on the first anniversary,” said Roussis. “To compensate, we add the cost to our annual budget and do more fundraising and writing grants.”

Currently, several of her eight full-time teachers earn between $17 and $18 hourly.

Ripple-effects of wage hikes

Economists say Connecticut’s continued wage hikes, though designed to keep pace with inflation, can trigger ripple-effects across the business landscape: higher payroll costs may lead to price increases, reduced hiring or shorter shifts for workers.

At just a hair under $17 an hour, the upcoming minimum wage hike has David Hall, Jr., owner of Hall’s Garage in West Cornwall “nervous about adding someone on” should his business undergo a slowdown.

“It’s gotten to the point where if somebody young and inexperienced wants to get their foot in the door, we can’t afford to pay them at that rate.”

Norbrook Farm’s Auclair said he understands the worker perspective but hopes policymakers recognize the pressure on small business owners competing in the marketplace.

Automatic adjustment system

Connecticut is one of only a handful of states that automatically adjusts its minimum wage each year, based on changes in the U.S. Department of Labor’s Employment Cost Index (ECI), a measure of hourly employer labor-cost changes including wages and benefits.

The indexing approach was adopted by the legislature in 2019 to kick in after the minimum wage reached $15; the first indexed increase took effect in 2024. Under the policy, future increases will reflect the percentage change in the ECI for the 12-month period ended June 30 of the prior year. The 2026 increase to $16.94 corresponds to the latest ECI rise of about 3.6% over the period.

Supporters say the system provides predictability for both workers and employers while critics say it lacks flexibility for businesses in weaker economic cycles.

In making the wage hike announcement in early September, Gov. Ned Lamont (D) said the increase is necessary. “Nobody who works full-time should have to live in poverty. This is a fair, modest increase, and the money earned will go right back into our own economy, supporting local businesses in our communities.”

According to the Current Population Survey, as calculated by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics, more than 60% of minimum wage earners in Connecticut are women and people of color.

Doing right by workers

“I want to pay my employees fairly,” stressed the Black Rabbit Bar & Grille’sChapman. “But the bigger problem is the cost of living.”

Norbrook Farm Brewery’s Auclair said he, too, sympathizes with employees making minimum or above minimum hourly wage. “I don’t know how young families are making it, living in the state of Connecticut.”