Connecticut minimum wage will be $15 per hour on June 1. What will change (and what won't)?

While the pandemic and inflation have changed the nation's economic outlook, Connecticut has stood by a pre-existing plan to raise its minimum wage to $15 an hour.

Now that it’s 2023, the minimum wage will increase from $14 to $15 in June under that plan. Some are concerned about small businesses affording the increase. Others say raising the minimum wage doesn't do enough for workers on its own, and people need to earn a "living wage" to keep up with rent and other expenses.

Here's what local players expect from the new minimum wage, including what it means for businesses on the state line with Rhode Island, and what wages will look like going forward.

When did Connecticut decide to raise the state's minimum wage, and how?

In May 2019, Governor Ned Lamont signed a law that first raised Connecticut’s minimum wage from $10.10 to $11 that October. The minimum wage has gone up by $1 every 11 months since, until it hits the $15 mark in June.

“It’s been implemented in a timely fashion that has helped out a lot of workers across the state,” said state Sen. Cathy Osten, who represents Connecticut's 19th District.

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Next year, the state’s minimum wage will be indexed to the U.S. Department of Labor’s employment cost index, which means it will automatically adjust going forward, without the need for a political debate, Osten said.

Due to the ongoing worker shortage, many businesses are paying more than the minimum wage anyhow, she said.

What does minimum wage buy?

People making $15 per hour still won't be able to reasonably afford rent.

Efforts to raise minimum wage are a step in the right direction, said Andrew Aurand, vice president of research for the National Low Income Housing Coalition, but they don’t do enough on their own.

A person is considered "rent-burdened" by the U.S. Department of Housing and Urban Development if that person spends more than 30% income on a rental. Someone would have to work 64 hours a week at minimum wage to afford a one-bedroom apartment at the current $14 minimum wage, according to the coalition's Out of Reach report data, or make over $22.50 at a normal 40-hour work week.

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People working minimum wage jobs may be trying to support families on that money, so increasing the minimum wage is an important step. However, low-wage workers will still need rental assistance as rental costs continue to increase.

“Raising the minimum wage to $15 an hour is an important improvement, but it doesn’t solve the housing affordability problem for low-wage workers,” Aurand said.

Like Aurand, Osten also acknowledges that $15 an hour isn’t a living wage but said it will at least improve conditions for people in janitorial, hospitality and entry-level jobs.

There also needs to be more subsidized housing, Aurand said, and more vouchers for low-income renters to access spaces in the private market.

Some of the legislation Osten said she’s working on involves job training, eliminating the tax break cliff for pensions and annuities for seniors, and improving compensation for early childhood care workers.

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“We require a number of those workers to have degrees, and their rate of pay is at that minimum wage level,” she said about early childhood care workers.

Could the minimum wage hike entice Rhode Island residents to work in Connecticut?

Neighboring Rhode Island, which borders both Windham and New London counties in Connecticut, is going through a similar transitional wage increase. The state brought its minimum wage to $13 an hour with the new year and plans to make it $15 an hour in two years, according to Rhode Island's website.

“We’ll take them, we have jobs,” Osten said.

In Eastern Connecticut, some of the main sectors still looking for workers include casinos, restaurants and advanced manufacturing, Osten said.

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Are businesses able to pay $15 an hour?

While larger businesses can take the hit, smaller businesses will need to adjust, said Chamber of Commerce of Eastern Connecticut President Tony Sheridan.

“It’s not easy for a lot of people, but it’s law and I’m not sure what you do about it at this point,” he said.

There were concerns from the business community when it was passed in 2019. Even a small recession would make things tough for businesses needing to pay at least $15 an hour, Sheridan said.

“You want everyone to be able to earn a living,” he said. “By the same token, if it makes the difference between having a job or no job, it becomes a whole different issue.”

There’s also a “trickle up” effect that could happen, resulting in another issue for businesses, said Betti Kuszaj, executive director of the Northeastern Connecticut Chamber of Commerce.

“If the person at the bottom rung get the increase, those higher up on the rung feel they should get the increase as well,” she said.

This article originally appeared on The Bulletin: Impact of a $15 CT minimum wage on rent, small businesses, job hunters