Unions, business face off over Conn. wages bill

Conn. lawmakers consider requirement that companies receiving development aid pay higher wages

Associated Press

HARTFORD, Conn. (AP) -- Money earmarked by Connecticut to draw new business faces a fresh challenge from organized labor, which is pushing for lawmakers to require benefits and wages higher than the minimum for janitors, guards and other service workers employed by companies receiving state aid.

Business lobbyists who oppose the legislation lost the first round last week when the Labor and Public Employees Committee approved the measure and sent it to the Commerce Committee. Businesses receiving $500,000 or more in economic development aid would be required to pay higher wages and benefits to its employees for 10 years.

"This is making sure the workers have the opportunity to work for a fair wage and decent benefits to provide them with real security," said Matt O'Connor, political director of 32BJ of the Service Employees International Union.

But the legislation would send the wrong message to business owners considering relocating to the state, said Eric Gjede, assistant counsel at the Connecticut Business and Industry Association.

"Come to Connecticut, and by the way, for the next 10 years you're getting punished," he said. "It's one more way Connecticut will be at a competitive disadvantage."

State law already requires the labor commissioner to establish a standard rate of wages for each classification of hourly workers. Added to the pay, which is set by the federal government, is a 30 percent surcharge to cover costs of health, welfare or retirement plans.

The proposed legislation, which failed in last year's legislative session, would extend the requirement to food workers, janitors and other employees who work for businesses or contractors of companies receiving $500,000 or more from the Department of Economic and Community Development, Connecticut Development Authority or Connecticut Innovations Inc.

Companies that fail to pay workers the set wage would pay the financial assistance received and a 5 percent penalty.

Lawmakers changed the legislation to address some concerns of the Connecticut Business and Industry Association, said Sen. Cathy Osten, the Senate chairwoman of the Labor Committee. For example, the legislation gives the Department of Labor flexibility in enforcing the measure to avoid fining companies that mistakenly do not follow the law, she said.

Sen. Joe Markley, a Republican, voted against the bill.

"This is the way government takes our control away from us," he said. "Here's some money and by the way, here are some strings attached to it."

The legislation also touches on economic development and job creation, which Gov. Dannel P. Malloy has made a key issue of his administration. Soon after he took office in January 2011, he launched an effort to draw large companies and has pursued other initiatives aimed at attracting business.

A spokesman for Malloy said the governor has made a priority of creating good-paying jobs with good benefits "and will continue to work with the legislature and others to achieve that goal."

Economic development aid has been criticized by some — Markley said Malloy is "bribing companies" to come to Connecticut — while others are skeptical about the effectiveness of state aid. Asked if she is satisfied with Connecticut's economic development initiatives, Osten, a Democrat, said, "I'm not there yet."

The Labor and Public Employees Committee will schedule hearings in April with officials of workforce investment boards to discuss problems they see in attracting business to Connecticut, she said.

"Do we have enough incentives in the right areas?" Osten asked.

Union supporters say businesses that take state money should be held to a higher standard in employee pay.

But Gjede, of the Connecticut Business and Industry Association, said the legislation would impose a costly burden on companies seeking financial help from the state.

"Higher labor costs mean less jobs," he said.

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