As state legislatures across the country buckle down for funding battles, sometimes it seems miraculous that they ever find enough tax revenue to fund anything: Every budget is a litany of imploding pensions, overcrowded classrooms, and dilapidated clinics—never enough money to go around. But lawmakers in Connecticut just found some in the coffers of its richest corporations.
Call it a Robin Hood Tax for big-box stores: take from the rich to give to the poor, by forcing companies that pay unlivable wages to support the public benefits that impoverished workers need to survive. According to one economic assessment, the “true cost” of low-wage jobs in Connecticut amounts to some $486 million per year paid through various public welfare programs. So the logic goes, the most heavily state-subsidized companies should pay their fair share.
“This raises the issue of the cost that low-wage employers burden the public with and burden the taxpayers with,” says Louise Simmons, professor of social work at the University of Connecticut and co-author of a new study on the legislation. “And it’s a business model that low-wage employers can use so that they don’t have to pay higher wages.”
The low-wage employer fee proposed in the Act Concerning the Recoupment of State Costs Attributable to Low Wage Employers, acts as a “penalty” paid by big businesses that capitalize on cheap labor with the help of government largesse: those paying less than $15 an hour, with 500 or more employees.
The targeted bosses would pay a fee proportional to the number of hours of poverty-wage labor used per quarter; companies pay the state $1 per low-wage work hour, as a sort of premium on the privilege to underpay workers. The state estimates the policy would apply to roughly 147,000 of more than 743,000 employees at the targeted companies, mostly concentrated in retail and service jobs, like big-box sales (Walmart alone employs about 9300 people statewide).
The funds would be targeted to the Departments of Social Services and Developmental Services, the Office of Early Childhood, and the Labor Department for administration.