Lawmakers are on track this year to raise Vermont’s minimum wage. But just how big a jump Democrats will push through the Legislature is still up for debate. And the fight for higher wages is about to heat up.
President Barack Obama has made raising the minimum wage one of the centerpieces of his second-term economic agenda. Obama wants to increase the minimum wage to $10.10 by 2017. And Gov. Peter Shumlin has decided he wants Vermont to show the way.
But many lawmakers here say an increase to $10.10 over the next three years isn’t nearly enough to improve the lives of low-income Vermonters. And now that Shumlin has put the issue center stage, advocates for working class residents are set to push for more.
“The governor’s plan takes three years to get to $10.10,” says James Haslam, director of the Vermont Workers Center. “Definitely it shouldn’t take that long to get to $10.10, and we need to have a plan that actually moves toward a livable wage.”
Haslam’s organization held a rally Tuesday in support of a bill that would raise the minimum wage to as high as $15 an hour.
At least four minimum wage bills have been introduced by lawmakers this year, and they call for minimum hourly wages of anywhere from $12 to $15. House Speaker Shap Smith says he doesn’t know yet what number lawmakers will land on.
“I think that it will be another number that’s subject to negotiation,” Smith says. “So my sense is that there’ll be a back-and-forth, and we’ll try to figure out what the right number is.”
An economic analysis commissioned by the Legislature shows that raising the minimum wage to $12.50 would mean aggregate income gains of $250 million for low-wage workers. But the analysis shows it would also result in an estimated 3,200 job losses.
“You raise the price of labor, you’re going to have less of it used,” says Tom Kavet, one of the economists hired to perform the analysis. “So a reduction in hours, a reduction in some jobs will occur. And the higher that goes, the more of an impact on overall employment and low wage employment in particular would occur.”
Raising the minimum wage can also have a negative impact on the net incomes of the very people the higher pay is designed to help. That’s because people working in low-wage jobs generally qualify for numerous state and federal assistance programs. The more money they make, the more subsidies they lose eligibility for.
“I think it’s pretty complicated,” Smith says. “You know, what you have to look at is what are the implications of moving the minimum wage higher, and potentially making it less lucrative for people to work because they earn out of health care thorough VHAP, or they earn out of other benefits that might be available to them.”
The business lobby is poised to raise concerns about the impact on the employers that will have to pay the higher wages. Business interests this year have already successful squelched a bill that would have mandated paid sick days. And they’ll soon turn their attention to the minimum wage.
“Businesses are concerned with the cost increases, but they also are concerned with more mandates,” says Jess Gingras, head of the Legislative Action Network at the Vermont Chamber of Commerce.
Vermont has the third-highest minimum wage in the nation, at $8.73 an hour. And it automatically goes up every year by the rate of inflation.
Senate Minority Leader Phillip Baruth co-sponsored a bill this year that would raise the minimum wage to $12 an hour. And Baruth says he agrees with low-income advocates who say raising the wage to $10.10 is rather underwhelming, especially considering that Democrats control the governor’s office and have a near super-majority in the Legislature. With inflationary adjustments, Vermont’s minimum wage would, under current law, hit a projected $9.35 by 2017.
But Baruth says that since the governor wants $10.10, it’s likely that lawmakers will ultimately follow suit.
“The governor has settled on $10.10 over course of a couple years implementation. If we could get higher than that, I personally would be happy,” Baruth says. “I tend to think, judging from the way this building works, that that number is going to wind up being the number.”
According to the economic analysis, raising the minimum wage to $10 an hour would generate about $30 million in aggregate income gains for the 22,000 or so workers that would be affected. The wage bump would also result in about 250 fewer jobs.
Moving the minimum wage to $12.50 would affect an estimated 53,000 workers. The food services and retail industries would be most affected by the changes.
Kavet says a deeper analysis is needed if lawmakers want a firm grasp on the impacts of raising the minimum wage, or if they want find the sweet spot where the state maximizes economic gains while minimizing adverse consequences.
The analysis concludes that moving the minimum wage to $12.50 could have “serious drawbacks that limit its efficacy in achieving the overall objective of improving the well-being of low-wage working Vermonters and their families.”
House Speaker Shap Smith says he hopes to have a minimum wage bill out of committee before the end of the month.
