Summer Study Committee Will Heat Up Debate Over $15 Minimum Wage

Aug 1, 2017

Supporters of a bill that would raise the minimum wage in Vermont to $15 an hour hope a new summer study committee will lay the groundwork for passage in 2018.

It’s been three years since Vermont last increased the minimum wage and, at $10 an hour, the state already has one of the higher minimum wages in the U.S.

But Chittenden County Sen. Michael Sirotkin says raising that wage again could lift the economic tide for low-income Vermonters. And he says public interest in the proposal is growing.

“And I think part of the reason we have this study and we have interest in this issue directly quite frankly relates to Bernie [Sanders] bringing it to the forefront of people’s attention," Sirotkin says.

That study Sirotkin is referring to begins next week, when the so-called Minimum Wage Study Committee holds its first hearing in Montpelier.

The committee will have six lawmakers - three each from the House and Senate. It was created as part of a wide-ranging economic development bill passed by lawmakers earlier this year. And Sirotkin, who’s been advocating for minimum wage increases since the early 1980s, says the more workers make, the more they’ll spend.

"I heard from businesses in Manchester who say this can be a burden on them, and their only choice would be to actually cut workers." — Manchester Rep. Brian Keefe

“Joint Fiscal has done already, a preliminary study, that shows they’ll infuse $250 million annually into the Vermont economy,” Sirotkin says.

That $250 million figure is if lawmakers raise the minimum wage to $15 an hour. This year alone, Vermont lawmakers have introduced five separate bills that would do that. The various bills would institute the $15 an hour wage as soon as 2020, and as far away as 2026.

Even supporters of those bills, however, say the plan has some potential pitfalls.

“And I look to this study committee this summer as a way to advance our knowledge of the issues surrounding it that we have just not addressed yet,” says Helen Head, the Democratic chairwoman of the House Committee on General, Housing and Military Affairs, and also a member of the minimum wage committee.

Head says she’s especially worried about something lawmakers refer to as the “benefits cliff.” That’s when a pay raise causes a person to lose more in state and federal benefits than they’ll get from the pay bump.

“And that can be a real problem because it’s a disincentive for people to stay in the workforce, or raise their standard of living through working,” says Manchester Rep. Brian Keefe, one of two Republicans on the minimum wage committee.

An analysis done for the Legislature’s Joint Fiscal Office found that, in general, the more a person earns, the more net resources they’ll have.

But that isn’t true across the board, and wage increases for low-income families with children under the age of 13 are especially problematic.

"I think part of the reason we have this study and we have interest in this issue directly quite frankly relates to Bernie bringing it to the forefront of people's attention." — Chittenden County Sen. Michael Sirotkin

Consider the case of a single mother with two children: If, as the analysis looked at, her income goes from $25,000 a year to $45,000 a year, she’ll end up losing more than $9,000 a year in “net resources,” mainly because she’d no longer be eligible for state and federal childcare subsidies.

In addition to the benefits cliff, Keefe says he’s also worried about the effect of a higher minimum wage on employers.

“I heard from businesses in Manchester who say this can be a burden on them, and their only choice would be to actually cut workers,” Keefe says.

Fiscal analysts for the Legislature say the data is mixed on whether or not increases in the minimum wage depress the labor market, and that lawmakers should “proceed cautiously” as they consider legislation.

Sirotkin says he thinks there are ways to address the benefits cliff, and he says that’ll be one of the main priorities for the study committee.

House and Senate lawmakers next year will also be considering the paid family leave bill that passed the full House during the 2017 session. The legislation would create a statewide insurance pool, funded by mandatory payroll deductions from all workers. The pool would then provide wage replacement for up to six weeks for employees who take a leave of absence to care for a newborn child, or tend to a sick family member.

Democratic leaders have previously acknowledged they may not have enough political capital to pass both paid family leave and a minimum wage increase in 2018. But Sirotkin and Head say it isn’t necessarily an either/or proposition.

“I think it’s far too early to assess that,” Sirotkin says. “They’re both important issues, and I’m glad they’re both being looked at.”

Legislative approval isn’t the only hurdle standing in the way of a $15 minimum wage. Republican Gov. Phil Scott has voiced strong opposition to the measure.