$15 minimum wage summer study committee opens can of worms in Vermont

By David Flemming

If some legislators get their way, Vermont will adopt a $15 minimum wage as soon as Jan. 1, 2019.

The six Vermont legislators comprising the Minimum Wage Study Committee met for the first time on Thursday to research and discuss the potential impacts of such a policy. The Committee will meet four more times before Dec. 1, and will make a recommendation when the full legislature returns in January.

Raising the state minimum wage seems like a simple concept. However, it soon became clear that actually doing so would have serious consequences.

Bennington County Representative Brian Keefe (R-Manchester) worried that a standard minimum wage covering the entire state would cause more unemployment in low income areas than in those areas that can afford to pay higher incomes. For example, Bennington County’s Median Household Income is below $50,000 while Chittenden County’s is over $63,000.

Then again, constructing a minimum wage that allowed for geographical flexibility has its own problems. Legislative Counsel Damien Leonard explained how New York’s uses a stratified minimum wage that varies based on industry, area of the state, and number of employees. As a result, New York has 21 different calculations for the minimum wage. This led Representative Jean O’Sullivan (D-Burlington) to exclaim, “I don’t know how anyone does business there!”

So, a uniform minimum wage in Vermont might cause the most unemployment in the areas with the lowest incomes. On the other hand, a minimum wage that attempts to be flexible enough to consider industry, geography, and size of company could create uncertainty in the business community and potential legal problems for businesses that have no idea which minimum wage applies to them.

The Legislature’s Economist Tom Kavet noted the difficulty in calculating the macroeconomic impact of a historically higher minimum wage on Vermont: “$15 is outside the range of what has been studied or experienced elsewhere.” Kavet expressed his wish for “better data collection,” especially in regards to “hours worked per employee.” Without more detailed data, if employers compensated for higher labors costs by cutting back all employees’ hours instead of letting some employees go, Vermont’s job totals would look exactly as they had before the minimum wage increase – although workers would certainly be negatively impacted in either case.

But Vermont does not collect “hours worked” data (only four states do), so it will be difficult to judge the real impact of an increased minimum wage.

Armed with ‘hours worked’ data, Vermont could better understand the impact of the higher wage and, hypothetically, slow down or stop increases if employers began to cut back on hours. But collecting new data presents problems as well. Not only would employers be paying higher costs for employee labor, they would also have to pay the cost of collecting and reporting the employee hours information to the state. Call it adding insult to injury – or task to tax.

No matter how you cut it, a $15 minimum wage will make it more difficult and expensive for employers to hire workers. Beyond that basic unpleasantness, it is clear from the first day of debate that the unforeseen and unintended consequences of mandating such a policy will be significant.

The Minimum Wage Study Committee: Sen. Michael Sirotkin (D-Chittenden), Chair, Rep. Helen Head (D-South Burlington), Vice Chair. Members: Rep. Brian Keefe (R-Manchester), Rep. Jean O’Sullivan (D-Burlington), Sen. Brian Collamore (R-Rutland), and Sen. Ann Cummings (D-Washington)

David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.

Image courtesy of Wikimedia Commons/Public domain

7 thoughts on “$15 minimum wage summer study committee opens can of worms in Vermont

  1. $15/hr definitely will help them pay for their drug addiction; leave it to the Progs to find a way to cut down on crime.

  2. Not to worry. If the Dem/Progressives want a $15.00 wage, they’ll get. If they have to cook the books to demonstrate its feasibly, so be it. Then when the house of cards collapses and the chickens come home to roost, it will be someone else’s fault.

  3. WAGES ,

    Well, lets look at Burlington how many Businesses are there and how many are permanent
    jobs maybe a hand full ?? Most jobs in Burlington are just that a job, no career path !!.

    Why, because Burlington let all the good jobs leave ( progressive ) mind set, we want a
    college town with bars, restaurants and other small businesses look at Church Street ,
    it use to flourish .

    So now these workers want $15 per for what ?? All this will do is cause most of these
    businesses to go out of business ( overhead ) .

    Wake up Burlington, you need to add real career opportunity and then the wages will
    follow. Big Business means big dollars to the tax base and wages .

    I remember the old days, great jobs in every part of the City ……… !!

  4. Arbitrarily increasing the minimum wage is tantamount to arranging deck chairs on the Titanic, disregarding labor market equilibrium that inevitably increases all higher tier wages by a commensurate amount. Consider the comparative arguments made by public school teacher and other government employee unions. It’s ‘equal pay for equal work’…right.

    Then the cost of living increases exponentially more than the paltry increase provided to minimum wage earners, thereby rendering the purchasing power of their additional pay less effective than what they could purchase before the arbitrary raise.

    If we really want to redistribute wealth, we can decrease the minimum wage by ten percent and require all higher tier wages to decrease ten percent. That’s wage and price controls through centralized planning…otherwise known as democratic socialism.

    Or we can stop being the pseudo-omnipotent moral busybodies we’ve become and trust free markets to make the economic adjustments that are clearly too complicated for even the best meaning government agencies to replicate.

  5. Can it get any dumber? We see how well it has worked in Seattle. People are losing their jobs; losing their hours, and their pay checks are actually decreasing. Liberals just don’t seem to have the capacity to learn from others’ mistakes.

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