Moore: Central Vermont Chamber of Commerce opposes $15 minimum wage

By Bill Moore

The General Assembly will convene its 2018 session in less than one month, and the business community is already concerned about the direction in which we may be headed.

It is apparent that one of the priority bills in the new year will be to increase the minimum wage to $15 an hour. The Central Vermont Chamber of Commerce has joined many other pro-business/pro-growth groups to oppose this recommendation.

Courtesy of ORCA Media

Bill Moore is president and CEO of the Central Vermont Chamber of Commerce.

In 2014, the business community agreed to a stepped increase in the minimum wage from $8.73 an hour, (nearly a dollar above the federal minimum) to $9.60 in 2016, $10 in 2017 and $10.50 in 2018. The agreement also called for indexing the minimum wage, beginning in 2019.

These increases were agreed to by all parties interested in workers’ wages and enacted by the General Assembly. One of the primary reasons for the agreement was to allow businesses to plan and prepare for increases and, by indexing increases annually, to avoid the constant battles over increasing the minimum wage.

Minimum wage jobs are generally those at the entry level. They are intended to be short-term until the employee gains the necessary skills and experience to take on more responsibility. More experience and responsibility leads to better jobs which leads to increased wages. The Minimum wage was not created to provide a permanent wage. The wage was in fact created to ensure that workers during The Great Depression were not exploited.

We believe that market forces should determine the minimum wage, not artificial increases imposed by the Legislature. In fact, the market is already driving the wages earned by Vermont’s workers. In 2016, only 10 percent of all Vermont workers earned less than $10.45 per hour, at a time when the minimum Wage was $9.60 per hour.

According to a 2016 study by the Heritage Foundation, “Starting wages of $15 per hour mean full-time employees must create at least $38,700 a year in value for their employers (including wages, employer payroll taxes, and Affordable Care Act mandated penalties). Such a high hurdle would make it much harder for less-experienced and less-skilled workers to find full-time jobs. Many of these workers are not yet productive enough to create that much value for their employers and businesses will not hire them at a loss. Consequently, many businesses might respond to a $15 mandate by eliminating positions, cutting hours, and looking for new ways to implement labor-saving technology.”

Such “labor-saving technology” is already available in the forms of self-check out counters and kiosks taking orders in restaurants.

We are concerned about the upward pressure on wages that increasing the minimum wage will have on the cost of doing business in Vermont. We are concerned that simply increasing the minimum wage does not increase workers’ productivity. We are concerned that the increase will in fact negatively impact the productivity of current employees who do not see their own wages increase commensurate to the increase in the minimum wage.

We are also concerned about the inflationary impact that increasing the minimum wage will have on the costs of goods and services sold in Vermont. Businesses will not absorb the increases and consumers will feel the burden of increased prices.

Already, a significant study that has been conducted looking at all sectors of Seattle’s economy (where the minimum wage is $13 per hour) is showing a huge negative impact on low-wage workers due to their working significantly fewer hours because of the increased wage. The study found that for every percent increase in hourly wages, low-wage workers saw hours reduced by three percent. The result was a loss of roughly $125 per month due to working fewer hours.

Automatically increasing wages does not address the core issue. We need to be creating a workplace that is assured that productivity is commensurate to the increases in the minimum wage. Education and training are the keys to success. We must be educating students to be prepared for the jobs of the twenty-first century. Training and re-training programs for incumbent workers and those re-entering the workforce must be geared towards today’s job requirements.

There are good paying jobs going for the asking across Vermont today. Employers that I have spoken with tell me that those jobs are not being filled because the applicants are not meeting the necessary job requirements.

Increasing the wage to $15 per hour is a lofty goal, but it does not solve the problem. Increasing the wage can stifle job growth, and even limit employers’ ability to create new jobs.

Better education, the right training and re-training of the workforce for today’s and tomorrow’s jobs will help to ensure a minimum wage greater than $15 per hour.

Bill Moore is president and CEO of the Central Vermont Chamber of Commerce.

Images courtesy of Wikimedia Commons/Public domain and Vote for Vermont

3 thoughts on “Moore: Central Vermont Chamber of Commerce opposes $15 minimum wage

  1. I live and own a business in a ski resort town. No one who works for me at present is working because they need the money. No one requests to work more than three days….four at the most. When I opened this business I was generally able to pay twice the minimum wage and that was my goal. As expenses rose, particularly R.E. taxes (now 10x what they were) and as the State mandated more and more, such as Disability Insurance, and the income has not gone up accordingly for a multitude of reasons, I am no longer able to pay much above the now $10.00 an hour. If I were mandated to do so right now, I would have to close my business. There are presently 24 buildings for sale in our downtown. We don’t need any more unless we want to announce to the world that the Town is dying a slow and painful death. The question of why has multiple answers but one thing is obvious: the people cooking up their recipe for their perfect socialist state in Montpelier, don’t have a clue what they force us to swallow. They need to understand: 1. Vermont has a “mud season” that takes a good 13 to 14 weeks out of the retail picture and is a serious handicap most states do not have. It takes another two months, if you remain open, to pay for that loss. When July or August rolls around, which are crucial for paying off that loss, the State thinks nothing, for example, of doing major construction on Main Street for two of the best months of the year and has done so to our Town twice in the last ten years. May or June are months they have not heard ofI guess when the loss would hardly be noticeable. 2. Most of Vermont retail business does not take place over seven days as it does in other states. We are generally limited to two weekend days. 3. The weather can ruin, and often does, the sales of an entire weekend. Worse! Just the wrong weather prediction of a major weekend storm on a Tuesday to New York City and N.J. residents, at the time people are planning the upcoming weekend, can cut your sales by thousands of dollars and can never be made up. 4. As the cost of a lift ticket, gear and restaurants goes up, the amount people have left to spend in a retail store goes down. 5. We are next to a State which has no sales tax…..huge implications. 5. Our legislators have no comprehension of death by papercuts. The fees and taxes alone on my business phone are now more than the entire phone bill when I opened my store. The service has not changed.
    It’s pathetic when the taxpayer dreads each year that Montpelier is in session. This one could make or break many retail businesses.

  2. In considering education and training, it would be wise to move toward the apprenticeship model, rather than the debt-model that college, university and technical schools thrive under. Apprenticeships can be in any discipline and would mix more formal education with work. Wages need to be allowed to be low to make training practical for a business. No business has a guaranteed employee, once that employee is trained, so future payback cannot only be somewhat considered. The formal education community always sides with higher minimum wage, because higher wages force their debt model, because the high wages make the apprenticeship model too expensive to work. There are a lot of aspects to this issue, but at the end of the day the true market will always win. No business can be forced to operate. Nor can a business be forced to hire.

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