By Bill Moore
A recent commentary published in the Times Argus laid out a case for increasing the minimum wage (“Why we should raise the minimum wage,” Oct. 13-15). The Central Vermont Chamber of Commerce agrees — the minimum wage should increase. However, where we differ is on the nature of and the timing of the increase.
The Central Vermont Chamber believes that the current minimum wage law is a responsible, effective way to increase the minimum wage. The current $10.50, and all future increases, are now set to be increased by either five percent every Jan. 1 or by the percentage increase in the Consumer Price Index, whichever is smaller.
The minimum wage also increases as a result of market pressures. Today, with virtually zero percent unemployment, most employers are paying well above the minimum wage in order to attract employees. The most current data available from the Vermont General Assembly indicates that only 8.5 percent of the workforce earns 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. The minimum wage was not created to provide a permanent wage. The minimum wage was, in fact, created to ensure that workers during The Great Depression were not exploited.
The article cites a study conducted by the Center on Wage and Employment Dynamics at UC-Berkeley as demonstrating that increases in the minimum wage “do not jeopardize job growth.” The General Assembly’s own legislative economist’s report clearly says that the state could lose up to 900 jobs by increasing the minimum wage to $12.50 by 2021. A minimum wage of $13.25 in 2022 would result in the loss of 1,240 jobs. A $15 minimum wage in 2022 would result in “ long-term average annual job losses of approximately 2,830 jobs.” I suggest that a mandatory increase does indeed “jeopardize job growth.”
The UC-Berkeley study is often touted by proponents as the most thorough study of minimum wage increases. However, that study only looked at food sector workers. The article fails to point out that the majority of food service workers earn additional wages through tips received, putting their average minimum wage significantly higher.
A much more comprehensive study is the National Bureau of Economic Research Working Paper study, “Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle” (June 2017). This particular research is much more comprehensive, having looked at all sectors of Seattle’s economy where the minimum wage is $13 per hour.
The study shows a huge negative impact on low-wage workers due to their working significantly fewer hours because of the increased minimum wage. The study found that for every percentage point increase in hourly wages, low-wage workers saw hours reduced by 3 percent. The result was an average loss of roughly $125 per worker per month due to working fewer hours. This does not portend well for a minimum wage of $15 per hour.
Automatically increasing wages does not address the core issue. What can be done to improve skills that will create a workforce that possesses the necessary tools to move away from low wage jobs?
Education and training, the keys to success, must be geared toward preparing employees for the jobs of the 21st century. Moving students who may not be college-bound into technical training and apprenticeships is vital. Improving access to the Community College of Vermont (CCV) and Vermont Technical College (VTC) will present better opportunities for those looking for high paying careers.
Improving access to vocational/technical education at the secondary level is also critical. That will require untangling a complex network of funding and administration that has become a barrier to providing what students and employers need.
Vocational/technical education at the secondary level needs to become a more accepted strategy for many students. Ironically, it is often parent expectations that stand in the way of a child getting a vocational/technical education. We must educate parents about the value of a vocational/technical education, and of the earnings opportunity and career potential found in those occupations.
Students should be exposed to vocational/technical options in at least the 10th grade, and earlier if possible. These things are all related.
Better education, the right training and re-training of the workforce for today’s and tomorrow’s jobs will help to ensure a working wage greater than $15 per hour.
We believe that legislating the minimum wage to $15 is bad public policy. The state should not be in the business of eliminating jobs. The state should be creating an economic climate that leads to the creation of new jobs. Additional job creation will also drive up wages in a competitive market.
Bill Moore is president and CEO of the Central Vermont Chamber of Commerce.