New bill would credit employee health benefits toward minimum wage requirement

Michael Bielawski/TNR

TOO MUCH BURDEN ON BUSINESS: The House Committee on General, Housing, and Military Affairs discussed a proposal that businesses should be allowed to credit health coverage towards meeting minimum wage requirements.

MONTPELIER — With lawmakers at the Statehouse advancing bills that would increase the minimum wage and require additional employee perks, one representative is putting forth an initiative to help businesses meet these demands.

Rep. Anne Donahue, R-Northfield, has proposed H. 434, which would credit health care benefits towards the minimum wage requirement.

For example, if an employee is getting $11 an hour and $4 in health care benefits, that will count as $15 an hour for purposes of the minimum wage.

“I have felt this way about this issue of health care compensation being considered a fully-integrated component of the wages,” Donahue told the House Committee on General, Housing, and Military Affairs on Wednesday morning.

She said the idea really crystallized for her after having an experience last year as an interim executive director of a small agency.

state of Vermont

Rep. Anne Donahue, R-Northfield

“We happened to give an extremely generous health benefit, and when I was looking at it I was thinking, ‘I wonder what that translates to in terms of an hourly rate?'” she said. “And the answer was $4.50 an hour.”

Her workers were getting the health benefit on top of $16 an hour. This means health coverage has reached a cost for these workers of 22 cents on every dollar they made.

Donahue noted those workers at half-time hours who were doing identical work and are not getting these benefits are essentially making 22 percent less per hour than their full-time counterparts.

“It crystallized for me the disparity in trying to talk about wages without talking about health benefits,” she said.

She noted that employee-tied health care systems can also vary greatly from one employer to another. For example, one employer might offer to pay 50 percent of the premium and another might offer insurance but no family benefits, or maybe they don’t offer insurance at all and they simply pay the tax penalty.

“There are just such huge disparities, so if we are looking at trying to improve the situation whenever we are looking at minimum wage, if we’re not incorporating health insurance coverage … [it won’t be the big picture],” she said.

Donahue suggested another scenario. If this $15 an hour wage requirement takes effect and there’s an employee making $13 or $14 an hour and suddenly that business needs to make cuts to free up money to get to $15, they could just say “well we’re just gonna cut the health benefits,” as Donahue put it.

“Then we haven’t really gained anything in terms of helping people,” she said. “That’s the reason I really urge that when this committee addresses around wage that you really incorporate health benefits as a compensation package.”

She suggested with all costs considered, maybe a real minimum wage — including health care — would actually be $18 or $19 an hour.

Rep. John Killacky, D-South Hero, asked why all benefits, health and otherwise, shouldn’t be rolled into this system. Donahue said this bill is more of a starting point, and bringing in other benefits could be for another day.

Rep. Thomas Stevens, D-Waterbury, told True North on Thursday that he’s not prepared to take this bill down off the wall just yet. He did say he is willing to borrow language and ideas from it for their ongoing conversations on the minimum wage in general.

“It’s a difficult concept because they are two different kinds of compensation but the ideas themselves are worth talking about,” he said. “We already have, in the minimum wage law, there is already a provision that says if you make a wage but say you work at a farm, the farmer can deduct the cost of room and board from your paycheck and then you end up getting paid somewhat less an hour. This isn’t quite the same because it’s another benefit that’s added on to that, but essentially it’s the same idea.”

Rep. Marianna Gamache, R-Swanton, told True North the requirements for a raised wage and mandatory health care in combination are going to burden employees and employers alike, and this bill might help a little.

“On the one hand you are increasing pay, and on the other you are taking money away for mandatory health care,” she said. “And in the case of employers, if the employers are mandated to provide the health care, then it’s not only an increase in the minimum wage but then you’ve got the increased cost of the insurance that they have to provide. … And the end game is … nobody is gonna win with this.”

Michael Bielawski is a reporter for True North Reports. Send him news tips at bielawski82@yahoo.com and follow him on Twitter @TrueNorthMikeB.

Images courtesy of Michael Bielawski/TNR and state of Vermont
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4 thoughts on “New bill would credit employee health benefits toward minimum wage requirement

  1. We are too expensive, our cost of living is rising faster than any other place on the planet, we have one of the highest minimum wages on the planet and we still can’t afford anything because….

    cronyism in Vermont is the Worst.

    Exhibit A)
    Chittenden county paying 40 cents a gallon too much

    Exhibit B)
    Health care 2x any industrialized nation, example from just this week? A friend of mine told me his co pay for insulin is up to $740 per quarter. He just bought insulin in Canada for $52, $157 for a similar duration.

    Exhibit C)
    We could build homes for OWNERSHIP @ $600 per month, less than $110k, Instead our state subsidizes rent (poverty trap) and builds a similar size property for $640,000.

    Exhibit D)
    We could reduce college tuition by 70% and increase pay for associate professors by at least double. (Look at the facilities, grand tenure salaries and the abuse associate professors experience)

    Exhibit E)
    We could have day care for $95/week, while building families, but the state has the crazy idea that institutionalizing kids from 2-20 is a grand idea, with their new “Let’s grow kid’s” program. Does this program also have them “experimenting” with their sexuality? Garbage, complete garbage.

    Cronyism and Socialism are really close cousins….really close. THAT’s our problem! It is beyond frustrating that we make people needlessly suffer in this state. There is NO attempt to keep any costs in line or reasonable.

    Many in Vermont are getting stinking rich or living very comfortably keeping everyone else poor. It has to stop.

    • Hi Neil,
      The more a state meddles, the more expensive it gets, and the less competitive, and the more oppressive a state becomes.

      This was true in
      USSR
      CHINA
      VENEZUELA
      CUBA
      VERMONT

      The minimum wage deciders are safely on a government payroll, with good A to Z benefits, not obtainable in the private sector.

      Why not add vacation time to wages, why not holidays

      All the various expenses a business has, mandated or not, should be added to wages, to determine the true cost of having an employee on a payroll.

      All should be added up, including Social Security, unemployment premiums,

      When a person gets an electric bill it has numerous charges, surcharges, taxes and fees and a total amount. Divide that total by the kWh and you get the c/kWh

      The same should be done with wages.
      Divide the total employee costs by hours worked and you get $/h

      This is not rocket science.

      • I agree my thought was to have all the employee benefits and expenses printed on every pay stub. Showing both sides of F.I.C.A. Is a classic, they don’t even see 7%+ tax they are paying, they don’t see how much health care costs, etc.

        What you say is so very true.

        Perhaps when people can see what is being done,then they are informed and can decide for themselves is,this a good deal?

        But then they’ll quickly discover the down side of monopolies,they have no other Choices!

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