By Guy Page
High demand for workers will boost Vermont wages and make the $15 minimum wage unnecessary, the chief economist for the state of Vermont predicted on Wednesday.
“The effective wage will exceed the [proposed $15] minimum wage due to market conditions,” Tom Kavet told a large crowd of lawmakers gathered in the Well of the Vermont Statehouse for the annual legislative briefing. Competition for dwindling numbers of workers will “bid up wages faster than anything that would happen with mandated minimums.”
Vermont’s unemployment rate is about 2.8 percent, a full point lower than the national average. The labor pool has shrunk. Workers are in high demand. The market is already rewarding them with a 0.5 percent increase above the rate of inflation, Kavet said.
Not surprisingly, Kavet’s prediction has not changed the minds of $15 minimum wage supporters, in part because the market won’t boost wages across the board. “Chambermaids won’t be making $15 an hour,” one Progressive legislator commented.
Vermont job creation (regardless of wage) is highest in construction, federal government (especially border security), health care and the service industry, Kavet also reported. At the bottom is manufacturing. Instead of investing 2017 tax reform savings in new workers, the manufacturing industry has chosen to boost worker productivity with new equipment and processes, Kavet said.
Real estate prices are up 14 percent in the Burlington area, but are down one percent statewide. Rutland, Bennington and Essex/Orleans counties have the weakest real estate markets. Connecticut’s very weak real estate market has likely suppressed the purchase ofsecond homes in Vermont, he said.
Statehouse Headliners is intended primarily to educate, not advocate. It is e-mailed to an ever-growing list of interested Vermonters, public officials and media. Guy Page is affiliated with the Vermont Energy Partnership; the Vermont Alliance for Ethical Healthcare; and Physicians, Families and Friends for a Better Vermont.