By David Flemming and Anne McClaughry
On Jan. 9, the House Committee on General, Housing, and Military Affairs considered the $15 minimum wage bill from 2019. Rep. John Killacky (D-Chittenden) began by saying, “I read (the 2019 report) ‘Women, Work and Wages in Vermont’ and the results were striking. Statewide women earn 84% of what men earn. Let’s get a pay raise for Vermonters (by passing the $15 minimum wage).”
Killacky’s 84% number is based on hugely generalized statistics that leave a lot of relevant information out.
According to a Vermont Business Magazine article which borrows from a much more rigorous Paydata report:
Overall, women in the US earn 79 cents for every dollar earned by men; when comparing compensation for all women versus all men (what PayScale calls the uncontrolled pay gap). However, in Vermont, women earn more — 87 cents for every dollar earned by men. Additionally, when PayScale controlled for various factors such as experience and job title (i.e. comparing apples-to-apples regarding compensation) to determine how much a woman makes compared to a man doing the same job, Vermont came out on top again.
Women tend to spend more time out of the workforce, which hurts their career. In 2018 we studied this issue and found that when a worker leaves the workforce, they incur a wage “penalty” upon their return. Workers who took a break for 12 months or longer experienced an average wage penalty of 7.3% relative to a similar worker who did not take a break. Women take more breaks and longer breaks than men, primarily for taking care of children and aging family members, and bear the brunt of this “time-off” penalty. Nationally, this ‘controlled’ pay gap shows that similarly qualified women earned 2% less than men who do the same job. But, in Vermont, the uncontrolled pay gap essentially disappeared and women and men in the same roles were paid the same amount.”
So there you have it. Vermont women earn 100 cents on the dollar if you take into consideration their work preferences, better than the 98 cents on the dollar that American women do. Without understanding this fact, a $15 minimum wage will do more harm than good. While $15/hour might give women already working a small bump in pay, other women will be prevented from returning to the workforce if they been out for a long while, because they can no longer produce $15 an hour worth of labor. Those women will earn 0% of what a man makes.
A lower minimum wage ensures that employers can afford to give women time to get back on their feet in the workforce, giving them higher wages as they return to peak productivity. A lower minimum wage gives women the flexibility they need.
David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.