$15 Wage is a Major Experiment Based on Incomplete Data

By David Flemming

There is a great deal of uncertainty about raising the minimum wage to $15 an hour because collecting data that could provide insights into the potential impact of raising the cost of labor presents a challenge – at least if we want to maintain people’s privacy.

At the House Committee on General, Housing and Military Affairs on Tuesday, Joyce Manchester of Vermont’s Joint Fiscal Office gave her testimony: “It was a little bit hard to collect the data (for the wages of VNA employees)… in the end we did not have usable data (to determine the full impact on hours and wages if the minimum increased to $15/hour). We need very detailed information about what each individual is earning in their annual wages over time. These folks (the VNA) are not used to that kind of data collection. I could see their spreadsheet, I could see what needed to be done, but I wasn’t allowed to because of confidentiality concerns.”

The Joint Fiscal Office (JFO) has previously offered some precise estimates about what it would cost Vermont to raise the minimum wage for government employees. However, when we get to the private and non-profit sectors, which employ the vast majority of Vermonters, the data is far more difficult to locate.

There is no centralized database containing the private wages of thousands of Vermonters. The closest thing we have is industry aggregate data from the Vermont Department of Labor and aggregate income tax data, none of which comes close to revealing per hours wage rates for individual employees. The private wage information necessary for vigorous analysis is contained in millions of spreadsheets across thousands of Vermont employers who are located amongst dozens of Vermont towns. Like the VNA’s data, most of this is legally protected from our government’s roving eyes.

In last week’s minimum wage testimony, the Vermont Department of Labor related how they only have the resources to audit employer wage records when an employee complaint has been filed. And since most employer-employee relationships are amiable, this does not occur with near enough frequency to paint a comprehensive picture of the wages for the half-million jobs in our state.

We do have estimates from legislative chief economist Tom Kavet regarding how many jobs he thinks will be lost. But without access to comprehensive and detailed wage data, there is no getting around the fact that these estimates contain a large margin of error, especially when we have few historical examples for minimum wage increases of such a great magnitude.

This is perhaps why there is such disparity between the JFO estimate of 2500 jobs lost annually in Vermont with the $15 minimum wage, and the Heritage Foundation’s estimate of 11,000 jobs lost. That’s a significant range, and a big gamble the legislature would be taking with Vermonters’ lives and livelihoods.

{ 2 comments… read them below or add one }

Allan Morrie April 13, 2018 at 9:52 pm

When the minimum wage is increased incrementally. Yhe employees who are earning $15 or should have 5heir wages increased by at least the same amount. There are companies that make huge profits (from their employees) that can most definitely afford to pay their employees more. The teniered employees are much more valuable to the company than a new hire.
Unfortunately, companies tend to take advantage of their experienced employees so they can be attractive to people seeking jobs. Thus the experienced employees fall behind with their small wage increase. The increase is NOT a raise for their efforts, it is a stagnent increase or a decrease from the cost of living!!!!

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William Hays April 14, 2018 at 4:32 pm

Existing on my Social Security Administration payback, and earned Military Retirement, I have seen no “Cost-of-Living” Adjustments (COLAs) in the last four years. What a “teniered” (Sic) employee makes, or the basis of their “stagnent” (Sic) COLAs is not a concern of mine, but the “$15 Minimum Wage” is a recipe for disaster in Vermont. The exodus to ‘Cow Hampshire’ will continue.

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