$7.25 can be better than $15

by David Flemming

Vermont has the seventh-highest minimum wage in the nation. At first glance, this might seem to make Vermont an attractive place to live. However, 2016 saw Vermont lose nearly 3,000 people through net migration, likely because our state lacks employment opportunities.

A $15 per hour minimum wage will merely compound the problem, not stop it. To make Vermont more competitive with New England, the Green Mountain State should consider lowering its minimum wage to the federal minimum of $7.25 per hour.

While some Vermonters extol $15 per hour as one step closer to “a living wage,” Vermont’s government is inadvertently dividing the working from the non-working, and the permanently poor from Vermont’s perpetually shrinking labor force who could soon pay even more of their paychecks toward proposals like “paid family leave.”

On the surface, enacting a higher minimum wage seems to be a mere matter of redistribution from employers to employees. Ironically, it redistributes opportunities from employers and young employees and gives them to experienced employees at a net loss to Vermont. Opportunities for college students and graduates, many of whom do not have the skills to earn $15 per hour, are redistributed to those who have been in the workforce long enough to justify earning $15 per hour.

College students and graduates don’t need higher wages to “make it.” We need experience – experience that we can only get when an employer is willing to take a chance on us at a lower wage. Employers are eager to give college students and graduates more when we can produce enough wealth to justify earning $15 per hour.

Unfortunately, by raising the minimum wage by an arbitrary amount (wouldn’t $30 per hour be twice as good as $15 per hour?) our legislators are preventing college students and graduates from gaining experience when we need it most: during and just after college.

Most Vermonters make smart hiring decisions and are not easily coerced into hiring more workers at higher wages. Many Vermont employers will face the impending likelihood of hiring one employee at $15 per hour instead of two employees at $12 per hour. If the minimum wage is increased to $15 per hour for all prospective employees, an employer is much more apt to buy an industry veteran’s labor.

A prospective job-seeking college graduate about whom the employer knows nothing about does not stand much chance of getting hired against an industry veteran. The Vermont employer would certainly like to hire both at $12 per hour and give both the chance to earn $15 per hour. But if coerced into a “choice,” the employer will likely choose the industry veteran over the college graduate.

If Vermont-born college students and graduates are not able to find work in the case of a $15 per hour minimum wage, we have two options. One, we can remain in Vermont and hope that a prospective employer won’t hold our coerced time out of the workforce against us. Or two, we can move to states like New Hampshire where it is legal to work for the federal minimum wage of $7.25 an hour. A $15 per hour minimum wage in Vermont would certainly be good news for New Hampshire employers, if not for Vermont employers. A $7.25 per hour minimum wage would help Vermont retain its college educated workforce and perhaps stem the flow of out-migration.

College students and graduates do not need paternalistic hand-holding as we step into the workforce. We need the freedom to pursue career-growing opportunities with Vermont employers. Since graduating from college, I found an excellent internship in Vermont for $11.50 per hour that my boss has said would never have existed if he was forced to pay me $15 per hour. I would hate to deprive future Vermont college students of resume-building opportunities at somewhat low pay.

Restricting my generation’s “right to negotiate” using counterproductive income redistribution schemes doesn’t do us any favors. You might be surprised at how much we are making in 5 years if you protect our freedom to gain experience now.

- David Flemming, of Essex, is a Young Voice Advocate, described on its website as organization that “cultivates the next generation of independent thought leaders in policy, journalism, and academia.”

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The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.

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