By David Flemming

Like it or not, Vermont needs its top 1% of income earners for economic growth and to fund our government services.

According to economist Art Woolf, as the incomes of those earning at least $500,000 fell between 2014-16, income taxes paid by Vermonters earning at least $500,000 declined $30 million. If the past actions of our legislature is any guide, our legislature will forgo cutting spending and fill this gap by squeezing more out of taxpayers across all income brackets, not just the 1%.

Rather than discuss the income tax decline, some of our legislators have tried to distract Vermonters from the fact that the 1% are providing so abundantly for Vermont by stoking our sense of envy. On March 16, Sen. Bernie Sanders (I-Vt.) hosted a nationally televised town hall focused on income inequality, an issue that has been thoroughly researched in the past few years.

Contrary to what Sanders may think, the left-leaning Economic Policy Center’s (EPI) income inequality data shows a strong correlation between the success of the 1% and the 99% at earning higher incomes. Between 2009-14, the 15 states with the highest income gains for the 1% gave those in the 1% bracket a 26% average income increase, while the 99% in those states increased their incomes by a state average of 2%. On the other hand, in the 15 states where the 1% only increased their incomes by a state average of 1.4%, the 99% saw their incomes increase by a minuscule state average of 0.8% over 5 years. This means that an average American in one of the 15 best states for the 1% saw their income grow three times as rapidly as in the 15 states where the 1% was least able to grow their incomes.

EPI’s data is not completely above suspicion, since it was founded by a coalition of eight labor unions and has supported unimaginative policies like the $15 minimum wage with faulty data techniques in recent months. I suspect that the inequality data may be similarly skewed to exaggerate the actual gap. Still, it can be used to help lay out the principle that inequality is of secondary importance to partnering with the 1% to propel economic growth in Vermont.

Would you rather Vermont be in the one-percent’s top 15 states, or remain in the one-percent’s bottom 15 states? To our legislators primarily interested in reducing inequality, remaining in the bottom 15 states makes a lot of sense for Vermont. According to the EPI data, the Hawaii-one-percent-club saw their incomes fall nearly 10% from 2009-14. However, Hawaii’s 99% saw their incomes fall only 2.7% during that time-frame! Just like that, inequality was reduced, because the poor saw their incomes decrease less than the 1%. Somehow, I don’t think many Vermonters would prefer decreased incomes, even if the highest income earning Vermonters saw their incomes fall even more.

Regardless of the importance we place on reducing income inequality, it should always take second fiddle to ensuring positive income growth rates for all. Vermont’s government can no longer afford to see businesses as hostile to the interests of low and middle income Vermonters. If our legislators change their outlook, Vermont (top income tax bracket of nearly 9%) could begin to look less like Hawaii (with a top income tax bracket of 11%), where the 1% and 99% each saw decreased incomes, and more like Utah (flat income tax of 5%), where the 1% and the 99% saw increased incomes. The one-percenters of Utah increased their income by 16% while the bottom 99% grew their incomes by 11%. Yes, Utah’s income inequality gap widened from 2009-14, but more importantly, Utah’s 99% and 1% both earned more.

Vermont’s inequality grew less than Utah’s from 2009-14. Vermont’s 1% increased their incomes by 7.6% and the 99% increased theirs by 3.9%. But since even the 1% of Vermont were behind the income gains of the 99%  in Utah, this success at decelerating inequality doesn’t mean much by comparison.

So, rather than following Senator Sanders and building resentment toward the 1%, perhaps we should be trying to encourage high-income earners to move to the state, and offer our services in helping them build the next great private enterprise that will provide jobs and sustainable economic development.

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March 19, 2018

by Rob Roper

Last fall, Carbon Tax supporters staged a major push to build support for their latest Carbon Taxing scheme, The ESSEX Plan. It has been a flop to say the least. So, to keep this zombie concept out of the grave where it belongs and roaming the countryside (at least long enough to get past the November election) Carbon Taxers shifted their efforts to passing a taxpayer-funded “study” of various Carbon Taxing concepts (H.763). Even this has received a tepid response. The governor said he would veto it. So, now their hope is to stick the language from the stand-alone bill into the “must-pass” budget bill, where they hope the thing will become law by default.

Whether or not that happens is currently in the hands of the House Appropriations Committee, which can add funding for the Carbon Tax study directly into to the budget (the Big Bill) – or not. Incorporating H.763 into the Big Bill would allow legislators to pass it without having to cast a direct roll call vote in support of the Carbon Tax agenda. Pretty sneaky, huh! Not doing so would leave the bill to languish “on the wall” to die.

The language in H.763 would direct the Joint Fiscal Office (JFO) to evaluate the costs and benefits of various Carbon Tax proposals. JFO testified against the bill, saying that they did not have the expertise to perform the study and that subcontracting the job to a qualified consultant would be cost prohibitive, far exceeding the $100,000 allocated.

The political dynamic at play here is that support for the Carbon Tax outside the State House is driven primarily by influential big donors from the renewable energy industry. These folks would benefit mightily from a Carbon Tax that would simultaneously drive up the cost of their competitors’ products while providing taxpayer funded subsidies, either directly or indirectly, to their own businesses. Those donors want to see something for their money, even if it’s just a study that keeps the ball moving down the field.

(FYI, members of the House Appropriations committee are, Reps. Kitty Toll (Chair, D-Danville), Peter Fagan (R-Rutland), Maureen Dakin (D-Colchester), Martha Feltus (R-Lyndon), Robert Helm (R-Castleton), Mary Hooper (D-Montpelier), Berard Juskiewicz (R-Cambridge), Diane Lanpher (D-Vergennes), Mathew Trieber (D-Rockingham), and David Yacavone (D-Morristown).

Rob Roper is president of the Ethan Allen Institute. 

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March 16, 2018

by Rob Roper

In 2007, then Senator Peter Shumlin said in an interview with Jane Lindholm, “Any reasonable scientist will tell you that we’re going to rise anywhere between another two and three degrees in the next 30 years. That means that New Jersey’s climate is moving to Vermont in the next decade.”  [Emphasis added] Well, it’s eleven years later, one year into the decade where Vermont is supposed to look like New Jersey. So, how did Peter “Carnak the Magnificent” Shumlin’s prediction turn out?

Maybe his crystal ball was upside down, because New Jersey is actually looking more like Vermont these days – full of snow. The real threat to our ski industry might have less to do with vanishing snow and more with stiffer competition from New Jersey’s Campgaw and Mountain Creek resorts! (Not really. Stowe rules!)

Chalk Shumlin’s prediction up there with Al Gore’s prediction that the polar ice caps would be gone in 2014. (They’re still here!) And the predictions that climate change would lead to a “browning” of the earth with dustbowl conditions. (The earth is actually “greening.”) The list goes on (CLICK HERE).

But, what Vermonters should think about is the fact that after Peter Shumlin made his prediction, he went on to become governor and based a lot of our current environmental policy on a foundation of belief that has turned out to be demonstrably wrong. So, maybe it’s time to adjust our environmental policy accordingly.

P.S. Who’s ready for Spring!

Rob Roper is president of the Ethan Allen Institute

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March 15, 2018

by John McClaughry

Jarrett Stepman of the Daily Signal adds an important fact to the Florida school shooting case. He writes: “Prior to the mass shooting, Nikolas Cruz was involved in a huge number of incidents on and off campus, numerous calls were made to the police, and the FBI was even involved… It would seem that somewhere along the way, he should have been stopped before the shooting took place. But that wasn’t the case.”

Max Eden, a senior fellow at the Manhattan Institute, explained in City Journal how an Obama-era Department of Education initiative designed to put an end to the “school to prison pipeline,” combined with local mismanagement, helped allow the shooter to fall through the cracks.

“Students charged with various misdemeanors, including assault, would now be disciplined through participation in ‘healing circles,’ obstacle courses, and other ‘self-esteem building’ exercises.”… Broward County was a leader in adopting this new program and was even touted for it by Obama’s Education Secretary Arne Duncan”.

“The Parkland shooter was involved in a number of alarming incidents, including assault and bringing bullets to campus, for which he was eventually moved to another school. Yet the police never arrested the shooter or expelled him, which is in part why he passed a federal background check and was able to purchase a firearm. The red flags swirling around the shooter went unheeded, and it appears that Broward County’s lax policies deserve some of the blame.”

– John McClaughry is vice president of the Ethan Allen Institute.

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March 14, 2018

by Rob Roper 

Vermont congressmen Peter Welch has been an advocate of doing away with Ethanol subsidies for a while. As the program’s serious failures mount, Welch is gaining some allies, and there is actually a possibility that the subsidies will be phased out. Here’s what he recently had to say on the subject:

 “We’ve now had more than a decade of experience with [ethanol subsidies], and it had the best of intentions. But it has turned out to be a well-intended flop.

“It actually doesn’t cut down on greenhouse gas emissions, it expands them. It’s had a significant impact on overplanting in fragile areas of the corn belt. It has had significant impacts on small engines. And it’s also had a significant impact on feed prices … and there is a lot of evidence it has increased the cost of food.” (Source: Red State)

What a refreshing admission from a politician! Our meddling actually made matters worse in pretty much every respect, and we should just stop.

Now, if only Welch and his colleagues would come to similar revelations regarding their actions in, say, healthcare reform, where government intervention (very well intentioned!) has led to higher insurance costs, longer wait times to access care, and an opioid crisis. Or in regard to their “help” with access to higher education, which has caused the price of a college degree to explode while the value of those degrees, in many cases, has declined. Or government’s approach to welfare, which has destroyed the black family in America and is now corroding other demographic groups….

The list is almost endless. But ethanol policy is a start.

Rob Roper is president of the Ethan Allen Institute.

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by John McClaughryJohn 2

Over the past six weeks the House Ways and Means Committee has diligently worked to produce a coherent bill to shift Education Fund spending from some people and districts to other people and districts, and erect a disincentive to excessive school district spending. This is a very intricate and difficult task that, frankly, probably 90% of the legislators don’t readily understand.

Its proposals have included lowering school property tax rates in 2020, changing the parameters in the school property tax-determination formula, eliminating the income sensitivity program that lets 70% of Vermonters pay school taxes on the basis of their incomes, creating a new $59 million income tax education surcharge, and putting every school district into what up to now has been punitive excess spending territory.

Just reciting this abbreviated list illustrates how difficult it is to find a solution to educational finance that will satisfy even a bare majority of House and Senate members, plus the Governor.

Maybe it’s time for the Governor and legislators to step back and examine why Vermont’s K-12 education costs per pupil ($18,066) are the fourth highest in the nation. Four of the reasons are easily understood. Vermont has the nation’s lowest student to staff ratio (4.8:1), an oversupply of small schools and small classes, Universal pre-K that can claim little or no lasting educational value, and an enormous expenditure per pupil for special education services.

But beyond addressing these, we need to recognize that since 1971 we have steadily created a more centralized and expensive public school system. Maybe we should be looking for a new 21st century model.

Two early efforts were the Schoolchildren First and Education Freedom District proposals of 2001. The latter proposed to loosen the leash on districts interested in moving in more creative directions. Citizens could choose to opt their district out of the state-controlled public education system in favor of a new locally-controlled system characterized by competition, parental choice, opportunity, diversity of educational experience, and responsiveness to local citizens and voters.

Among the opportunities available to the new district would be:

  • exemption from state mandates and required supervisory overhead (except for civil rights and financial accountability)
  • parental choice, with educational funding paid out to parents for use in public, charter,  alternative, parochial, work-study or other educational programs.
  • voter approval of two district school budgets, one presented by the district school board covering non-instructional costs, and the other  presented by the teachers union, covering costs relating to the union contract.
  • allowing home schoolers to take selected classes, make use of library resources, and participate in extracurricular activities at public schools.
  • apprenticeship and community work-study alternatives to classroom instruction
  • exempting teachers from state certification requirements, and offering them merit pay
  • nationally recognized subject matter tests for students (such as ACT)
  • contracting for instruction, maintenance, and management
  • creating Florida-style McKay Scholarships for special education students

The idea behind the EFDs was to allow pioneering districts do creative things, so that others would be motivated to do the same. Despite promotion by the Chair of the House Education Committee, the “education stakeholders” killed the EFS bill in committee.

Eight years later the report of the Commission on Rebalancing Education Cost and Value found that “a policy of creating an ever-enlarging ‘system’, populated with thousands of teachers, administrators and bureaucrats, controlling the annual expenditure of $1,450 million taxpayer dollars, jealously protective of the benefits enjoyed by the people employed in the ‘system’, and dismissive of the abilities and preferences of parents and children, is a policy  headed off in a totally wrong direction…What is insupportable is the continuing and ever growing extraction of well over a billion tax dollars each year, to buy overpriced and undistinguished educational outcomes for Vermont children who need ever-better outcomes to live and compete in the 21st Century.”

Not surprisingly, the “education stakeholders” wanted no part of the Commission’s recommendations, because accepting many of them would threaten to disrupt their comfortable near-monopoly arrangement.

So today’s legislators valiantly soldier on, trying to make a different collection of taxpayers feed the system and create more powerful disincentives to excessive school district spending. At the same time the Governor, rightly concerned with “cost containment”, seems to lean toward doing that by creating a Great Big Hammer to beat school districts into submission.

But wait a minute – maybe the overgrown public school system  itself is the problem.

John McClaughry is vice president of the Ethan Allen Institute (www.ethanallen.org). He was formerly vice chair of the Senate Education Committee.

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March 12, 2018

479 people took the Ethan Allen Institute Town Meeting Week Survey. We marketed this on social media to a general audience of Vermonters aged 25 and up. Here are the results…

1. Do you approve or disapprove of the direction Governor Scott is taking Vermont?
Approve. 29.75% (141)
Disapprove. 54.01% (256)
No Opinion. 16.24% (77)

2. Do you approve or disapprove of the direction the Legislature is taking Vermont
Approve. 11.04% (52)
Disapprove. 84.08% (396)
No Opinion. 4.88% (23)

3. Should lawmakers increase the VT state minimum wage from $10.50 to $15.00 per hour
Yes. 22.13% (106)
No. 73.07% (350)
Don’t Know. 4.80% (23)

4. Should VT lawmakers enact a Carbon Tax on gasoline (32¢/gal) diesel fuel, home heating oil (40¢/gal), natural gas, and propane (24¢/gal), with the revenues used to subsidize electric bills?
Yes. 5.43% (26)
No. 91.02% (436)
Don’t Know. 3.55% (17)

5. Should VT lawmakers mandate that all employees participate in a paid family leave program financed by a new payroll tax on employees?
Yes. 12.79% (62)
No. 77.62% (371)
Don’t Know. 9.41% (45)

6. Should VT lawmakers enact a “per parcel fee” on all Vermont land holdings to finance the clean-up of Lake Champlain?
Yes. 10.06% (48)
No. 81.76% (390)
Don’t Know. 8.18% (39)

7. Should VT lawmakers enact stricter gun control laws?
Yes. 21.76% (104)
No. 75.52%% (361)
Don’t Know. 2.72% (13)

8. Vermont’s taxpayer financed Pre-Kindergarten programs should be:
…available to all children, regardless of income or special needs. 46.48% (211)
…focused on helping low-income families and special needs children catch up
with their peers. 53.52% (243)

9. Which of the following is a more important goal of education finance reform?
– Lower total taxes by decreasing overall spending. 76.32% (361)
– Shift costs from the property tax to the income tax while maintaining
spending levels. 23.68% (112)

10. Which of the following describes the best way for Lawmakers to make Vermont “affordable?”
– Enact policies that will lower the cost of living, spur economic growth,
and leave more money in Vermonter’s pockets. 86.5% (410)
– Provide more and more generous welfare programs to subsidize the
cost of living in Vermont. 2.95% (14)
– Other (Please Specify) 10.55% (50). See answers below. These have been
modified slightly to correct capitalization, punctuation, and typos,
but not for content.…

  • Cut compliance costs, reduce subsidies, stop redistribution of wealth.
  • Provide universal health care by taxing marijuana.
  • Retire and let decent people make legislation.
  • Partner with companies to make VT their home.
  • All of the above.
  • Spend more on education!
  • Fair taxation.
  • Tax benefits for business who raise salaries which have been frozen for decades, decrease disparity.
  • More businesses.
  • Stop building such fancy bridges!! Way over built for most streams and rivers.
  • A combination logical industrial growth, progressive taxation, healthcare for everyone by payroll deductions.
  • Find a cure for the teachers’ union and retirement funds.
  • Stop welfare.
  • Approve a state bank to invest in housing, increase minimum wage to a livable wage, merit based free college tuition, expand the education system to include daycare, universal healthcare coverage, a tax system that treats all income no matter its source equally.
  • Lower property taxes while removing tax on SS, pensions, and military income.
  • Seriously, they need to reduce the total per capita taxes on middle class Vermonters.
  • Stop pandering to special interest groups. Study long term effects before passing legislation, and listen to people who actually work in specific areas before changing laws.
  • Consider becoming the organic state, deepen the respect and intensity of our brand, get grants to help small and medium scale farms, use Agritourism and geotourism to re-invigorate villages and towns.
  • Have casinos.
  • Can’t we do both?
  • Stop over regulating business.
  • Stop restrictions and taxes/fees that cause businesses so much red tape they choose not to locate here.
  • Stop spending. Ie, the lawsuit against Trump a while back, that wasted our $$. Stop spending!!
  • Both of the above
  • Discontinue all welfare, build poor farms, and get these lazy people out of pajamas and to work, even if it’s to grow their own food! Long overdue.
  • Too often tax breaks are used by business who then leave. Time to think outside the box. Taxes are already too high and there are too many big box stores putting little business owners out of jobs. Dollar Stores, Walmart and Home Depot owned by single families who do not give anything back to communities.
  • Stop using federal debt and inflation to destroy the dollar and take us towards bankruptcy.
  • No pre-k, lower education costs and property tax, improve cell service and internet access.
  • Quit spending money like drunken sailors on programs that are ineffective.
  • Lower taxes and stop giving money to junkies and worthless single mothers.
  • Just stop spending.
  • Answer 1, while developing sustainable energy, health, and environmental protection.
  • Stop texting Social Security and other retirement income. The state is losing residents because it is too expensive to live in this state. Raising the minimum wage only increases the cost of living here.
  • Decrease size of VT government (employees)
  • Reduce the total cost of governing Vermont and providing services to Vermonters. THEY MUST REDUCE BOTH THOSE COSTS, EVEN IF IT MEANS ANTAGONIZING THE VT-NEA AND THE STATE EMPLOYEES UNION.
  • Act to increase the stock of affordable housing. Increase public transportation options.
  • Support low income housing, higher minimum wage, high quality childcare, food assistance and progressive tax structures that will make Vermont appealing to low and middle income workers
  • Universal Health Care
  • $15 minimum wage, retail service workers bill of rights where there is a 20 hour minimum for chain retail and service establishments. Fund act 48. Expand low income housing, make rent income sensitive for those making more than $50k/year
  • Live within the budget. No new spending. Live on a fixed income as those on social security generally do. Live within your means.
  • It should not be an either or choice. Welfare programs don’t need to be more generous but we have serious problems that will not be addressed without government spending, water quality issues being one of them.
  • Reduce regulations. Less regulations, fewer state employees.
  • STOP SPENDING and DEREGULATE, DEREGULATE, DEREGULATE!!!!!!!!!! Is that clear? DEREGULATE!!!!!!!

If you have not taken the survey, but would like to CLICK HERE!

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March 9, 2018

by John McClaughry

The governor most intoxicated with the idea of enacting a carbon tax – and even using it as a springboard to a Presidential race – is Democratic Gov. Jay Inslee of Washington. Last week, according to the Seattle Times, his hopes were dashed in the Democratic controlled state Senate, whose leadership informed him that there weren’t enough votes to pass his bill, so it was scrapped. If it had squeaked out of the Senate, it would have had to pass the House by this Friday, when the legislative session ends.

Todd Myers of the Washington Policy Center told the media that the carbon tax bill would have would have added 12 cents to the price of a gallon of gas and increased household costs by about $175 per year. Even one of the Senate Democrats was quoted as saying “Those who can least afford it will be bearing the biggest burden.”

Gov. Inslee is spearheading an initiative in November to pass his failed bill. In 2016, a carbon tax initiative measure in that state garnered only 42 percent of the votes. While the Inslee proposal that year was initially set at $20 per ton, the measure that will appear on ballots this November will be $30 or $40, which ought to make it even harder to pass.

By comparison, the ESSEX carbon tax plan being peddled in Vermont would ramp the tax up to $40 per ton. Let’s hope it meets a similar fate.

John McClaughry is vice president of the Ethan Allen Institute.

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March 8, 2018

by Rob Roper

VPIRG’s executive director, Paul Burns, has an op-ed in Vermont Digger (and probably other Vermont papers) today. It’s disappointing that he offers nothing substantial to support the ESSEX Carbon Tax or to refute EAI’s arguments against the scheme. He’s insulting in calling us “nutty”, selling “snake oil,” and misleading when he says we are “on the payroll of the fossil fuel industry.” This is completely false. Though it is worth noting that many VPIRG donors and board members stand to financially benefit from a Carbon Tax that subsidizes their renewable electricity businesses and/or mandates that Vermonters buy their product.

Burns’ attempts to mislead don’t end with false claims about the Ethan Allen Institute; he misleads Vermonters about the ESSEX Carbon Tax.

Burns says, “Vermonters will collectively save a dollar on low-carbon electricity for every additional dollar they pay for polluting fossil fuels.” According to the plan only 50% of the revenue raised would be used to generally reduce electric rates. So, for most Vermonters this is a scheme that takes $10 from one pocket and puts $5 back into the other. A rip off. The other half of the revenue would be divided between low income rebates (300% of poverty or less) and rural rebates for households earning less than $150,000. If you don’t fall into both of these categories – and most Vermonters don’t — you’re screwed under the ESSEX Carbon Tax.

Even if you are both rural and poor, in most cases you would still have to buy an electric vehicle, solar panels, an electric heat pump, or some such thing in order to break even.

Burns says, “Further, the plan is revenue neutral – meaning there is no change in state government spending.” Not really. Yes, the money raised will be redistributed, but only what’s left after the state pockets the overhead for collecting and monitoring the tax. Given how complex this mechanism is, the cost is likely to be very high. The Auditor of Accounts, for example, is charged with conducting at least two audits of the program each year, which by itself will be very expensive.

And, here’s what the bill says regarding electric utilities: “(c) Rate recovery; other provider expenses. A Vermont retail electricity provider shall have the opportunity to recover in retail rates its necessary and reasonable expenses….” Yes, folks, under the ESSEX Carbon Tax electric companies are authorized to RAISE your electric rates in order to cover the logistical costs of lowering your electric rates! They take out of one pocket what they put into the other. It’s a scam!

Burns says, “It’s true that the wealthiest and large corporations would pay their fair share as Vermont’s biggest polluters – while low- to moderate-income Vermonters would save money.” This is absolutely false. Ben & Jerry’s is one of Vermont’s wealthiest and largest corporations, and they testified that the ice cream maker will net nearly $1,000,000 in subsidies under the ESSEX Carbon Tax. That money will come from small, less wealthy businesses that rely on gasoline, diesel, and home heating fuel, such as contractors, landscapers, general stores, etc., who will end up paying more.

Of course, having the government force a bunch of small businesses to subsidize their electric bills IS good for Ben & Jerry’s business, as Burns notes. But he is not telling the truth when he implies this is good for Vermont business in general. It’s not.

Burns says, “State government isn’t responsible for picking winners or losers.” But, under the ESSEX Carbon Tax the state is picking electric based businesses (like wealthy Ben & Jerry’s) to be winners, and businesses that rely on trucks, vans, gas ovens and stoves, etc. to be losers. Pretending otherwise is insulting people’s intelligence.

The Ethan Allen Institute is willing to have a civil, substantive, and honest debate about the details of the ESSEX Carbon Tax. We are disappointed that Paul Burns and VPIRG are apparently not willing or able to engage on that level.

Rob Roper is president of the Ethan Allen Institute

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March 6, 2018

by David Flemming

An overwhelming 17 out of 20 Democrat and Progressive Senators (85%) voted for a Vermont state minimum wage of $15 per hour. While raising the minimum wage might seem like a natural Democratic/Progressive thing to do, some Democrats were far more likely to buck their party – notably, those that represent counties along the New Hampshire border.

14 of 15 Democratic Senators representing Vermont’s non-New-Hampshire boarder counties voted in favor of the $15 minimum wage. However, of the 5 Democratic Senators in counties along the New Hampshire border, only 3 voted in favor. During the minimum wage discussion over the first half of the legislative session, economists and representatives agreed that NH will likely keep its minimum wage at $7.25 regardless of whether VT adopts a $15/hour minimum wage. We can’t know for certain what factors convinced John Rodgers (D-Essex-Orleans) and Robert Starr (D-Essex-Orleans) to vote against raising the minimum wage, but I’d be willing to bet that the massive wage gap that would exist between their constituencies and the New Hampshire factored into the decision.

While businesses and workers all across Vermont will be harmed if the $15 minimum wage mandate passes, the repercussions in border counties will be much more severe. Grocery stores operating in New Hampshire with the flexibility to pay new workers $7.25 will have an unprecedented competitive advantage over Vermont grocery stores that have to pay new workers $15/hour. This will force Vermont border businesses to make some tough decisions. And, if workers cannot generate $15 worth of value in their Vermont jobs, our lawmakers may be inadvertently forcing them to commute to New Hampshire to find employment.

Does this mean Vermont’s non-border Senators made the right decision in voting so overwhelmingly in favor of a higher minimum wage? Not necessarily. The dynamics of supply and demand for labor in the non-border counties contain their own peculiarities. Vermont non-border businesses that sell high-volume essentials like groceries and gas would find themselves competing against businesses that also have the higher cost of labor imposed on them. Some of these businesses may have to shut down if they were making low profits before the $15 minimum wage kicked in, but they wouldn’t face the same competitive pressure as Vermont businesses set against New Hampshire border businesses.

That being said, workers making below $15/hour in non-border counties could find themselves in a more difficult situation than workers in border counties. For them, the option of “living close to friends and family in VT and working in NH” is not really an option. They would have to uproot their lives in order to make the move. Or they could settle for an unemployment check every month.

Creating a one-size-fits-all wage for businesses and workers just getting into the workforce is akin forcing a group of people to all wear the same shoe size regardless of the size of their feet. For border businesses that have to cut back on hiring, but can remain in business, the minimum wage is indicative of a shoe that is painful to wear but better than nothing. For the young, less skilled workers who are unable to escape to NH, the $15 minimum wage becomes a jest akin to the government telling a worker they are better off wearing size 7 shoes for their size 10 feet. It is needlessly harsh and ridiculous on its face.

David Flemming is a policy analyst for the Ethan Allen Institute

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