House Committee Takes Up $15 Minimum Wage

March 22, 2018

by Rob Roper

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Long faces as committee members learn the harsh truths about a $15 minimum wage.

The House Committee on General, Housing, and Military Affairs began debating the $15 minimum wage legislation (S.40), following the bill’s passage in the senate. Representatives of the Joint Fiscal Office (JFO) provided a broad overview of the likely impact of the higher wage if it becomes law. Here are some of their conclusions in a nutshell…

The impact on employment, according to JFO, includes a net annual long term disemployment rate of 2250 jobs, disemployment as a share of total jobs of 0.05%, and disemployment as a share of minimum wage jobs of 3.3%. What this means is that Vermont would be losing about 2250 jobs a year from 2028-2040 after the $15 minimum wage was fully implemented in comparison to anticipated job growth if the current law remains in place, and that the negative impact would land way disproportionally on low income workers.

It can be expected that if the $15 minimum wage becomes law low income Vermonters will experience other negative side effects, such as loss of work hours, loss of work-related benefits such as paid vacation and health insurance, as well as state sponsored benefits, for which the higher wage could be disqualifying. The state benefits most affected would be Medicaid, reach up, LIHEAP, EITC, and particularly child care subsidies.

The businesses most likely to be negatively affected by the $15 minimum wage include gas stations, retails stores, food and beverage establishments, warehousing and storage, food services and drinking establishments, textile and apparel, furniture and wood product manufacturing, large food product manufacturing, non-profits and social services, and child care services.

Overall, JFO expected the net impact of the $15 minimum wage would be on state GDP of negative 0.3%.

Why the legislature would consider, let alone pass, a law that they know will both a drag on the overall economy and have significant negative impacts on the state’s most vulnerable businesses and citizens is mind-boggling. But, at this point it appears that a majority on this committee are inclined to support the bill. Governor Scott has hinted strongly that he will veto the $15 minimum wage if it reaches his desk.

Rob Roper is president of the Ethan Allen Institute

{ 3 comments… read them below or add one }

Vincent C Hunter March 24, 2018 at 12:09 am

Again the obvious — how come we to a point where those we elected to represent us presume to meddle in the relationship between businesses and their employee? Are we captive of the narrative that citizens can’t care of themselves and the bugieman will abuse them if we don’t smack back those abuse entrepreneurs.

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Tom March 24, 2018 at 8:13 am

I Know the state want more money for low income but what about people that will only have there SS retirement. As min wage goes up and up people on SS Retirement don’t go up the same. This will heart them as there coasts will go up so fast and they only get a 2% increes comepaired to a 30% increes of min wage. What do we do about this?

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William Hays March 26, 2018 at 1:43 pm

I understand that miscreants, housed in the State of Vermont “corrections” system, are paid a pittance for “meaningful” work they perform while incarcerated. Will they be paid the new “Minimum Wage”?

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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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