If the State Can’t Afford the $15 Minimum Wage, Who can?

May 7, 2019

by Rob Roper

With just a couple of weeks left in the 2019 legislative session advocates for the $15 minimum wage were somehow surprised by the reality that, if they pass this, more revenue will be necessary to pay state funded healthcare workers. One estimate, likely low, says that figure will be $30 million over five years.

The situation is this: many healthcare workers who are employed by public/private partnerships and dependent upon Medicaid funds for their salaries currently earn less than $15 an hour, with jobs starting around the current minimum wage of just under $11 an hour. If the mandated wage increase goes into effect, but no money is allocated through Medicaid to make up the difference, the only option is to lay off workers and cut services. As a VPR article states, this is “a simple math problem.”

However, as that article also notes, “… so far at least, lawmakers have yet to make any long-term commitments to assure that the increased Medicaid funding will materialize…. Late last month, the House Committee on General, Housing and Military Affairs attached an amendment that would allocate $875,000 in Medicaid funding to offset payroll increases in year one of the phase-in. Waterbury Rep. Tom Stevens, the Democrat who chairs that committee, said even that money could be difficult to find in the budget — “and we’re not sure it’s there,” he said.

In this scenario, the state is the customer and the Home Health Services are the businesses. If the customer isn’t willing to pay more for the business’ services, then the business is in deep trouble. Even, as in this case, the customer would like to spend more money on the business’ product, they may not have it (even given the power to tax, which most customers don’t have), the business is in deep trouble.

While it’s nice that the legislature is considering paying more for these healthcare services (with our money), it would also be nice if they considered, in this light, the plight of private businesses that will be forced to raise the prices for their goods and services and that have customers who are unwilling or unable to pay those increase. These businesses do not have the luxury of petitioning politicians for a big chunk of taxpayer money to make up the differences in their budgets. These businesses are just in deep trouble.

Rob Roper is president of the Ethan Allen Institute


{ 2 comments… read them below or add one }

Guy Page May 8, 2019 at 8:52 pm

Good point, Rob. It seems that when THEY have to balance with the budget, spend a little of their own (political) capital, it becomes a Serious Matter. I guess we should count our blessings that there is at least some restraint.


jim May 11, 2019 at 12:40 pm

Rob, The legislature usually gets what it want regardless of cost. Their simplistic solution is to find a new tax or raise an existing one. So what else is new?


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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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