Study: $15 Minimum Wage = Massive Job Losses in Key VT Industries

by Rob Roper

The latest analysis of the $15 minimum wage is by a team of economics professors from Miami University and Trinity University and looks at California. This study, California Dreamin’ of Higher Wages, concludes that:

… a 10% increase in the minimum wage would cause a nearly five-percent reduction in employment in an industry where one-half of workers earn wages close to the minimum. In an industry with an average share of lower-wage workers, their findings imply that each 10% increase in California’s minimum wage has reduced employment for affected employees by two percent.”

Consider that Vermont is debating a 50 percent increase in the minimum wage over a handful of years, and consider also the finding that the industries most negatively impacted by minimum wage increases proved to be accommodation/food services and retail trade (55 percent low wage), followed by agriculture, forestry, fishing and hunting (46 percent low wage).

That right there is a pretty good description of a huge part of Vermont’s economy, and we do not have Silicon Valley here to compensate.

Vermonters should also be paying close attention to this analysis because California’s and Vermont’s minimum wage histories are very similar. Both states began raising their minimum wages above the federal rate in the late 1990’s, and have followed similar trajectories ever since. Now California is scheduled to raise its minimum wage from $10.50 in 2017 to $11.00 in 2018, and then increase $1 per year until it reaches $15 in 2022. Vermont, just one year behind, will go from $10 to $10.50 on January 1, 2018, and, should the legislation under consideration pass, follow a similar path to $15 by 2022 or shortly thereafter.

The California study concludes that, “In these industries [food services and retail trade], we project 10.7 and 9.5 percent of jobs will be eliminated as a result of a $15 minimum…. These two industries account for half of the predicted job loss….”

Tell us again how a $15 minimum wage is supposed to help low wage Vermonters?

Rob Roper is president of the Ethan Allen Institute

{ 3 comments… read them below or add one }

Douglas Tuthill December 19, 2017 at 11:16 pm

our current government structure including our governor are so far out of touch with everyday Vermont that it is disgraceful. what Vermont needs is all new members in both houses and a governor who does not talk out both sides of his mouth , this wage structure is one more way to destroy the opportunities of our uneducated and young inexperienced workforce . Shame on the stupidity in Montpelier

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Mark Shepard December 24, 2017 at 9:47 pm

It is, however, good for those of us in the automation sector :-)

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James Hall January 6, 2018 at 4:12 pm

The Dem/Prog crowd had rather see a $15.00 min wage than to see the benefits of more money in peoples’ pockets from the Trump program. The Dem’s plan makes those dependent on government calling their shots, likely voters that support the left. Creating the climate for a betterment of the job situation and wages will take some time because we have lost so much over the years, and it chips away at the left’s base. We are in a tough place because of the left’s handiwork, but it can be corrected. It starts with voting for the right candidates and EVERY ONE votes.

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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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