We
are now in the last weeks of the 2018 legislative session. Barring
any surprise demands by the Governor or legislators, like the call
for passing a taxing and regulating marijuana sales that occurred
last week, we should be finished by mid-May. There are a number of
important bills that we continue to deal with before we pass the
budget and adjourn. One of these bills is the Minimum Wage bill
(S.40), which was passed by the Senate and has been studied for
several weeks by the House General, Housing & Military Affairs
Committee.
The
current Vermont minimum wage is $10.50/hour which became effective on
January 1, 2018. The bill under consideration would continue
increasing the minimum wage to $15/hour by 2024, about a 75 cent
increase per year on average, starting at 60 cents in 2019. The
minimum wage exemptions would remain the same, including for students
under age 18, agricultural workers, nannies/babysitters, newspaper
deliverers, and employees of nonprofits that receive state funds.
The bill would also adjust state child care subsidies to account for
the minimum wage increases in order to maintain those benefits for
low wage workers with children.
So,
why do we need to keep raising the minimum wage since Vermont has one
of the highest minimum wages in the northeast? The simple answer is
that for a large number of people, it is simply not enough to live
on. Governor Scott has talked repeatedly about making Vermont more
affordable and protecting the most vulnerable. For the approximately
25,000 Vermonters who work one or more minimum wage jobs, it is still
too hard to pay for the basic necessities of supporting their
families. For single parents making minimum wage, there are
repercussions for their children as well. According to the Economic
Policy Institute (EPI) of all minimum wage earners in Vermont, 62%
work full time, 88% are at least 20 years old with an average age of
38, 56% are women, and 22% have children. On average, those with
families earn 55% of their family's total income. A person working 40
hours per week at the current minimum wage makes about $21,840/year,
slightly above the federal poverty level for a three person family.
However, according to the EPI study, a modest but adequate standard
of living in Vermont for one adult without children costs about
$32,000/ year, including housing, food, transportation, taxes and
health care. With children, necessitating child care, the costs are
even higher. At $15/hour, the 2024 target, a full-time minimum wage
job would pay $31,200*, which would no longer be a poverty-level wage.
Objections
to raising the minimum wage revolve around the increased costs to
business, the potential loss of jobs, and economic impacts. Most
minimum jobs are in the service sector of the economy. In the first
year, a full-time employee's earnings would increase $1250, a cost to
the employer. This cost would presumably be passed on to consumers.
However, the increased income would also be spent, thereby injecting
more money into the local economy. The impact on jobs would be
minimal compared to the increase in wages. Moreover, the high
turnover rate seen in minimum wage jobs may be reduced thereby saving
employers training costs. The EPI study estimates that while 2% of
low wage jobs would be lost, 98% of low wage workers would benefit.
Overall, the economy would benefit from raising the minimum wage
gradually over several years while improving the affordability
factor for those who need it most.
As always, I can be reached by phone
(802-233-5238) or by email (myantachka.dfa@gmail.com).
*Note: The original publication of this article incorrectly had $26,500 as the annual income at $15/hour for a full time job.
