Rep. Mike Yantachka
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 bill 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 that 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 percent work full time, 88 percent are at least 20 years old with an average age of 38, 56 percent are women, and 22 percent have children. On average, those with families earn 55 percent of their family’s total income. A person working 40 hours per week at the current minimum wage makes about $21,840 per 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 a year, including housing, food, transportation, taxes and health care. With children necessitating child care, the costs are even higher. At $15 an hour, the 2024 target, a full-time, minimum-wage job would pay $26,500, 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 $1,250, 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 percent of low-wage jobs would be lost, 98 percent 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 at (802) 233-5238 or by email.