Margolis: Paid sick leave and minimum wage would be a double whammy for business

Speaker of the Vermont House Shap Smith of Lamoille County before the start of the 2014 legislative session. Photo by Roger Crowley/for VTDigger

Speaker of the Vermont House Shap Smith of Lamoille County before the start of the 2014 legislative session. Photo by Roger Crowley/for VTDigger

Editor’s note: Jon Margolis is VTDigger’s political columnist.

“I was the one that knocked her down,” said W.C. Fields in the 1940 classic “My Little Chickadee.”

Not so, said one of his buddies, claiming that he was the one who had knocked Chicago Molly to the floor.

“Oh yes, that’s right,” admitted Fields. “He knocked her down. But I was the one started kicking her.”

There is, of course, nothing funny about kicking someone who has been knocked to the floor, even if knocking him (or in this case, her) to the floor was justified. What was funny was that Fields was not merely admitting that he had started the kicking; he was bragging about it, singing praises of his own indecency.

A lesson, perhaps, to those pondering one of the current quarrels in Vermont politics, the one stemming from the decision by Gov. Peter Shumlin and the Democratic leaders of the Legislature to support another increase in the state’s minimum wage and to abandon – for now – the proposal to require employers to grant paid sick days to their workers.

The Vermont Workers' Center sponsors a Health and Diginity Rally in the Cedar Creek Room of the Vermont Statehouse in Montpelier on opening day of the 2014 legislative session. Photo by Roger Crowley/for VTDigger

The Vermont Workers’ Center sponsors a Health and Diginity Rally in the Cedar Creek Room of the Vermont Statehouse in Montpelier on opening day of the 2014 legislative session. Photo by Roger Crowley/for VTDigger

The decision has enraged many liberals. Their dismay is understandable because they had put a lot of time and effort into gathering support for the sick leave bill, H.208, and it was overwhelmingly approved by the House Committee on General, Housing and Military Affiars last year. The bill seemed to have some chance of getting passed.

But then Shumlin met twice – once in Washington and once in Connecticut – with President Barack Obama and some other Democratic governors. From these meetings, and probably at the president’s urging, a political strategy apparently emerged: Let’s push a minimum wage increase, in as many states as possible if Congress won’t approve it nationally. Shumlin, always an advocate of a higher minimum wage, happily agreed to support raising Vermont’s minimum, now $8.73, to $10.10 in increments over three years.

This strategy could be described as a political ploy. It could also be described as elected officials deciding to pursue a policy they think is wise and which most people support.

Isn’t that the way democracy is supposed to work?

To be sure, much the same could be said of the sick leave bill. There’s little doubt that most Vermonters support it. So, in principle, does Shumlin, though he’s expressed some concern that if Vermont goes it all but alone here (only Connecticut has a mandatory sick leave law) the state might become less attractive to business.

So why don’t he and the Legislative leaders support both bills?

Well, for one thing, there seems to be less support for the sick leave bill than for the minimum wage hike. So House Speaker Shap Smith would have to do a fair amount of convincing and cajoling (Smith doesn’t do much threatening) without a guarantee of success.

A smart legislative leader is selective about how much convincing and cajoling he does. A member who has been convinced/cajoled on one bill becomes a tougher sell on the next one. Smith may prefer to save those efforts for bills he thinks are more important.

“At this point in time there really isn’t enough support to pass the bill,” Smith told Vermont Public Radio. “And we don’t want to bring it to the floor if it’s not going to pass.”

But there may be another reason Shumlin, Smith et al. have decided to hold off on the sick days bill, and it is probably not because they are “prepared to put the profit interests of a few businesses over the well-being of thousands of workers and their families,” as suggested by James Haslam of the Vermont Workers Center.

Jim Harrison, president of the Vermont Grocers' Association.

Jim Harrison, president of the Vermont Grocers’ Association.

Not that elected officials are or should be indifferent to business profits. Without profits, businesses could not pay decent wages to their workers or provide the tax revenue that supports social programs. That helps explain why American liberals have always been in favor of profitable businesses.

In this case, the Democratic leaders may simply have decided that while they have to knock their opponents down, they need not start kicking them while they’re on the floor. That’s both good politics and good governing.

Granted, taking this above-the-battle, political science angle is easier for those of us who are not and never have been low-paid convenience store clerks who don’t get paid when they can’t come to work because they or one of their children is sick.

Betsy Bishop, president Vermont Chamber of Commerce

Betsy Bishop, president Vermont Chamber of Commerce

But elected officials have a broad mandate, and one of them is to maintain comity, both in the Statehouse and in the community at large. The opponents in this case are the several organizations that represent the business community – the Chamber of Commerce, the Retailers Association, the Grocers Association, Associated Industries of Vermont. They oppose both bills assiduously, if not bitterly. To pass either bill, the Democratic leaders will have to beat these opponents (knock them to the floor). They need not humiliate them (kick them while they’re down).

These organizations are legit. They represent real constituencies that are and ought to be part of the political discussions. Their legislative lobbyists are decent people with whom Shumlin, Smith, Senate President Pro Tem John Campbell and several committee chairs regularly consult, negotiate with, sometimes support, sometimes oppose. Maintaining cordial relations with them is part of an elected official’s job. So there is a limit on how badly those officials should want to beat up on them in any one year.

There’s also an economic consideration. Like raising the minimum wage, requiring paid sick days will cost some businesses money. In effect, passing both bills means passing a higher minimum wage. Absorbing both extra costs all at once increases that cost, perhaps too quickly for some businesses to make the adjustment. Even if they can – and almost all of them probably could – many businesspeople would probably resent the combined burden for years to come.

Creating resentment is not a healthy outcome either for the state’s elected officials or for anyone else. If it is necessary to offend and annoy a key constituency, there is something to be said for doing it in incremental doses.

Just as there is something to be said for paid sick leave, which many businesses already provide. Without them, more employees come to work sick, infecting others. Almost every other capitalist democracy requires a week or even two of paid sick days, and the requirement has not ruined any of their economies. It would be no surprise if over the next few years several states, including Vermont, follow their example.

But right now in Vermont, there is also a reasonable case for holding off on paid sick leave while increasing the minimum wage. The state’s Democratic leaders are not nearly as funny as was the late William Claude Dukenfield (even when he was sober, which was rarely). But they’re better than he would have been at governing.

Jon Margolis

Comments

  1. Fred Woogmaster :

    This analysis makes perfect sense – unfortunately.

    These are Bills that will provide assistance to those who can truly benefit from that assistance; especially children.

    Business need not be harmed. State Government could provide the buffer and help Business with any unintended burden.

    When is profit too high?When it drains from the pool of public good.hat price profit?

  2. Cynthia Browning :

    I think that the most effective action that the Legislature could take to help low income workers would be to do the income tax reform recommended by the Blue Ribbon Tax Structure Commission several years ago. Shifting from taxing “Taxable Income” to taxing “Adjusted Gross Income” would reduce the ability of higher income individuals to shelter their income from taxation, so that they would pay a more reasonable share of the costs of government.

    It is my understanding that the highest tax bracket in Vermont would be paying around 6% of income if credits, deductions, and exemptions did not allow them to lower that to around 3.5%.

    Also, in his report on the effect of raising the minimum wage, Legislative economist Tom Kavett concludes that businesses would likely reduce hours and reduce other pay raises or benefit costs, and workers might not end up much better off.

    Rep. Cynthia Browning, Arlington

    • John Greenberg :

      Shifting from taxable income to AGI would eliminate federal deductions, not federal tax credits. Which deductions would you like to eliminate? What would you do about the ones which are already built into AGI, such as business deductions for Schedule C and Chapter S taxpayers?
      Beware of unforeseen (and often undesirable) consequences.

  3. David Black :

    Vermont is known to be anti business.
    Why stop here?

  4. Moshe Braner :

    Summary: form above substance?

  5. Dave Bellini :

    Regarding the paid sick days: Of course it is true that some small businesses cannot afford this. However large employers can afford to do something. Wal-Mart isn’t a small employer and I’m pretty sure they’re making enough money. What really irks me is that the State of Vermont, again, not a small business doesn’t provide paid sick days to many full time, year round employees. The state classifies them as “temps” but in reality they are PERMANENT STATE EMPLOYEES WITHOUT BENEFITS.
    .
    The most egregious example are the full time, year round correctional officers. The state doesn’t even comply with the current law and the slumber party going on at the A.G.’s office has continued to assure no enforcement. This charade has been going on for over 30 years. Even if one sets aside the moral issue here, it’s financially STUPID to keep sending boatload after boatload of people to the corrections academy, use them as temps and watch the majority quit soon after. It costs real money to send people through the corrections academy (10K?) have them quit and reload with another group. All the turnover creates a great deal of overtime that costs taxpayers millions. Lastly, the academy graduates are predominantly young and in good physical condition. These are the type of people that use very little healthcare. Yet, the state of Vermont won’t take them into the self-insured state employee’s health plan. This would save the state money not cost money. So, if there’s any legislators reading this, tell your colleagues, the current system for hiring correctional officers is monstrously stupid. It costs more money and doesn’t yield the desired outcome.

    • J. Scott Cameron :

      One analysis I reviewed identified the State of Vermont as the employer with the most employees who lacked paid sick days.

  6. Thomas Powell :

    Either of these bills will amount to chump change if Shumlin’s single payer scheme gets legislative legs. That’s the end game for this ambitious governor, who wants bragging rights as the First Governor to drag his state down this fiscal rathole. Just wait until AIV, Vt. Grocers, and the Chamber have to tell their members about the new 12% payroll tax, then let the jobs exodus begin. If education funding doesn’t kill the golden goose, single payer surely will. But I suspect our governor hopes to be in Washington by then.

    • Walter Carpenter :

      “First Governor to drag his state down this fiscal rathole. ”

      And what happens if it is not a fiscal rathole, such as maintaining the current system would be? A 12% payroll tax (That is, if it is a payroll tax and if it is 12%) is less than many businesses pay for health insurance to insure their employees now. And they will not be penalized by higher rates if an employee gets sick.

    • Wendy wilton :

      Thomas, AIV and other pro-business groups do not need to tell business owners who are paying attention that a payroll tax is coming and what it will mean to them. The question right now for businesses is where are they in the process of planning their exit strategy. Most of them are doing this very quietly.

  7. Pat Heffernan :

    “Bad for business” is such a tired mantra. Most Vermont businesses already provide earned sick leave and pay a higher-than-minimum wage. It is the chain restaurants and box retailers that fight such policies most aggressively and continue to spread misinformation. They tend to be members of the traditional business groups referenced.

    VBSR (Vermont Businesses for Social Responsibility) supports both of these policies as a net benefit for a sustainable Vermont economy.

    Today’s VtDigger article by Rep. Stevens and business owner Kimmich adds to this discussion: http://vtdigger.org/2014/03/23/stevens-kimmich-evidence-allay-fears-cost-earned-sick-days-bill/

    • Renée Carpenter :

      Thank you Pat Hefernan!

  8. ron jacobs :

    Vermont has one of the nation’s lowest unemployment rates, yet business continues to threaten the state that it will leave unless it gets its way. It seems to me that something can be worked out ot ensure small businesses can afford paid sick leaves and a better minimum wage, while bug businesses just need to change their priorities. In other words, don’t pay so many bonuses to their top executives and use that part of the return to pay its workers a better wage and sick days. It’s all about priorities.

    • J. Scott Cameron :

      Our low unemployment rates are largely the result of our rapidly shrinking labor force, not an abundance of jobs. We are aging out and the kids are not staying and replacing us. The lack of an adequate labor pool is one of several factors which tend to make Vermont unattractive to business.

      • Michael Stahler :

        Exactly right. And guess what happens when the state, directly or indirectly increases the cost of living? More young people and families leave. NOT what the state needs!

  9. The minimum wage raise was not put through for “Legal Americans”. It was put through for the “illegals” with the intent to broaden their (Dems) voting block. This law insures that people entering the work force will go a lot longer before they get a raise for quality work and good employee character. So, Oshumlin meets with Obama and drags more Fed socialist ideology to our State to further crush, under the stomping boot of oppressive Government, our State sovereignty. Let’s face it, we don’t have State Government any longer but rather we have Nationalist running our State. They will not stop till we have equally distributed misery and completely centralize every aspect of our lives. We need to change the faces in Montpelier starting with career politicians.

    • J. Scott Cameron :

      I don’t think you’re on to something.

    • Walter Carpenter :

      “They will not stop till we have equally distributed misery and completely centralize every aspect of our lives. ”

      So do you support paying workers in Vermont a $1.00 or so an hour (to pick a figure totally at random) like they do in all those unregulated places our manufacturing jobs went to in order to exploit dirt cheap labor?

  10. sandra bettis :

    how about ‘offending and annoying’ the people? as pat says, many businesses (the socially responsible ones) support these bills and they aren’t even mentioned in this article. henry ford got it – if you pay your employees a decent wage, they can buy your products.

  11. sandra bettis :

    ‘decent people’ think about what is best for others, not what is best for their own pocketbooks.

  12. Tony Redington :

    Reporter Margolis indicates the W. C. Fields analogy calls for a business getting knocked down (minimum wage increase) and then kicked (five sick days a year after excluding very small businesses) is akin to what the Legislature is doing. Think of all those employees and/or their family members (kids or elders mostly) kicked around for decades now by businesses forcing sick workers to the worksite (or their other sick family members to fend for themselves). The healthy businessman is kicking the sick employee, that is the point!!

  13. Skip Woodruff :

    Somehow we have got to stop doing the bidding of a President who clearly does not have our best interests at heart…PERIOD!

  14. J. Scott Cameron :

    Whatever happens I do think that this discussion has been helpful and that it has raised awareness in the business community.

    Business does not want mandates like this from government, because a ‘one size fits all’ approach often does more harm than good. Several business owners I know are now considering how best to craft a paid sick leave policy that will work for their businesses and employees.

    We should keep a few thing in mind: the proposals to increase minimum wage will put a few more bucks a week in a worker’s pocket but won’t raise them out of poverty; the paid sick leave as proposed is great if a worker needs a day or two off but any medium to major illness will still be devastating. These are both band-aids.

    For the long term we need to attract and nurture solid, sustainable and environmentally friendly companies who create high value products and services which require and support high paying jobs with benefits. And we need to train and educate a workforce to meet the needs of those businesses.

    It’s not going to be easy, but it can be done.

    • Walter Carpenter :

      “the paid sick leave as proposed is great if a worker needs a day or two off but any medium to major illness will still be devastating. These are both band-aids.”

      Scott, I agree with your premise here. When I was critically ill several years ago, paid sick days were a godsend. I had accumulated a bunch of them; until that time I rarely got sick. I never used them; suddenly, I needed every one I had accrued. They helped tide me over until I could procure a medical leave.

      The question here, though, is why is that we have to “attract” jobs with benefits. I agree that we have to nurture them, but why cannot we work so that the jobs already here, both now and in the future, created by Vermonters going out on their own, as well as the jobs we will attract, have benefits?

  15. On election day, when the “people” go to the polls, “we the people” ARE the Legislative Body of this State. Let’s push our left leaning State back to the right. Let’s push our State back toward Constitutional Law. Tea, anyone? – oh wait, it’s all been thrown in the harbor!

    • Walter Carpenter :

      “Let’s push our left leaning State back to the right.”

      So that working people would have far fewer rights than they do now? Is that the idea?

      • Paul Richards :

        “Working people”? Think about that. First off “working people” in this country, in one sense have more “rights” than they ever have and more than “working people” in any other nation. On the other hand the government keeps stealing from them to fund their crony programs, pick winners an losers, fund their criminal mis-handling of our nations debt and to play Santa clause to further their cause. The idea is to gain back some of our rights afforded by the constitution and stop the complete out of control madness of this ever growing mess called our government. Enough is enough! This country is going down the tubes because our one party government is totally inept at managing our money. All they do is pander to peoples bleeding hearts while constantly devising ways to extract more money out of us to fund their mistakes. The golden goose is about dead!

        • sandra bettis :

          i wouldn’t brag about the rights of workers in this country – my friend in europe was appalled that we don’t have sick leave or a livable wage or health care or day care…..

          • Paul Richards :

            If you feel slighted living here I suggest that you go live with your friend in europe and see how you like the whole package there instead of pushing their socialist agenda here. We are running out of “other” peoples money.

          • Paul Lorenzini :

            Move to Eurpoe!!!!!! Vermont is not Europe, and if you like Europe so much then go THERE!!!!!!!!!!

  16. John Devino :

    Isn’t it reassuring to know that the next time you eat out, your meal might have been prepared by a coughing and/or sneezing cook who should have stayed home but could not afford to lose a day’s pay.

  17. Lee Stirling :

    Despite the fact that Gov. Shumlin isn’t willing to own-up to it, it appears as though a payroll tax will have to be used to fund the bulk of single-payer health care by 2017. Given that there’s a push to also raise the minimum wage to $10.10 by 2017, what does anyone think the potential effects of the payroll tax for health care will be when coupled with the $10.10 minimum wage? It seems like by increasing the minimum wage, then assessing a payroll tax on all Vermonters to pay for health care (in place of current premiums) that low wage Vermonters likely won’t be any better off in the end in terms of their income. Lets assume a 14% payroll tax to fund Green Mountain Care single payer. Someone making $10.10/hour working full-time (40 hours/week) would have a gross income of $21,000. 14% of this gross income equals $2940 which, when calculated down to the hour would be $1.41/hour. If you subtract this from the $10.10 hourly wage you’d be left with $8.69 which is less than the current $8.73/hour minimum wage. I suppose an argument can be made that minimum wage earners will still be better off due to Green Mountain Care instead of being uninsured. But it remains to be seen how the coverage would look under Green Mountain Care, no sense for exposure to out-of-pocket expenses. If, in the end after a 14% payroll tax, those minimum wage earners will end up paying more out of pocket than previously under VHAP or Catamount, then they’ll be worse off financially than before single-payer. I wonder if this has this been part of the discussion at the Statehouse.

    • Walter Carpenter :

      “that low wage Vermonters likely won’t be any better off in the end in terms of their income. ”

      Perhaps you low-wage Vermonters will be better off in one respect. They will not have to worry about the constant possibility of losing it if their income rises by ten bucks a month, which they did under Catamount or VHAP. There is something to be said for the end of that problem.

    • sandra bettis :

      if they are making minimum wage, they will be eligible for Medicaid so they won’t have a premium. (even at the whopping 10.10 per hr)

  18. Townsend Peters :

    This article is fatally flawed on its own terms. It fails to support its premise by showing that either initiative is actually a “whammy” to business. The article lacks any discussion or citation of reliable estimates of what the impact to business would be or which business sectors would be affected.

    But more importantly, we live in a new gilded aged where workers are being consistently thrown under the bus. Giving them a decent minimum wage and a paltry seven days’ sick leave should not be an “either or” equation.

    We clearly need more progressives in the Vermont legislature.

  19. sandra bettis :

    it seems to me that there are 2 kinds of employers – the ones who support health care, sick leave and a livable wage and the ones who don’t. before you take a job, it might be a good idea to see which leg they stand on. then you will know right off what kind of employer they are.

  20. Mike Gagnon :

    I am so sick of this socialist state! I can’t wait to leave. This type of liberalism is just thievery. And by the way your comment:

    Just as there is something to be said for paid sick leave, which many businesses already provide. Without them, more employees come to work sick, infecting others. Almost every other capitalist democracy requires a week or even two of paid sick days, and the requirement has not ruined any of their economies.

    This is just not true. The logical conclusion of this type of liberalism is catastrophe for our economy. Just look at Greece. Grossly liberal and bankrupt. Just where Vermont is heading!

    • sandra bettis :

      if it were true that greece was floundering because of paid sick days, then the rest of europe would be floundering too. a happy healthy workforce actually makes for a vibrant economy. by the way, how do you think the economy is doing in the usa??

  21. sandra bettis :

    mr cameron seems to think that businesses do not need to be mandated to do the right thing. obviously, that is not correct. i suppose he thought the same thing about wall st.

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