A push to increase Vermont’s minimum wage to $10.10 remained on the fast track Tuesday.
The House committed to raising pay for the state’s lowest income earners by $1.37 an hour Jan. 1 after defeating an amendment to spread the increase gradually over three years. The phase-in, which was supported by the Shumlin administration, failed by a 20-vote margin.
About 20,000 Vermonters are projected to earn less than $10.00 per hour in 2015, according to legislative economist Tom Kavet. Their paychecks would grow by about $30 million under the proposal, Kavet predicts.
H.552 will go to a third and final reading in the House on Wednesday before moving to the Senate. The bill will need to move quickly in the upper chamber to make the Legislature’s timeline of wrapping up the spring session in early May.
Resistance to the bill in the House was fairly split along party lines. Most of the argument on the House floor revolved around the speed with which the minimum wage should be raised. No one argued that the state’s current minimum wage of $8.73 per hour is “livable.”
“I don’t think this bill is about what we ought to do. I think what we ought to do is clear,” said Rep. Anne Donahue, R-Northfield. “I think it’s about how and when.”
Donahue worried that moving the state minimum wage too far ahead of neighboring states would handicap Vermont businesses.
Reps. Michael Marcotte, R/D-Newport, and Matthew Trieber, D-Bellows Falls, said the raise to $10.10 per hour is good, but not if it’s done too quickly.
The two proposed a “phased-in” raise, aligned with Gov. Peter Shumlin’s preference to step up to $10.10 per hour by 2017. They said the time was necessary, in part, to study the impacts of the raise on social service assistance and work force training programs.
But a one-time jump to $10.10 per hour, effective Jan. 1, prevailed. Tipped employees also may see their minimum wage rise.
As the bill stands, one study by the Legislature’s Joint Fiscal Office would broadly examine the impact of moving to a livable wage closer to $12.50 per hour. Another study — by the Agency of Commerce and Community Development, the Department of Labor and the Agency of Human Services — would analyze the impact a $10.10 minimum wage would have on public assistance programs.
Supporters relied heavily on a preliminary report by Kavet and former JFO staffer Deb Brighton. They predicted only a negligible negative impact for the state overall. They said advantages outweigh potential downsides.
“We find that a minimum wage increase to $10.00 would probably have negligible, if any, negative aggregate economic consequences and could be an important component in advancing some of the lowest income workers towards a livable income,” Kavet and Brighton wrote.
Because low-income workers are more likely to spend their raises, Rep. Jean O’Sullivan, D-Burlington, said the bill boils down to more of an economic argument than a philosophical one. The money workers earn will go straight back into the state’s economy, she argued.
Many lawmakers urged their colleagues to vote for the raise on moral grounds.
“Low-income Vermonters cannot pay their own rent,” said Rep. Cynthia Weed, P/D-Enosburg Falls. She calculated that, at the current minimum wage of $8.73 per hour, someone would have to work 89 hours per week, without a week off, to afford an average housing cost of $1,007 per month.
However, several lawmakers testified against the bill because, as Donahue said, it would do more damage than good. Higher wages could make people less eligible for public assistance, and they’d end up losing more in benefits than they would gain with the raise, some said.
concerns
Although Marcotte and Trieber’s proposal to spread out the raise over three years failed, their suggestion to add the agency study of public assistance impacts was voted into the bill.
Citing the same Kavet report promoted by supporters, Marcotte highlighted the situation of a single parent with one child who receives public assistance. That family’s overall financial health actually wanes when the parent earns more than $9.62 per hour. The combined wages and benefits catch back up only when the parent makes $20.43 per hour.
Single parents with one child are not the predominant recipients of public assistance, Department for Children and Families Commissioner Dave Yacavone said in an interview Tuesday afternoon.
Yacavone said more than half of families receiving benefits are single parents with two children whose finances would not dip despite a sudden wage hike.
O’Sullivan acknowledged that about 5,000 families, such as those cited by Marcotte, may lose financial ground under H.552. Based on the economic report findings, she estimated their aggregate losses would be roughly $7 million of combined state and federal money.
“I am sure that AHS can figure out how to hold this subset of Vermonters harmless,” O’Sullivan said. “I’m sure they can figure it out.”
Yacavone is not so sure, however. He said the state’s hands are largely tied because the vast majority of assistance programs are federally funded and therefore bound to federal eligibility requirements.
“So, I couldn’t come in and doctor it, or ameliorate it because the federal government sets that,” Yacavone said.
Aside from worries about the social service “slope” that leaves beneficiaries worse off, traditional concerns also surfaced about the impact of a minimum wage hike on business.
In their economic report, Kavet and Brighton predicted the minimum wage raise may cost about 250 jobs statewide, or less than 1 percent of the state’s total employment.
House Minority Leader Rep. Don Turner, R-Milton, echoed concerns raised by Rep. Robert Bouchard, R-Colchester, about mandating a minimum wage increase just before implementing single-payer health care.
