The state minimum wage is $8.73 per hour, compared to the federal rate of $7.25 per hour. Vermont nudges up the minimum hourly wage each year in proportion to changes in the Consumer Price Index.
Sen. Kevin Mullin, R-Rutland, unveiled his own strategy Thursday morning. The chair of the Senate Committee on Economic Development, Housing and General Affairs wants to gradually bump it up to $10.47 per hour by 2018, in roughly 45-cent increments. After that, the wage would continue to increase with the cost of living.
That’s not quite as high as Sen. Don Collins, D-Franklin, would like to see it. He said Thursday afternoon that he would aim closer to $11 per hour over four or five years. Collins is considering whether to introduce his own plan, or sign on to Mullin’s proposal.
Another “hybrid” option was offered Thursday morning by Sen. David Zuckerman, P-Chittenden.
Zuckerman wants more time to get above $10.10 per hour, and he believes it will help businesses to know at least a few years in advance what the next step-up will be. His proposal is also gradual, but faster.
Zuckerman suggests jumping to $9.75 per hour in 2015 and adding 75 cents in each of the following two years, landing at $11.25 in 2017. He also wants to establish an “apprenticeship wage,” payable for up to six weeks while a new employee is training: $8.76 in 2015, $9.45 in 2016 and $10.13 in 2017. His proposal retains cost of living increases.
Meanwhile, Sen. Philip Baruth, D-Chittenden, is drafting his own version of $10.10 per hour by 2016. One intermediate step of $9.42 per hour would come in 2015. After reaching $10.10, annual cost of living increases would continue.
Vermont Grocers Association President Jim Harrison offered up his own proposal Thursday morning — a much slower approach, reaching $10.50 by the year 2019. Small businesses with eight or fewer employees would have to pay 85 percent of the state minimum for larger companies.
Students under 22 would be exempt, and a three-month training wage — again 85 percent of the state minimum — would be added. Harrison also suggests scrapping the annual cost of living increases and going back to the drawing board each time the wage is raised.
He said the goal of higher wages is shared by all, but “waving a wand … doesn’t get us there,” Harrison said. “At the end of the day, I’m not sure what we’ve really accomplished other than redistributing.”
Harrison emphasized his desire to grow the economy in a way that lifts wages up by driving demand for services — a dualistic approach Baruth said lawmakers are pursuing.
All this is being contemplated against a backdrop of what passed the House. Representatives voted April 9 to jump the minimum wage to $10.10 per hour in 2015, then pick up the cost of living increases in 2016.
H.552 also proposes conducting two studies: raising the minimum wage closer to a “livable” wage, which is near $12.50; and examining the impact higher wages have on public assistance recipients.
The concern for public assistance is the people who fall in the cracks between earning higher wages and losing benefits because of the increased income. A segment of recipients, depending on family size, are more likely to end up in worse shape even with a higher wage.
Weighing the options
As lawmakers were contemplating their options, they asked legislative economist Tom Kavet about the variance in impact between boosting wages quickly or ramping up over time.
“The longer you wait, the less impactful it is, both positive and negative,” Kavet told the Senate Economic Development Committee.
Kavet also testified that many professions in Vermont typically pay slightly less than their counterparts in other states, which indicates to him that there is room in the state’s economy to absorb higher wages and still remain competitive.
On the fringe of minimum wage discussions is the Earned Income Tax Credit, a federal and state tax mechanism designed to help low-income workers.
Lawmakers are gathering information about potentially raising the state’s portion of the EITC — especially if they target aid to those who might lose more in assistance than they gain in wages.
None of the proposed amendments exactly match Shumlin’s gradual goal of $10.10 per hour by 2017.
CORRECTION: The Vermont Grocers Association proposed a $10.50 per hour increase by 2019, not 2017, as originally reported.
