Jack Hoffman: Full-time workers should make enough to live on

Editor’s note: This commentary is by Jack Hoffman, a senior policy analyst at Public Assets Institute, a non-profit, non-partisan organization based in Montpelier. He lives in Marshfield.

There appears to be a good chance the Legislature will increase the minimum wage this session, but so far it has set its sights too low. The Legislature needs to look beyond the $10.10 an hour that President Obama and Gov. Peter Shumlin have proposed and think in terms of what a Vermont family needs to live on.

Full-time work ought to support a decent standard of living. People who work 40 hours a week, year round, ought to have at least enough income to support their families and meet their basic needs.

The Economic Policy Institute in Washington, D.C., and the Vermont Legislature’s Joint Fiscal Office calculate that a basic family budget for a single parent with one child is close to $50,000 a year. For a family of two working parents with two children, it’s $70,000-$75,000.

Phil Merrick, owner of August First Bakery and Café in Burlington, said he supported a higher minimum wage because it was the right thing to do and would help the economy by putting more money in the pockets of people who would spend it immediately — and in Vermont.

 

Vermont can’t raise the minimum wage to $25 or $30 or $35 an hour, and it probably can’t even guarantee a livable income for a full-time working mother with just a single child. But by raising the minimum wage to $11.50 or $12 an hour and expanding the state’s tax credit for low-income, working families, Vermont could begin to close the huge gap between the cost of a decent standard of living and what most low-wage workers have to live on.

Combining an increase in the minimum wage with an increase in the Earned Income Tax Credit (EITC) for low-wage workers was the subject of a paper by Jeannette Wicks-Lim, an economist at the Political Economy Research Institute (PERI) at the University of Massachusetts and an expert on the minimum wage. She discussed her research with a Vermont Senate committee recently. She also refuted a commonly heard claim that raising the minimum wage hurts the economy and costs jobs. Wicks-Lim told the committee that research had found little or no negative effect from raising the floor on wages.

Her testimony was reinforced by Phil Merrick, owner of August First Bakery and Café in Burlington. As a business owner, he said he supported a higher minimum wage because it was the right thing to do and would help the economy by putting more money in the pockets of people who would spend it immediately — and in Vermont. The cost of the minimum wage proposed by the governor would be inconsequential to his customers, Merrick said. And he thinks the wage increase should be higher than the governor recommended.

Vermont, like the rest of the country, has seen a growing gap between rich and poor. Raising the minimum wage alone isn’t going to close that income gap. There are many other steps that need to be taken. But raising the minimum wage can help, especially if it’s coupled with an increase in the EITC that gets full-time workers closer to a livable income. And those changes need to be part of a broader commitment among policy makers to reduce income inequality in Vermont.

Comments

  1. Thank you, Mr. Hoffman. Thank you very much.

  2. I totally agree – the minimum wage should
    be $12. I also think that the wait staff should be paid the same, not reduced as it is now. The way it is now, the owners are expecting their customers to pay their staffs salary via tips. They charge more than enough to pay the full salary to their staff. This method used in the US is just another way of taking advantage of the
    consumer. It is not practiced in most of the industralized world

  3. John Grady :

    Jack Hoffman
    “Full-time work ought to support a decent standard of living.”

    http://northplatte.craigslist.org/search/apa?query=+

    http://burlington.craigslist.org/apa/

    North Platte housing is a real lot cheaper than Vermont.

    http://www.zillow.com/homedetails/601-S-Bare-Ave-North-Platte-NE-69101/102714118_zpid/

    Nice house at a decent price so North Platte isn’t some sort of economic wasteland.

    Why should taxpayers subsidize the profit margin of Vermont landlords threw EITC ?
    High cost housing also lets New York Bankers suck money out of the state because of interest on real estate loans and the more people make in wages the more DC sucks out of the state.

    If rent was $300 less a month it’s worth more than a $2.00 an hour raise because the more people make, the more they pay in taxes so grossing another $2.00 an hour doesn’t equal taking home another $2.00 an hour. The more people make the less federal FREE money they qualify for as far as food stamps, free school lunches, federal EITC so Vermont consumers and Vermont taxpayers and Vermont employers all paying more so we can get less back from DC while landlords and bankers rake in the profits off bloated real estate prices and rents.

    For every action there is an equal an opposite reaction.

    Vermont policies created the high priced housing situation so fixing the regulations so more affordable housing is available for the lower end of the working class would help. NIMBYism and ACT 250 has starved the state for housing.

    We could endlessly throw money at the problem or we could fix the problem. Throwing money at the problem so it can be sucked out of the state doesn’t fix the problem of high priced rents.
    Investing in energy efficient small homes that will last for decades is an investment. Subsidizing over priced rentals which in many cases aren’t energy efficient is just wasting money.

    Current Landlords wouldn’t be happy if they got undercut but lots of people have made bad investments in lots of things, it goes with the territory and it’s called taking risk.

    If Vermont wants to compete for jobs it needs cheaper housing. We need to lower the cost of living but not the standard of living and get rent seekers out of peoples pockets and it includes Bankers skimming off the high priced housing in the state.

  4. Steven Farnham :

    Nobody is going to listen to what you wrote, Jack – it’s way too simple, and makes way too much sense.

    But let’s hope that I’m wrong, and that they do listen.

    I agree with Dawn Griffis (above). Let’s stop treating waitstaff as if they are a lower class of people, and pay them as if they are human like the rest of us.

  5. Paul Lorenzini :

    Mother Theresa lived a long time on what she considered a livable wage. She wasn’t greedy.

  6. Glenn Thompson :

    Unless one is Single, living in their parent’s basement, and have almost no living expenses…they will not make it in Vermont on $12/hr. Vermont is highly taxed. Has a high cost of living. The costs of housing is expensive, and the costs of utilities including heating is expensive. Better find another solution to the problem other than pushing for an increase in the minimum wage?

  7. Tom Haviland :

    I’ve been thinking about this for a while now. There’s two competing ideas about what work is, I think.

    For the employer, there’s a task that needs doing and they need someone to do it. That task has a value to the business and the employer doesn’t want to pay more for the task than the value.

    For the worker, they need to be able to live and eat on what they receive for employment. The amount necessary to do this may be more than the value of the task to the employer.

    So there’s a disconnect.

    Since the employer has the greater power in the relationship, they tend to push wages down, as we’ve seen over the past twenty or thirty years of stagnating income for everyone not at the top.

    One way to handle this disconnect is to take the survival part off the table. This makes the relationship much more equal. The employee can be more picky about the work they choose to do. The employer can price the task closer to the value, but may not be able to find someone, in which case they have to assess the value of the task. They may find it really doesn’t need doing or can be automated. Or they have to pay more in order to get someone to do it.

    The mechanism for this is a Universal Basic Income. Everyone has an income floor that they cannot fall through.

    If you’re interested, you can read a short article here: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/05/11/thinking-utopian-how-about-a-universal-basic-income/

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