The Senate Finance Committee is scrutinizing a plan that would lower the wage threshold for cash incentives to companies that bring new jobs to Vermont.
A provision in the Senate’s economic development bill, S.138, would allow companies that create lower-paying jobs to qualify for the Vermont Employment Growth Incentive, or VEGI.
The VEGI program awards cash incentives to companies that create jobs in Vermont. The jobs must be new and must pay 160 percent of minimum wage, or $14.64, plus benefits.
Under S.138, the VEGI wage threshold would drop to $13 an hour, the livable wage level set by Joint Fiscal Office.
A company must apply for VEGI through the Agency of Commerce and Community Development and prove that the economic activity would not occur in Vermont otherwise, or would occur “in a significantly less desirable manner” without the incentive. Companies that are approved by the program receive a lump sum after the jobs have been created.
Patricia Moulton, secretary of the Agency of Commerce and Community Development, said recent increases in the state’s minimum wage are disqualifying too many companies from VEGI too quickly.
“We’re leaving jobs on the table,” Moulton said in an interview Wednesday.
The state’s minimum wage is $9.15 this year and steps up to $10.50 by 2018. Under current law, the minimum wage increase would bring VEGI eligibility thresholds up to $16.80 within three years.
Moulton said that some jobs paying slightly under the 160 percent threshold — $14 per hour this year or $16 per hour in 2018 — may be good jobs for workers in rural areas.
For companies that are already considering a move to Vermont, the change could increase the number of eligible jobs, Moulton said.
Sen. Mark MacDonald, D-Orange, vice chair of the Senate Finance Committee, raised questions about whether lowering the threshold would encourage companies to bring in lower-paying jobs.
Gregory Maguire testified in favor of the change on behalf of Revision Military, which has plants in Essex and Newport that manufacture eyewear and head protection to sell to military and law enforcement agencies.
“You are creating a harder threshold for companies outside of Chittenden [County],” Maguire said. “Yet we are paying a very competitive wage in Newport.”
Maguire said the company has offshore factories and wants to move some of those jobs back to Vermont. Since the “re-shored” jobs would be new to Vermont, they could potentially qualify for VEGI.
“The Newport factory is the only factory that can provide head protection in all sizes in the country,” Maguire said. “That is because of the skilled workers in Newport.”
The Senate Finance Committee is scheduled to take additional testimony Thursday afternoon on the proposed changes.
