Editor’s note: This commentary is by Walter Carpenter, of Montpelier, who works in Vermont’s tourist business and is a health care activist.
[R]ep. Pattie McCoy, R-Poultney, missed some points about raising the minimum wage in Vermont to $15 an hour in her commentary. McCoy, who is the House minority leader, said that a “$15 minimum wage only makes sense politically if people do not bother to look beyond the slogans and remain blind to the full impact of what is being proposed and what it will do.”
Perhaps the “full impact” is actually much different. Bank of America saw this when they hiked their minimum not to $15, but to $20 an hour. They were clearly not blind to the consequences of this move and even saw these consequences as more beneficial than keeping their front line employees on wages so low that they needed public assistance programs. It did take them and their peers some time to see this. The report also cited a 2013 report from the Committee for Better Banks that noted that about a third of bank tellers were on some form of public assistance. Amazon, another scion of capitalism famous for its low wages, also upped its minimum to $15 and may even go higher now.
McCoy mentions the benefits cliff and how low-income workers could lose subsidies. I am curious here if the purpose of wages is to keep us having to depend on these subsidies or working multiple jobs just to make it from week to week. As Bernie Sanders asked, “Why should taxpayers subsidize starvation wages?” A February 2019 report from the Economic Policy Institute found that “Safety-net benefits for low-wage workers and their families make up more than half of spending on Medicaid, welfare (TANF), food stamps (SNAP), and the earned income tax credit, and cost federal and state taxpayers more than $150 billion a year.” The Vermont Public Assets Institute reported in a 2015 article that the total costs to Vermont taxpayers for subsidizing low wages was $372 million.
Several states have asked Bernie’s question. California, Illinois, Massachusetts and New York have followed the lead of cities like New York City, San Francisco and Seattle and are either raising their minimum wage or have raised it to $15 an hour. Maryland and New Jersey have recently joined them. The Economic Policy Institute’s 2019 report also noted that other states “Including Washington, Oregon, Colorado, Arizona, Missouri, Michigan, and Maine, have approved minimum wages ranging from $12 to $14.75 an hour.” Workers are now flowing out of Vermont because the wages are insufficient to live here. This flow could turn into an exodus, as wage earners do not want to essentially work to stay on public assistance programs.
McCoy wrote, “there are some significant consequences to this [raising the minimum wage] that the proponents of the bill and the media are not telling Vermonters.” In this, I wholeheartedly agree, though in a different way than McCoy. Beside the $150 billion we spend nationally to subsidize low wages, there are things like the added costs of the need to keep building more prisons or of shipping inmates around to alleviate overcrowding. The tragic and unending carnage of the opiate epidemic is also one of the “significant consequences” of low wages. We should ask here why the injustice of low wages exists in the first place, and the policies on state and federal levels that have sustained them until now, but that is for another day. These costs are billed to the taxpayers.
In Vermont, some 11.3% of our citizens now live in poverty. Erhard Mahnke, in a commentary in VTDigger, translated this 11.3% percent into a human perspective: approximately 70,000 Vermonters live in poverty. Is keeping 70,000 Vermonters in poverty good economic policy?
To again quote Bernie, “A job should lift workers out of poverty, not keep them in it.” The U.S. has the lowest minimum wages and the highest poverty rates and income inequality because of it in all of the world’s most advanced democracies. The Vermont Senate took a stand against the costly injustice of this and passed S.23, the bill to raise the minimum wage. As a wage earner myself, I thank them for their stand and sincerely hope that the House follows suit. A person is not a productive member of his or her community when mired in poverty or just this side of it by excessively low wages. This is terrible economic and moral policy.
