By Nathan Suter
With Vermont considering joining the other states and cities that are raising their minimum wages to $15 an hour, legis- lators are beginning to look at the likely impact. Experience to date and the best economic analysis indicate that a gradual- ly phased-in $15 wage would deliver ex- tensive bene ts for one in three working Vermonters, beginning to reverse decades of pay inequality.
Vermont workers would bene t broad- ly from a phased-in $15 minimum wage, which would raise pay by an average of $2,000 a year for more than three in ten working Vermonters. Of the 87,000 work- ers receiving raises, 87% are adults, 56% are women, 59% work full time, and one in ve are parents. And on average they provide 63% of their total family income.
As for the economic impact, studies conducted for New York and California show that a gradually phased-in $15 minimum wage would generate billions in new consumer spending that would boost business sales and o set a signi cant portion of the higher cost for employers. More than 100 economists have endorsed raising the minimum wage to $15 by 2024,2 explaining that it would help re- verse decades of growing wage inequality and that the bene ts would far outweigh the costs.
Research on past minimum wage increases in Vermont and other US states nds little negative impact on employ- ment or hours. The latest is a sophisticat- ed new study of all US state and federal minimum wage increases between 1979 and 2016, which shows they boosted pay without costing jobs. Another leading study3 compared job growth in all neighboring US counties with varying minimum wages ‒ including Vermont’s counties bordering New Hampshire where the minimum wage is much lower ‒ and found no evidence that higher wages hurt jobs.
In Seattle, analysis by University of California economists found that as of 2016, employment in the restaurant industry (the sector most a ected) had not been hurt. Although a second University of Washington study suggested that the minimum wage might be costing jobs, it has been criticized by leading economists as deeply awed – for example, by mis- interpreting the reduction in the number of low-paying jobs as the result of rising pay in Seattle. Those weren’t lost jobs, they either became higher paying jobs, or react Seattle’s booming job market.
driving wages higher. A forthcoming study of Chicago’s minimum wage, which is phasing up to $13, also nds no evi- dence of slowed job growth.
As for concerns that some Vermont workers could lose certain public ben- e ts under a wage increase (commonly referred to as the “bene ts cli ”), it’s important to put them in context. Because the vast majority of Vermonters lifted by a $15 minimum wage are single adults without children, they qualify for few public bene ts. While they’ll pay more in taxes and may see limited reductions in some bene ts, they will net substantially better. Of 87,000 workers getting raises, parents of an estimated 7,000 low-income children4 who receive childcare subsi- dies could be at risk of losing signi cant bene ts as their pay rises. There’s a real issue here – but it has to do with problems in how child care bene ts eligibility is de ned, not whether low-income working parents should be denied a long overdue pay raise. The Legislature’s Joint Fiscal O ce has outlined sensible reforms that would address the problem by raising the eligibility threshold for childcare subsi- dies. And the cost of increased eligibility could be more than covered by savings in other states bene ts, especially Medicaid, as workers transition to higher wages.
Too many Vermonters struggle with at paychecks and rising living costs. That’s why voters and a broad array of community, social service, faith and business organizations5 have joined the Raise the Wage Coalition led by Rights & Democracy. The myth that minimum wage workers are mostly high school students couldn’t be further from the truth in Vermont, where the average minimum wage worker is 38 years old and over half are women who are earning the majority, if not all, of their household income. Hardworking Vermonters deserve fair pay to support themselves and their families, and raising their wages will bene t us all through increased local spending, happier healthier workers, and more secure families. We are all in this together.
community-development-issue-briefs/2016/a- $15-minimum-wage-in-new-england-who- would-be-a ected.aspx
2) http://www.epi.org/economists-in-support- of-15-by-2024/
3) http://irle.berkeley.edu/ les/2017/ Credible-Research-Designs-for-Mini- mum-Wage-Studies.pdf
4) http://legislature.vermont.gov/assets/Doc- uments/2018/WorkGroups/House%20Com- merce/Wage%20and%20Bene ts/W~Deb%20 Brighton~Earnings%20and%20Net%20 Resources%20to%20Meet%20Basic%20 Needs-%20Single~2-15-2017.pdf
5) https://raisethewagevt.wordpress.com/coali- tion-members/
For a full list of sources, please go to this article at www.pjcvt.org/blog
Nathan Suter is an organizational develop- ment consultant and social entrepreneur with a background in nonpro t management and community organizations. He is a member of the board of the Peace & Justice Center and is the Center’s liaison to the Vermont’s Raise the Wage Coalition.