Vermont Senate Increases Minimum Wage

On May 5, the Vermont Senate passed a four-year, multi-tier plan to raise the minimum wage in Vermont to $10.50 per hour by 2018. In 2019, annual cost-of-living wage adjustments will resume. The bill is just one example of the flurry of legislative activity due to the Senate’s self-imposed May 10 deadline.

The bill differs from one passed earlier this year by the House, which will bring the minimum wage to $10.10 next January. Governor Shumlin’s plan would have increased the minimum wage to $10.10 by 2017, in three separate stages.

Governor Shumlin has strongly pushed for a minimum wage bill since meeting with President Obama at a conference in March.

“Although we are seeing some economic recovery and turnaround,” he said at Bear Pond Books in Montpelier, “we know that the folks at the bottom are not seeing prosperity.”

An amendment proposed by Sen. Peter Galbraith (D-Windham) that would have required companies with over 50 employees to pay at least 12 dollars an hour was defeated in an 18-10 vote. A second amendment proposed by Sen. Peg Flory (R-Rutland), that would have given employers a 12-week period before paying increased wages, was also defeated.

One national study showed that if adjusted for inflation since 1968, the minimum hourly wage in Vermont would be $10.66. Some studies estimate that the new wage hike will collectively increase the paychecks of around 20,000 Vermonters by 30 million dollars.

Even prior to the bill, Vermont’s $8.73 hourly wage was the highest in the Northeast, and fourth highest in the county.

Yet, some local businesses are concerned that Vermont’s higher rate will make them less competitive. Sen. Jane Kitchel (D-Caledonia) also expressed concern for the profit-margins for small businesses in her district.

To many people living in Caledonia, “shopping locally means going to New Hampshire,” she said in an interview. “Our little stores have come and gone and are operating on a small margin.”

Another concern is that the bill may negatively affect Vermonters currently on welfare programs. Sen. Kevin Mullin (R-Rutland), chair of the Senate Committee on Economic Development, Housing and General Affairs, said the committee will be examining, “ ... what happens with the Earned Income Tax Credit, what happens with state benefits programs, and things like that.”

Mullin also expressed concern that the bill skirts the fundamental problem: Vermont is an unattractive state for complex industries to set up shop.

“To be honest with you, it doesn’t matter if it’s $8 or $13,” he said. “It’s not enough to live on in a costly state like Vermont. We need better jobs.”

Sen. David Zuckerman (P/D-Chittenden), who owns an organic farm, adopted a more nuanced stance. He admits that the bill may hurt his business directly, but his market will expand ifconsumers “had more money in their pockets” to buy his food.

Yet the general response to the bill has been positive. In April, a survey conducted by Sen. Bill Doyle (R-Washington) suggested that 71 percent of Vermonters were in favor of raising the minimum wage, 20 percent were opposed to a hike and 10 percent were unsure.

Some experts estimate that the livable wage in Vermont is $12.48 per hour. Accordingly, in Doyle’s survey just 26 percent of respondents claimed that living in Vermont was “affordable.”

“This bill is an effective step in helping Vermont’s low-income workers support their families,” Rep. Helen Head (D-South Burlington) said. “And it will enable people to put that money back into the state economy by spending at local businesses.”

House Speaker Shap Smith (D-Morrisville) also praised the bill as an important step toward allowing many more Vermonters to meet their most “basic needs.”

“A Vermonter working full time and making the minimum wage cannot afford health care, housing or food without government subsidies,” Smith said.