The Senate Economic Development, Housing, and General Affairs Committee is getting closer to finalizing a bill that would increase Vermont’s minimum wage. Although the Committee is nominally working on S.40, the final language approved is not expected to follow that bill in detail. The expected core of the bill would increase the minimum wage by $0.75 annually to exceed $15, followed by indexed annual increases. Some of the details that remain unsettled are what the inflation adjuster will be and what provisions might be included to insulate certain recipients of public benefits from losing benefits owing to wage increases. The $0.75 increases annually tracks with a proposal made by the Lake Champlain Regional Chamber of Commerce on January 19, but which is opposed by AIV and the other mainstream business associations engaging on this issue.
With the Senate and Committee leadership strongly committed to increasing the minimum wage, Senators need to hear from Vermont employers directly if the debate is to return to more responsible grounds. Employers concerned about increases in the minimum wage can contact leaders and Senators as below:
Senate President Pro Tempore Tim Ashe
115 State Street
Montpelier, VT 05633
Phone: (802) 828-3806
Fax: (802) 828-1040
Senate Economic Development, Housing, and General Affairs Committee | Click here for contact information .
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Phone messages can be delivered directly in the State House by calling (802) 828-2228 .
Concerns and Alternatives
AIV testified January 19 in opposition to increasing Vermont’s minimum wage above and beyond the increases enacted in recent years and the indexing that is currently scheduled to follow.
As in past testimony, AIV stressed that while the minimum wage is often perceived as a retail and hospitality issue, it can also impact manufacturing. Of particular concern to manufacturing is that manufactures face significant challenges in passing on local costs through prices given national and global competition, and the fact that the positive feedback loop through increased purchasing power often cited by supporters of increasing minimum wage does not really apply to Vermont manufacturers, given that the overwhelming number of customers are out of state. AIV also pointed out that these two particular concerns are magnified by Vermont being an outlier in a high minimum wage compared to the majority of other states.
These particular manufacturing concerns are in addition to a number of general concerns, including:
- Cost of increasing wages currently below the new minimum wage.
- Cost of increasing higher wage scales to maintain recruitment and retention incentives.
- Increased challenges in attracting entry level and other employees from competing sectors.
- Increased pressure to automate or otherwise reduce employment relative to production.
- General lost opportunity costs owing to diverting funding from other priorities, including employee benefits, capital investments, etc.
AIV also noted on January 19, as we have in the past, the importance of predictability and credibility in state policies that affect operating costs as manufacturers and other businesses plan their futures in Vermont. In 2007 and again just in 2014 there were major changes and increases in Vermont’s minimum wage laws that were proclaimed to settle the debate as to what the law should be and provide the basis for understanding wage costs moving forward. To now once again reopen the issue would undermine the credibility of the legislative process and the predictability of operating costs in Vermont.
As alternative ways to promote better paying jobs in Vermont, AIV stressed the importance of looking for ways to reduce the costs of doing business in the state (which is consistently one of the most expensive states in the country for manufacturing) to help employers afford higher wages. But of particular help for manufacturing would be to focus more on improving Vermont’s school systems and workforce education and training resources so that more Vermonters can qualify for the higher skilled and higher paying positions that manufacturers are currently struggling to fill.
Employers interested in options for engaging on this issue are encouraged to contact us at email@example.com. We would especially encourage manufacturers with positions that would be directly impacted by such an increase in the minimum wage to contact us about how the proposal would affect them.