UPDATED ACTION ALERT | Minimum Wage Increase Advances in the Senate

The Senate Economic Development, Housing, and General Affairs Committee Wednesday passed S.23, which would increase the state minimum wage to $15 an hour by 2024.  The bill is now before the Senate Appropriations Committee and could be taken up on the Senate floor in the near future.

The Appropriations Committee is not expected to make any changes to S.23.  AIV will continue to engage Senators on this legislation, and members are strongly encouraged to familiarize themselves with the bill, follow up with us to learn about further developments and opportunities to engage Senators, and to contact their own Senators with any concerns and questions.  Links to the current version of the bill and contact information for legislators can be found at the end of this post, and you can contact AIV at info@aivt.org for more information.

Overview of the Current Bill

Under the current version of the bill, the minimum wage would increase as follows:

January 1, 2020, $11.50

January 1, 2021, $12.25

January 1, 2022, $13.10

January 1, 2023, $14.05

January 1, 2024, $15.00

The minimum wage would be indexed to inflation following.

Action Needed

AIV has 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 has 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 has also stressed 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 has 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.

It will be critical for legislators to hear from employers about potential issues and concerns with this legislation.

To review S.23 as it was passed by the Senate Economic Development, Housing, and General Affairs Committee and is currently before the Senate Appropriations Committee, click here.

To find contact information for the Senate Appropriations Committee, click here.

To find contact information for your Senators, click here.

To contact Senate President Pro Tempore Tim Ashe:  (802) 828-3806  |  http://protem.vermont.gov/contact