Minimum Wage Increase Costs Small Business $30 Million

Date: April 16, 2014

The Vermont House of Representatives passed H.552 by voice vote on
April 9, and sent the bill on to the Senate for consideration.  H.552, would raise Vermont’s minimum wage to
$10.10 per hour beginning January 1, 2015. 
The 2015 timeline represents a far more aggressive pace than the one
called for by Governor Shumlin, who had proposed a three year phase in that
would not reach the $10.10 mark until 2017. 
Representative Helen Head, D-South Burlington, who chairs the House
Committee on General Services, Housing and Military Affairs praised the passage
of H.552 and stated:  “This bill is an
effective step in helping Vermont’s low-income workers support their families
and will enable people to put that money back into the state economy by
spending at local businesses.”  Much of
the opposition has been voiced by NFIB/VT; who has been consistent about the
deal that had been supported by elected officials when the Cost of Living
Adjustment went into effect on 2007. 
Most other business organizations have remained neutral on Governor
Shumlin’s proposal for the three-year phase in to $10.10.  Other have raised against H.552 because of
their concern over those Vermonters currently on state aid falling off the
“benefit cliff” due to the higher wage.

H.552 faces an uncertain future as it moves to the Senate.  Senator Kevin Mullin, R-Rutland, chairman of
the Senate Committee on Economic Development, Housing and General Affairs has
already begun to raise questions that his Committee plans to address.  Mullin remarked, “…what happens with the
Earned Income Tax Credit, what happens with state benefits programs, things
like that. We’re concerned that we don’t want to kick somebody off a (benefits)
cliff so that they’re actually going to end up in a worse position.”  The Senate will surely be considering the
state economists economic analysis by Tom Kavet which found that about 22,000
Vermont workers earn less than $10 an hour. 
The analysis also cited that raising the minimum wage to $10.10 would
generate about $30 million in aggregate costs to business and result in about
250 fewer jobs.

For his part, Governor Shumlin seemed to remain committed to the 2017
timeline he originally suggested.  During
the House debate he stated:  “I believe
that our proposal gets us where we need to go in a careful enough way so it
doesn’t displace jobs as we go there,” and that the 2017 timeline is “the best
way, the most responsible way, to raise wages for folks who are working hard
but aren’t making enough money.”

NFIB/VT will continue to urge the legislature to leave the minimum wage
law as is, given the $30 million increase cost to small businesses and the
potential for job loss particularly at a time when Vermont’s economy is growing
at a rate of less than one percent.

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