MINIMUM WAGE INCREASE COSTS SMALL BUSINESS $30 MILLION

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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