Maryland Becomes Sixth State To Pass $15 Minimum Wage, Vermont To Follow
Apr 6, 2019, 04:46pm
As Maryland Becomes Sixth State To Pass $15 Minimum Wage, Vermont Lawmakers Look To Follow Suit
Patrick Gleason Contributor
PolicyI cover the intersection of state & federal policy and politics.
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The Vermont State House in Montpelier, Vermont, USA.
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MONTPELIER, Vt. — Days ago Democrats who control the Maryland statehouse overrode Governor Larry Hogan’s (R-Md.) veto of legislation that raises the state minimum wage to $15.00 per hour, up from $10.10. In explaining his opposition to the measure, Governor Hogan stated that for his state the hike will “cost us jobs, negatively impact our economic competitiveness, and devastate our state’s economy.”
Now Democrats who run the Vermont legislature are taking action to join their Maryland counterparts in imposing a $15 minimum wage.
Like their fellow partisans in Annapolis, Vermont Democrats may have to override a Republican governor to do so.
Vermont lawmakers most recently raised the state minimum wage in 2014, when then-Governor Pete Shumlin (D) signed legislation raising the minimum wage to $10.78. Now Vermont lawmakers are considering another increase with S.23, a bill that would raise the state minimum wage to $15 per hour, a nearly 40% hike from the current level. That bill passed the Vermont Senate on February 28 by a vote of 19 to 8.
In addition to Maryland, the other states where a $15 minimum wage has been enacted include New York, California, Illinois, Massachusetts, and New Jersey.
The debate over whether Vermont will become the seventh state in the U.S. with a $15 minimum wage now moves to the Vermont House of Representatives, where Democrats hold a 98 to 43 majority. Republican leadership in that chamber has already voiced opposition to the proposal.
“This sounds nice, giving low-income workers a raise; however, there are some significant consequences to this that the proponents of the bill and the media are not telling Vermonters,” Representative Patricia McCoy (R-Poultney), the Vermont House Minority Leader, writes in an op-ed published this past week.
While proponents of raising the minimum wage may think they’re helping the poor, as Representative McCoy explains, the majority of Vermont’s poor will not benefit from a minimum wage hike:
The majority of Vermonters living in households classified as ‘poor’ do not have earned income. These are seniors, living on Social Security and other fixed income sources, or people reliant on social safety net programs. They will not benefit from an artificial wage increase rather they will be harmed by the inflationary effect of the wage increase as the prices for the goods and services they need increase as a result.”
In the few states where a $15 minimum wage has been imposed, some employers and employees are already being negatively affected. "New York City restaurants are eliminating jobs, reducing employee hours and raising prices due to the higher costs of the $15-per-hour minimum wage," the New York Post's Greg Bresiger reports.
Seniors can also expect a cut in medical services as a result of the $15 minimum wage as, for example in Vermont, higher labor costs for healthcare workers will cause an estimated $50 million in new Medicare and Medicaid costs that will have to be made up for with cuts elsewhere.
Another area the $15 minimum wage will wreak havoc is with childcare costs. One Vermont childcare center estimated that the wage increase would force her to raise prices $40 per week per child. On top of that, among wage earners who would benefit from a higher minimum wage, that boost, explains McCoy, will be offset by a reduction in means-tested benefits. In her article, Representative McCoy writes about how Vermont’s Joint Fiscal Office “calculated that a couple working full time in minimum wage jobs with one child in care would see an annual income increase by $1,155 in the first year of proposed minimum wage increases, but they would lose $1,334 in benefits.”
High Minimum Wage Disproportionately Harms Rural Communities
President Donald Trump is spending time this weekend in the first state to enact a $15 minimum wage: California. California’s minimum wage hike is being phased in over a couple of years, hitting $15 in 2022. Conveniently for former Governor Jerry Brown (D), who enacted the minimum wage hike while acknowledging that it doesn’t make sense from an economic standpoint, the damage to employers and the Golden State economy won’t become evident until long after he left office.
Opponents of California’s minimum wage hikes point out the disproportionate harm it will do to lower-cost, rural parts of the state.
Unfortunately for El Centro and other rural and agricultural parts of California, economic development and job growth is about to become more difficult,” writes Chuck DeVore, former California state senator and now Vice President at the Texas Public Policy Foundation. “That’s because the state passed a minimum wage law in 2016 that imposes a uniform minimum wage, regardless of the vast cost-of-living differences in the most-populous state of 40 million people.”
Ethan Allen Institute president Rob Roper points to a new study out of California that demonstrates how a minimum wage hike will adversely affect the Vermont economy. According to the analysis examined by Roper, “the industries most negatively impacted by minimum wage increases proved to be accommodation/food services and retail trade (55% low wage), followed by agriculture, forestry, fishing and hunting (46% low wage).”
That right there,” adds Roper, “is a pretty good description of a huge part of Vermont’s economy, and we do not have Silicon Valley here to compensate.”
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Minimum Wage Hikes Make Already Unsustainable Entitlement Programs Even More Costly To Taxpayers
Raising the minimum wage also saddles state entitlement programs, which are already growing at an unsustainable clip, with millions of dollars in additional cost. The Ethan Allen Institute has been highlighting this reality about the $15 minimum wage under consideration in the Green Mountain State, pointing to testimony underscoring this fact:
The Vermont Department of Disabilities, Aging & Independent Living (DAIL) testified that if the Vermont legislature were to adopt a $15 minimum wage, as is seems poised to do, ‘it may also result in unintended consequences.’ That’s an understatement,” Roper writes. “The report submitted that the increased price for labor would cost Medicaid $41,904, 930 and Medicare $9,086,865.”
In addition to piling higher costs on already unsustainably entitlement programs, Roper breaks down how a $15 minimum wage would do the most harm to senior citizens, and be particularly burdensome for young families by applying upward pressure on the cost of childcare, which is already a large burden for many households.
Even lawmakers who have supported legislation to raise the minimum wage acknowledge that it is not a victimless action. Take Maryland Delegate C.T. Wilson (D-Charles), who voted for the minimum wage hike recently enacted in Maryland.
Delegate Wilson described the change as “a little bit of a soft punch in the gut” to Maryland businesses.
As the Ethan Allen Institute and others have made clear, rather than a soft punch to the gut, imposing a $15 state-mandated minimum wage is more like a full body blow to small businesses and rural communities. It is also a policy that will lead to economic hardship for young families and senior citizens. We’ll soon find out in the coming weeks whether lawmakers in Vermont decide to join their blue state counterparts in slugging employers and consumers in the gut with a $15 minimum wage.
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