With House bill 770, Moran and his colleagues are aiming to set what they call a “livable wage rate,” at no less than $15 per hour, beginning January 1, 2016. This amount would be increased annually by 5%, or the percentage increase of the consumer price index’s US city average, as calculated by the US Labor Department, depending on which is smaller. The minimum wage for a tipped employee, such as those who work in restaurants, would increase to $7.25 an hour.
“It’s an ambitious bill,” said Moran. “The number one problem we’re facing is economic inequality across the state and the nation. By raising the minimum wage, we would increase the purchasing power of many people, who are therefore able to spend more money in the mom and pop stores than they do now. Some call it disposable income, but it’s really necessary income for buying milk and bread, too.”
H. 770 is one of two bills that Moran is co-sponsoring in regard to raising the minimum wage. Another bill, H. 552, proposes a raise to $12.50 an hour, with tipped employees earning $6.65 per hour. Vermont currently has the third highest minimum wage in the country at $8.73 an hour, behind Washington and Oregon. With President Obama making clear his push to raise the federal minimum wage during last month’s State of the Union address, Vermont, 13 other states, and the District of Columbia have joined in, introducing legislation on the issue. By introducing multiple bills, Moran and his colleagues want to begin the process of looking at all avenues for combating income inequality.
Moran believes that raising the minimum wage to a “livable” rate will benefit all Vermonters, because taxpayers are forced to supplement income through programs like the earned income tax credit, and the low income home energy assistance program. “We’re not just aiming at people who make $8.63 an hour,” said Moran. “A lot of people in my district work in the service industry, which is not a high paying industry, but they aren’t making the minimum wage either. Some still need to be supported by the government. It’s difficult to go on $10 an hour and raise a family.”
Moran said that the minimum wage hike is still an idea and the $12.50 proposal is currently being studied to see what affect it would have on recipiants’, benefits, as well as the overall economy in the state.
According to University of Vermont professor of economics Arthur Woolfe, the establishment of a higher minimum wage is not a solution for helping lower income families, or those individuals currently earning the minimum wage as well as those already earning $15. Woolfe, whose area of expertise includes Vermont economics as well as state and local public policy, says that minimum wage workers only make up at the most 5% of the state labor force, half are under 25 years old, and most do not live in poor households. Woolfe believes that tax-subsidized programs like the earned income tax credit are already proven, working change agents.
“We should target people actually trying to live on low wages, and we already do,” said Woolfe. “We have policies and programs that do just that and are much better programs than raising the minimum wage.”
Woolfe also said that raising the minimum wage to $15 or even $12.50 would cause employers to make cuts to their workforce, and retail stores and restaurants would take the biggest hit. Woolfe said that business will be forced to do any or all of three things: Take money from profits to pay wages, raise their prices, and cut the labor force. “Retail and dining have two of the lowest profit margins in the US,” said Woolfe. “The people who remain employed are happy to get 15 hours, while others are working less than they were before. They were willing to work for $8.73 an hour for 30 hours, now they can only be employed for five hours a week, and you have a lot of people who were willing to work but now can’t.”
While Woolfe says that he believes the minimum wage is not necessary at any rate, he believes that those jobs that hire at minimum wage are important in their ability to teach people skills through workforce development. Moran said that this is a myth as those jobs try to train employees to prepare for higher quality jobs, but the higher quality jobs are simply not there anymore.
One opponent of such a drastic raise in the minimum wage is Adam Grinold, executive director of the Mount Snow Valley Chamber of Commerce. Grinold, who is also the owner of Wahoo’s Eatery in Wilmington, says that while he doesn’t believe that legislators would ever approve such a raise, the livable wage debate being held on a national level does not always translate locally, or to individual small businesses. “For our business model, $15 an hour just would not work,” said Grinold. “There are set formulas for what you charge a person for a product. In order to pay all employees $15, that can only come from one place, and that’s increasing sales.”
Grinold also said that in an area with the economic challenges of the Deerfield Valley, the relationship between the employer and the employee is the most important tool. “For any business, the number one product is its employees,” said Grinold. “The argument you hear about livable wage on a national level is about allowing companies like Walmart to pay their hard-working employees so little. That argument does not work in a small business environment like we have here.”
While he admits he has not fully formed his opinion on the matter, Sen. Bob Hartwell says that the subject of income inequality is about helping those who work hard for little pay become a stronger piece of the economy and achieve a higher standard of living. “It needs to be looked into,” said Hartwell. “My concern is if it is imposing on really small employers. If all of a sudden the wage is $12, I don’t doubt our workers are worth that, but can a small market afford that. But with larger firms we have to wonder if all employees are paid honestly for what they work.”
Aside from minimum wage increases, H.770 is proposing more elements of what it refers to as an “Economic Bill of Rights.” This includes provisions for paid family leave, turning Vermont from an at-will employment state into a just cause employment state, and creating a rental housing registry.
Paid family leave is another part of the bill that Moran believes is ambitious. According to Moran, the federal government has rules stating you can keep your job when family leave is taken, but it is not paid time. H. 770 would create a “Paid Parental Leave Fund” consisting of a 0.63% contribution deducted from an employee’s wages. Moran calls this idea a self-insurance plan, and said that the 0.63% was just a working number at this time. An employee will be required to provide ample notice for their leave period and will be required to file an application for the benefits of the program, by which eligibility will be determined. An employee awarded benefits under the program would receive their average weekly wage.
Turning Vermont into a just cause place of employment is another of the bill’s focal points. Moran says that Vermont allows employers to terminate employees without just cause, creating an at-will work culture. This bill proposes creating an understanding that employees have protection from being fired at will. “You can be fired at any time for any reason besides discrimination,” said Moran. “If an employer vets you and hires you, and you make the proper changes and go somewhere new, there needs to be an understanding between the employer and you that they can’t turn around and say ‘No, I don’t want you working for me anymore.’”
Rep. Moran and Sen. Hartwell will be at the chamber’s legislative breakfast Monday morning at Dot’s of Dover.