The cost of inaction

Since July, the Minimum Wage Study Committee has spent a lot of time discussing the possible effects of raising the minimum wage. Their time might be better spent discussing the effects of not raising it.

In our 2016 State of Working Vermont report, Public Assets found that nearly 20,000 working families with children were not earning enough to meet their basic needs, including two-thirds of single parents. Even in families with two working adults more than a third were struggling to make ends meet.

At the core of any effort to raise the minimum wage is the goal of putting more money in low-wage workers’ pockets. While there are complicating factors that policymakers have to consider (benefit cliffs, timing, economic effects) the ultimate question has to be: Will this help make Vermont families better off?

The answer is yes.

Every two years, the Legislative Joint Fiscal Office analyzes the amount different family types require to meet their basic needs. They estimate the wages each earner would need in order to cover that family’s costs. The official Vermont livable wage is the average of the urban and rural amounts for an individual living in a two-adult household with no kids. In 2016, the livable wage was $13.03 per hour.

In 2016, the Vermont minimum wage was $9.60. As the table indicates, no one earning the minimum wage last year was meeting their basic needs without additional support. Even a single person in shared housing without children working full time could not make ends meet on the current minimum wage. And while the minimum wage will go to $10.50 in 2018 and grow with inflation after that, it won’t get closer to covering basic needs, which also grow with inflation.

The minimum wage is overdue for an increase as wages for most workers have been stagnant since 2000 despite economic growth. And the minimum wage is not getting closer to the livable wage; it’s been less than 75 percent of a livable wage since the Joint Fiscal Office started calculating the livable wage more than a decade ago. These are reasons enough to raise the minimum wage.

While it’s not the only policy change needed to ensure that every Vermonter can afford their basic needs, a significant increase in the minimum wage would definitely be better than doing nothing for the tens of thousands of Vermonters now struggling to pay for food, housing, and other essentials.

Posted by Stephanie Yu on October 3, 2017 at 10:15 am

4 Responses to “The cost of inaction”

  1. peter stromgren says:

    It must have been 15 years ago when there was a movement to bring a livable wage to VT. At that time the number this group was using was $13.75/hr. as I remember it. At the meeting I attended I asked the question what is the impact on state taxes if this wage was enacted. At the time they had no answer, but a few years later I learned it would increase tax revenues by $250 million. Where is this fact in the discussion.

    People need to make a decent wage. As I understand it these minimum wage numbers only enable enough funds to meet the basic necessities. There is no frivolous extras. The fear that the world will come to an end in VT if this is enacted is false. Workers with low anxiety because the family can eat and sleep without fear is a far better productive worker than one that doesn’t know from one day to the next how to make ends meet. Enough of the mantra that those in need are “takers”. They have a right to meet their basic needs.

  2. Lee Gelineau says:

    Although I sympathize with the plight of low income people, I really can’t see how raising minimum wage to these levels is going to be beneficial in the long run. I manage a Ben & Jerry shop here in Vermont and provide entry level jobs for a lot of young people. Financial restrictions aren’t going to allow us to pay them more than my supervisors now get. Those jobs will simply disappear because nobody is going to want to pay $8.00 for an ice cream cone. The inflation that this will cause will be detrimental primarily to the low income people it’s supposed to help; who wants to pay 20% more for groceries. You can’t freeze prices without causing economic disaster. What’s your answer to this?

  3. Stephanie Yu says:

    The minimum wage in Vermont is scheduled to go to $10.50 in 2018 and grow with inflation after that. There are a variety of proposals under consideration that would raise the wage on different schedules. The timing makes a big difference in terms of how dramatic the increases would be. The question to ask with any of these proposals is whether workers are getting better off or worse off. Minimum wage research has found consistently that the aggregate benefits of reasonable minimum wage increases outweigh the costs for low-wage workers.

  4. Marcee says:

    Supervisors and management should start out at no less then $18-$20hr.
    That’s still very low.
    Minimum wage does need to increase and not only here but in NH especially.
    Like look at me for example,
    I’ve done care giving for nearly 18 years and 8 of those years I held my LNA , until I broke my ankle and lost all of credits, and with 18 years experience, I am offered a starting wage of $12.75hr.
    Not at all fair. Once I pay gas money to get back and forth, insurance, a car payment, small portion of rent. I end up at the food shelf to get food enough for about 1 week. If it weren’t for help from family I probably wouldn’t eat the rest of the month. Add in my phone bill and electricity…. etc
    And thank God I don’t have young children anymore…. how would I care for them? Cost of living needs to dramatically decreased OR wages need to dramatically increase. Either way, something needs to happen!

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