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Editorial: Waging the same old wage argument

  • Rep. Rob LaClair, R-Barre, speaks against a minimum wage bill at the Statehouse in Montpelier, Vt., on Friday, Jan. 24, 2020. (VtDigger - Glenn Russell)

Published: 3/7/2020 10:10:11 PM
Modified: 3/7/2020 10:10:09 PM

Before and after the Vermont House recently overrode Gov. Phil Scott’s veto of a bill raising the state’s minimum wage to $12.55 an hour by 2022, supporters and opponents had predictably different interpretations of the effect.

“This increase in the minimum wage will not end poverty as we know it,” said Rep. David Yacovone, D-Morrisville. “It will, however, help smooth the sharp edges of poverty and make life a little easier to tolerate for many.”

For his part, Scott, a Republican, echoed the concerns of many in his party in a statement issued after the vote. “My concerns for this bill — based on fiscal analysis from the Legislature’s Joint Fiscal Office — have been that the negative impacts on Vermont’s economy, workers’ hours and jobs will outweigh the positive benefits, especially in our more rural areas,” he wrote.

This perennial argument rages on in academic circles as well, although the preponderance of studies now conclude that a modest increase in the minimum wage has minimal effect on employment and a significant positive effect on low-wage workers. And “modest” certainly characterizes the $12.55 minimum legislators enacted, a $1.59 increase from the current $10.96 an hour. It stands in contrast to the $15 an hour minimum they passed in 2018, which Scott succeeded in killing with a veto.

But to be fair to the governor, a number of studies also point in the opposite direction: that a higher minimum wage negatively affects hours and jobs. Still others conclude that while the immediate effect on employment is minimal, long-term job growth is slower in states with higher minimum wages. And the concern Scott raises about the impact in Vermont’s most rural areas is not without merit. The economies of Chittenden County and the Northeast Kingdom could not be more different.

Given that this will not be the last time that raising the minimum wage comes before the Legislature, it would be an excellent time for lawmakers to gather the data needed to inform their decision-making in the future. Commissioning a five-year study by the University of Vermont of the current increase could shed light on its effect on employment in different parts of the state in terms of the number of minimum wage jobs and the number of hours worked at those jobs, both short- and long-term, as well as how workers were affected.

If indeed the impact, as Scott fears, proves to be a reduction in employment in rural areas, then the Legislature might consider an idea we first heard expressed by Rep. Tulsi Gabbard during her campaign for the Democratic presidential nomination: a tax break for small businesses struggling to pay their employees a living wage. If soundly designed, it could level the playing field with much bigger employers.

In the meantime, there’s a case to be made that a higher minimum wage does more than smooth the sharp edges of poverty in this new gilded age. There is increasing evidence that higher minimum wages also correlate with measures of well-being. Although more research would be needed to confirm the findings, three studies last year found that a higher minimum wage was associated with a decline in suicides, according to a review of the literature by the explanatory journalism website Vox.

And intriguingly from a business point of view, a recent study of nursing home administrative records over 25 years found that raises in the minimum wage boosted pay for nursing home staff, with a variety of positive outcomes for patients: fewer health code violations during inspections, fewer bedsores and a big reduction in mortality. It remains speculative why this occurred, but possible explanations include nursing homes’ ability to attract better qualified staff, increased motivation on the part of existing staff, or reduced profit margins that force greater efficiency.

So it could be that raising the minimum wage is not only a matter of dollars and cents, but also of dollars and sense.

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