Is The $15 Minimum Wage A Good Idea For Vermont?
What say you?
The Vermont Senate on Friday passed a bill that would incrementally increase the state’s minimum wage over the next six years, from the current level of $10.50 per hour to $15 in 2024. The bill now moves to the House. Governor Phil Scott has indicated that he will not support the legislation as written.
• Fairness. Raising the minimum wage will mandate raising the wage of any worker we currently employ by roughly the same dollar figure ($10.50 to $15, or $4.50 more per hour). This is a matter of fairness — we wouldn’t expect a dedicated employee of five to 10 years to make the same as a new hire. Pretty much every employee would receive an increase of $4.50/hour. In other words staff making $17/hour now would need to move to over $20/hour.
• Prices Increases. Our business already pays well above the current minimum wage except for high school students who are working for the first time. In the last year, we had a little over 110,000 hours of payroll. For us, with an increase in the minimum wage of $4.50/hour, our payroll expenses would go up by about $450,000 in just six short years for that factor alone. Our net operating profit the past three tax years has been nowhere near enough to cover that type of expense increase, so to survive, we will have to implement some significant price increases and/or staff reductions to maintain a profitable entity.
• Reducing Benefits. A dramatic increase in minimum wage will dramatically alter the benefits we offer. We currently offer many benefits including a fully paid staff lunch, 2 percent match on Simple IRA accounts, 20 percent discount on all store purchases, gym membership contributions, and a significant contribution to health insurance premiums. We would need to consider paring back these programs to pay for the additional increase.
• Reducing Bonuses. We currently practice open book finance. As part of that we offer a gain share on the net operating profit of the business. Last year we shared $48,000 out of our total net operating profit of $178,000. We would need to consider paring this benefit back to help cover the added payroll expense. Additionally, we would need to re-evaluate how we can reduce the overall number of people we currently employ. More automation and thus less labor is a significant way to reduce expense. This type of action would be magnified across the state and may lead to fewer available jobs.
• Inflation Pressures. Don’t get me wrong. We do need to continue to raise the minimum wage here in Vermont. Placing more money in the pockets of our state’s overall economy is a big deal. Vermont has actually been very thoughtful about this issue up to this point. A more gradual process, mirroring the increase we have seen over the past five years from $8.50 to $10.50 per hour, would continue this line of thinking. A 23.5 percent increase of $2 per hour over five years is much more feasible than a 42.9 percent increase of $4.50 per hour over six years. But the decision to increase the minimum wage by $4.50/hour in such a short period of time will fuel inflation within the state. Every employer will have to raise prices to cover the added expense. It will trickle down to every sector of the economy.
What say you?