There are six different legislative proposals up for consideration by the Vermont General Assembly this session to raise the state’s minimum wage. Senator Michael Sirotkin, chairman of the Senate Economic Development Committee, is leading the charge to enact S.40 which hikes the wage to $15-hour over four years. He recently wrote an editorial citing a bipartisan committee report, which claimed raising the minimum wage would benefit the state and workers but result in very few job losses.
On behalf of nearly 1,300 small business owners who are members of NFIB in Vermont, I say, “Senator, there is evidence to show that won’t be the case!”
To see just how destructive such a mandate can be to low-wage workers, one needs only look at the recent experiment in Seattle. Politicians in that city were hailed when they raised the local minimum wage to $13, which is the second of three incremental increases to take that city’s wage to $15 per hour.
A recent study sponsored by the city of Seattle and conducted by the University of Washington found that nine months after the wage went to $13, about 5,000 low-wage jobs disappeared. It also found the number of hours worked by low-wage workers dropped by 3.5 million hours, and the average low-wage employee saw their paycheck drop by $125 a month. If Hollywood were writing this drama, it would be titled “Jobless in Seattle.”
A similar policy in Vermont will hurt workers in our state and the small businesses employing them. When employers face a mandated wage increase, raising the pay of employees who fall below the new minimum isn’t the only cost they face. There are also additional payroll taxes to be paid. If the wages of workers making above the new minimum aren’t also bumped up, productivity is likely to suffer. The business owner may not be able to afford these added costs, and the marketplace might not tolerate higher prices for the goods they sell.
A business owner faces hard choices. Jobs can be eliminated, hours cut, and remaining employees asked to take on more duties. The latest Seattle study appears to confirm those were the choices employers made.
When Vermont lawmakers consider raising the minimum wage here, it is crucial that they consider the unintended consequences. This recent study shows that the people they intend to help would actually be hurt. Raising the minimum wage was a bust for Seattle. We don’t want the sequel to play out in Vermont.
Article written by Shawn Shouldice of NFIB. Shawn Shouldice of Montpelier has represented NFIB, the leading advocate for small business, for 15 years. NFIB’s mission is to defend the right of small business owners to run their business without undue government interference and to advance public policies that promote their success.