March 19, 2019

Minimum wage hike harmful

There are six different proposals up for consideration by the Vermont Legislature to raise the state’s minimum wage. Sen. Michael Sirotkin, chairman of the Senate Economic Development Committee, is leading the charge to enact S.40, which would hike the wage to $15 per hour over four years.

He recently cited a bipartisan committee report claiming raising the minimum wage would benefit the state and workers and result in very few job losses. But 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 per hour, which is the second of three incremental increases to take that city’s wage to $15 per hour.

A University of Washington study conducted nine months after the wage went to $13 found about 5,000 low-wage jobs disappeared. It also found the number of hours worked by low-wage workers dropped by 3.5 million, and the average low-wage employee saw their paycheck drop by $125 a month.

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.

Jobs can be eliminated, hours cut and remaining employees asked to take on more duties. Those appear to be the choices Seattle’s employers made.

It is crucial that Vermont lawmakers consider the unintended consequences of raising the minimum wage. The Seattle study shows that the people they intend to help would actually be hurt.

Shawn Shouldice

National Federation of Independent Business


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