FAQs & Figures
Minimum Wage Questions
8. What is the minimum wage in Vermont?
9. Are there other states with higher minimum wages?
10. What is a COLA?
11. Isn't it mostly just young people starting out who aren't earning livable wages?
12. I never thought the minimum wage was supposed to be a livable wage.
13. Increasing the minimum wage will be good for businesses.
14. Plus, it's fair.
15. Increasing the minimum wage will be good for taxpayers.
16. Won't increasing the minimum wage make it harder for Vermont businesses to compete with New Hampshire and other border states?
What is the minimum wage in Vermont?
Currently
the minimum wage in Vermont is $7.53 an hour ($15,662 /yr. (2007)). In
the future, it will increase every Jan 1st based on a cost-of-living
adjustment (COLA) using the national CPI-U (Consumer Price Index-Urban)
figure. Nationally, the minimum wage is $5.15 an hour ($10,712
/yr.). The minimum wage is important even to those earning considerably
above it. Because the minimum wage sets a limit on how low wages can go
for most people, it also sets the starting point for where wages move
up from. Since the minimum wage is so low, it helps keep wages in
general lower -even for those of us earning in the $8 to $9 an hour
range. If
the wage had just kept pace with inflation since 1969 when it was a
$1.60 an hour, minimum wage would be $8.00 an hour in 2005. However, because it has not, the extremely low minimum wage is helping to pull wages down for everyone.
Are there other states with higher minimum wages?
Yes.
Several states have higher minimum wages than Vermont. Vermont's rate
is the fourth highest rate in the country as of January 2007. Many
state legislatures are currently debating increases to their state
minimum wage rates. For the most up to date list of state rates go to: http://www.dol.gov/esa/minwage/america.htm
New England |
General MW |
Connecticut |
$7.65 |
Maine |
$6.75 |
Massachusetts |
$7.50 |
New Hampshire |
$5.15 |
New York |
$7.15 |
Rhode Island |
$7.40 |
Vermont |
$7.53 |
| States with Higher Minimum Wage Rates than the Federal Minimum Wage of $5.15 | Minimum Wage Rate (as of Jan 2007) |
| Alaska | $7.15 |
| Arizona | $6.75 |
| Arkansas | $6.25 |
| California | $7.50 |
| Colorado | $6.85 |
| Connecticut | $7.65 |
| Delaware | $6.65 ($7.15 on 1/1/2008) |
| District of Columbia | $7.00 |
| Florida | $6.67 |
| Hawaii | $7.25 |
| Illinois | $7.50 |
| Maine | $7.00 |
| Maryland | $6.15 |
| Massachusetts | $7.50 |
| Michigan | $7.15 ($7.40 on 1/1/2008) |
| Minnesota | $6.15 |
| Missouri | $6.50 |
| Montana | $6.15 |
| New Jersey | $7.15 |
| New York | $7.15 |
| North Carolina | $6.15 |
| Ohio | $6.85 |
| Oregon | $7.80 |
| Pennsylvania | $7.15 |
| Rhode Island | $7.40 |
| Vermont | $7.53 |
| Washington | $7.93 |
| West Virginia | $6.55 |
| Wisconsin | $6.50 |
What is a COLA?
A
cost of living adjustment (COLA) is a tool used to increase wages based
on inflation. The Consumer Price Index (CPI) is used to adjust dollar
values for inflation. There are several ways to calculate a COLA for
the minimum wage rate. Some states, such as Washington, base their COLA
for the minimum wage rate on changes in the Consumer Price Index for
Union Wage Earners and Clerical Workers (CPI-W). In other cases, such
as the Federal Poverty Measure, an alternative CPI is used to calculate
annual increases. There are currently minimum wage COLA's in Vermont,
Oregon, Washington, and Florida.
Isn't it mostly just young people starting out who aren't earning livable wages?
This
is a favorite argument of businesses- the only people earning the
minimum wages or low wage in general are teenagers living with their
parents. But it just isn't true. According to the phase 8 of the
Vermont Job Gap study, Sixty-one percent (61%) of all year round full
time workers in Vermont who earned less than $15,000 ($7.20/hr) in 1999
were over 29 years old. Over 10,000 full time workers over 29 earned less than $15,000 per year.
I never thought the minimum wage was supposed to be a livable wage.
When
originally passed as part of the Fair Labor Standards Act in 1937, the
minimum wage was supposed to be enough for one working parent to
support a family of four. President Franklin Delano Roosevelt declared,
"No business which depends for its existence on paying less than living
wages to its workers has any right to continue in this country. By
living wages I mean more than a bare subsistence level-I mean the wages
of decent living."
Won't increasing the minimum wage lead to inflation with prices going up and mean that people end up no better off than before?
There
is no good evidence one way or the other that increasing the minimum
wage will lead to increase inflation. There are examples over the last
thirty years when wage hikes did not spur inflation and other times
when inflation occurred with no wage hikes.
In any event, what does it tell us that we are always hearing from politicians, business organizations and the media about the possible inflationary effects of increasing wages at the low end of pay scale but no concern is mentioned about the effects of the enormous concentration of wealth by the richest Americans, or the obscene speed at which pay for corporate executives is increasing.
The average annual compensation of a CEO of a large company in 1998 was $10.6 million, 419 times what the average worker makes, according to the organization United for a Fair Economy. That ratio has risen from 49 times to 1 in 1980. Had workers' pay risen at the same rate, the average worker would earn $110,000 today, not the $29,000 that an average worker makes. Had the minimum wage increased at the same rate as CEO pay, it would be $22.08 today, according to the Institute for Policy Studies. (Washington Post, 8/30/99)
The bottom line is that inflation is constantly on the rise, whether workers get a wage increase or not. Blaming inflation on those who make the least is nothing short of shameless. Since the last time the minimum wage was raised nationally in 1996 the economy has created 3.9 million new jobs and inflation has fallen from 2.7% to 1.9%--its lowest level in a generation. According to John Schmitt, an economist with the Economic Policy Institute in Washington, D.C., "The fact is that we have seen and will continue to experience price increases in cities and nationwide that have little or nothing to do with the minimum wage. In reality, proposed efforts to raise the wages of America's lowest paid workers will help wages catch up with price increases that are happening independent of wage fluctuation."
Increasing the minimum wage will be good for businesses.
We
all know that when we have more money we will spend more. This will
work with a minimum wage increase too. Higher wages will mean more
discretionary income that people can choose what to do with. So while
businesses will have to pay that higher wage, they will get their money
back in increased business. This money will circulate in the economy
and multiply, leading to increased economic growth for everyone.
Plus, it's fair.
Right
now businesses paying a livable wage because they believe it's the
right thing to do have to compete with businesses that don't. This will
put all businesses on a level playing field and allow businesses to
compete on the basis of the quality of their products and service.
Increasing the minimum wage will be good for taxpayers.
When
people are paid below a living wage, they are forced to receive public
assistance or go without necessities. This helps drive up taxes for
everyone. If businesses paying a living wage directly to employees, it
could mean lower taxes for everyone.
Won't increasing the minimum wage make it harder for Vermont businesses to compete with New Hampshire and other border states?
No.
A 1992 study by Princeton University economists examined changes in
employment at 410 fast food restaurants on the border area of New
Jersey and Pennsylvania before and after New Jersey increased its'
minimum wage from $4.25 to $5.05-a 18.8% increase. Their study found no
significant differences in employment in these businesses after New
Jersey raised the minimum wage.
Soon there will be a Job Gap Study that determines livable wage amounts for Maine and New Hampshire, and will provide us with much more information on this issue. Preliminary results show that Maine's livable wage levels are comparable to Vermont's. Perhaps, instead of competing among the northern New England states, we could work to pass minimum wage rates that are similar across the region.
FAQs & Figures
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