Editor’s note: This commentary is reprinted with permission from the Ethan Allen Institute Blog.
An overwhelming 17 out of 20 Democrat and Progressive senators (85 percent) voted for a Vermont state minimum wage of $15 per hour. While raising the minimum wage might seem like a natural Democratic/Progressive thing to do, some Democrats were far more likely to buck their party — notably, those that represent counties along the New Hampshire border.
Fourteen of 15 Democratic senators representing Vermont’s non-New-Hampshire border counties voted in favor of the $15 minimum wage. However, of the five Democratic senators in counties along the New Hampshire border, only three voted in favor. During the minimum wage discussion over the first half of the legislative session, economists and representatives agreed that New Hampshire will likely keep its minimum wage at $7.25, regardless of whether Vermont adopts a $15 per hour minimum wage. We can’t know for certain what factors convinced John Rodgers (D-Essex-Orleans) and Robert Starr (D-Essex-Orleans) to vote against raising the minimum wage, but I’d be willing to bet that the massive wage gap that would exist between their constituencies and New Hampshire factored into the decision.
While businesses and workers all across Vermont will be harmed if the $15 minimum wage mandate passes, the repercussions in border counties will be much more severe. Grocery stores operating in New Hampshire with the flexibility to pay new workers $7.25 will have an unprecedented competitive advantage over Vermont grocery stores that have to pay new workers $15 an hour. This will force Vermont border businesses to make some tough decisions. And, if workers cannot generate $15 worth of value in their Vermont jobs, our lawmakers may be inadvertently forcing them to commute to New Hampshire to find employment.
Does this mean Vermont’s non-border senators made the right decision in voting so overwhelmingly in favor of a higher minimum wage? Not necessarily. The dynamics of supply and demand for labor in the non-border counties contain their own peculiarities. Vermont non-border businesses that sell high-volume essentials like groceries and gas would find themselves competing against businesses that also have the higher cost of labor imposed on them. Some of these businesses may have to shut down if they were making low profits before the $15 minimum wage kicked in, but they wouldn’t face the same competitive pressure as Vermont businesses set against New Hampshire border businesses.
That being said, workers making below $15 an hour in non-border counties could find themselves in a more difficult situation than workers in border counties. For them, the option of living close to friends and family in Vermont and working in New Hampshire is not really an option. They would have to uproot their lives in order to make the move. Or they could settle for an unemployment check every month.
Creating a one-size-fits-all wage for businesses and workers just getting into the workforce is akin forcing a group of people to all wear the same shoe size regardless of the size of their feet. For border businesses that have to cut back on hiring, but can remain in business, the minimum wage is indicative of a shoe that is painful to wear but better than nothing. For the young, less skilled workers who are unable to escape to New Hampshire, the $15 minimum wage becomes a jest akin to the government telling a worker they are better off wearing size 7 shoes for their size 10 feet. It is needlessly harsh and ridiculous on its face.