Vermont's minimum wage set to rise again next year

(The Center Square) — Wages will rise for hundreds of thousands of low-skilled workers in Vermont next year under a law that pegs the state's wage floor to the federal inflation rate.

Beginning Jan. 1, Vermont's minimum wage will rise from $13.18 per hour to $13.67 per hour as a result of the state's mandated economic adjustment, according to the Vermont Department of Labor.

For a full-time worker earning the minimum wage, the rate hike will mean another $25.20 per week in their pockets before taxes, or about $1,310 more a year, state officials said.

Meanwhile, the minimum wage for tipped employees will increase from $6.59 to $6.84 per hour. Tipped workers get a base pay equal half of the state's minimum wage.

The state's minimum wage has gradually risen over the past several years under a law approved by the Legislature in 2020, when the minimum wage was $10.96 per hour.

The law required the first two increases, to $11.75 in January 2021 and $12.55 in January 2022. After that, it was calculated in proportion to the Consumer Price Index.

Business leaders argue that regular wage hikes put the squeeze on many smaller employers, prompting belt-tightening, layoffs and ultimately higher prices for consumers.

But advocates for low-skilled workers argue that the increasing minimum wage hasn't kept pace with the state's high cost of living and record-high inflation that has driven the cost of food and other necessities.

A 2022 report by Vermont's Joint Fiscal Office estimated that a "liveable wage" in the state in 2022 for a two-person household with no children and employer-sponsored health insurance was $15.33 per hour. For a single parent with two children, the liveable wage was $45.92 per hour, according to the report.

A Democratic-sponsored state Senate bill calling for an increase in the state's minimum wage to $15 an hour by 2025 was filed earlier this year but doesn't appear to be gaining traction.

Another Democratic proposal filed in the House calls for hiking the wage floor to $19.45 per hour, which remains stalled in a legislative committee.

Gov. Phil Scott, a Republican, has vetoed several bills in recent years seeking to raise the wage floor, most recently in 2020 when he rejected the plan to index the rate to the price index.

He raised concerns about the "unintended consequences" of the hike and argued against "arbitrarily forcing wage increases" that would put the squeeze on employers, which was proposed during the height of the COVID-19 pandemic.

But House and Senate Democratic leaders ultimately overrode Scott's objections to approve the changes.