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Posts tagged ‘minimum wage’

Can You Live on $8.73 an Hour? Supporting an Increase in the Minimum Wage

April 15, 2014


Can you live on $8.73 an hour? Especially if you are not allowed to work 40 hours at that rate, with no job-related benefits? That is the current minimum wage, and on April 9, the House passed H.552, which proposes to raise the minimum wage to $10.10 in January 2015. $10.10 is the current level proposed by legislation at the federal level, but it, and a proposal by Governor Shumlin, is to phase this in over three years.

The stark reality is that you cannot live easily on $8.73 an hour, especially if you have children. You will need SNAP benefits (federal food stamps, which are constantly threatened by budget cuts), child care subsidies, heating assistance and the earned income tax credit. The federal and state governments do provide relief through these types of programs, but no one who receives them will tell you that they add up to a livable wage.

My committee, the General, Housing and Military Affairs committee, passed this bill out of committee on a 6-2 vote, and we to implement the rise in the minimum wage in one year for a number of reasons. First, our current minimum wage has an inflation rise built into it, and so it rises every year at a rate between 5% and, on the lower side, the rate of inflation. Since it went into effect, inflation has been less than 5% every year. Nevertheless, if we did nothing with the minimum wage, it would be about $9.35 in 2017, meaning that the minimum wage increase would be a net of 75 cents over three years for Vermonters. (It would be larger in parts of the country where they adhere to the federal minimum, $7.25.) Conversely, a wage of $10.10 raised in 2015 but in effect in 2017, when adjusted for inflation, has a buying power of about $9.60 in 2015 dollars, meaning that the net effect is a 25 cent raise over three years. We chose to propose raising the minimum wage in 2015 because it would represent real dollars in real time. Read more