Montpelier, Vt. – Governor Phil Scott today vetoed S.23, a bill that would have mandated an increase to Vermont’s minimum wage. This mandate would have been on top of increases that already occur annually under current Vermont law.
In his veto message (included below) the Governor outlined his primary concerns with a mandated increase, which are:
Fiscal analysis projects job losses, decreases to employee hours, and increased costs of goods and services, which will offset the intended positive benefits for workers;
These harmful impacts will be felt more significantly in rural parts of the state, worsening economic inequity between counties; and
There will be an overall negative impact on economic growth.
“It’s critical to recognize that we share the goal of Vermonters making more money. I also believe Vermonters should keep more of what they earn, which is why I can’t support policies that increase the costs of living,” said Governor Scott. “Despite S.23’s good intentions, the reality is there are too many unintended consequences and we cannot grow the economy or make Vermont more affordable by arbitrarily forcing wage increases. I believe this legislation would end up hurting the very people it aims to help,” he concluded.
The Governor’s veto message to the Legislature is included below:
“Pursuant to Chapter II, Section 11 of the Vermont Constitution, I am returning S.23, An act relating to increasing the minimum wage, without my signature because of my objections described herein:
“It’s critical to recognize that we share the goal of Vermonters making more money. I also believe Vermonters should keep more of what they earn, which is why I can’t support policies that increase the costs of living.
“My objection to a mandated increase to the minimum wage is based on three primary concerns:
- Fiscal analysis projects job losses, decreases to employee hours, and increased costs of goods and services, which will offset the intended positive benefits for workers;
- These harmful impacts will be felt more significantly in rural parts of the state, worsening economic inequity between counties; and
- There will be an overall negative impact on economic growth.
“These concerns are reinforced by data and analysis from regions where mandated increases have taken effect, and – importantly – by the Vermont Legislature’s Joint Fiscal Office, which predicted, if implemented, this bill could cause job losses, reduced hours, and higher prices.
“Based on our own experience with mandated minimum wage increases in recent years, Vermont data shows that increases to hourly rates do not guarantee an increase to weekly or annual earnings for Vermont workers.
“The Legislature’s economist, Tom Kavet, also reported a mandated increase would have a more harmful economic impact in our more rural regions.
“From workforce declines to overall economic recovery – or lack thereof – most of the state has simply not kept pace with Northwestern Vermont, particularly Chittenden County. A statewide mandated wage increase would exacerbate this regional economic inequity.
“For example, a local mom and pop store in Monkton, Albany or Richford, already struggling to stay open, is far less able to absorb an increase than a retailer with a higher volume of sales in the Burlington area. That means workers in these areas are more likely to be impacted by the predicted job losses or reduced hours, and small, locally owned businesses will feel an even greater burden. We must ask ourselves what our struggling communities might look like with more empty storefronts.
“Even New York recognized its own regional inequity when raising the minimum wage, carving out four discrete regions, which account for the different economic circumstances in different parts of the state. We must recognize we have two Vermonts with distinct economies.
“Finally, I’m concerned with the overall economic impact to the state. The Legislature’s JFO predicts a negative economic impact, specifically through a slight reduction in Vermont’s Gross Domestic Product.
“Vermont has one of the highest minimum wage rates in the country – which already increases annually – and yet employers across the state struggle to fill positions. If the minimum wage was directly correlated to economic prosperity and workforce growth, Vermont would have a stronger economy and a larger workforce than New Hampshire.
“Despite S.23’s good intentions, the reality is there are too many unintended consequences and we cannot grow the economy or make Vermont more affordable by arbitrarily forcing wage increases. I believe this legislation would end up hurting the very people it aims to help.
“Based on the outstanding objections outlined above, I cannot support this legislation and must return it without my signature pursuant to Chapter II, Section 11 of the Vermont Constitution.”