and welcome everybody we're here to kick off testimony on s40 minimum wage hearing from Damien and Joyce about some of the background information I appreciate you're being here and when you're ready let's go thank you for the record Damien Leonard Legislative Council. I'm Joyce Mantis we're joined people. So the way the presentation is going to go this morning is I'm going to walk you through Vermont's current minimum wage and a little bit of a history about the minimum wage and Joyce and I are going to talk about the income distribution in Vermont and the Vermont livable wage and I'll talk to you a little bit about minimum wage legislation across the United States and states that have recently increased their minimum wage and we'll go through a comparison of recent minimum wage increases do a walk-through of s40 if we get that far this is originally planned for yesterday when we have three hours so and Joyce will walk you through an overview of some of the economic analysis related to wage increases under s40. Oh dear, is that already starting? Okay. I'll just invite any members of the audience who can't see to move around toward this side of the room Isaac and Dennis can you see this projection? If you're following along on a device this should also be posted on the community's website. Okay so Vermont's minimum wage is currently 1050 per hour for most employees under current law the minimum wage will annually increase by the percentage increase in the consumer price index or 5% whichever is less beginning next January 1st. Service or tip to employees must receive at least one half the minimum wage from their employer before tucks and just to be clear if the individual doesn't reach minimum wage with their tips and the base wage combined the employer has to bring them up to minimum wage at least and then a service or tipped employee is an employee in a hotel motel tourist place or restaurant who customarily regularly receives at least $120 per month in tips for direct and personal customer service and the words like tourist place are defined in our regulations they're not defined in the statute. Excuse me representative Fields you may want to move around either here or or here because of the projection if that's that works for you. So on the next slide here I apologize for what is probably fairly logical print for most of us the this is the current statute governing the minimum wage without going into depth on it the top part of it sets out the minimum wage then their bottom half sets out the tipped wage and there's the proviso in there that if the US government ever sets a minimum wage that's higher than the state minimum wage we default to that and we would be preempted even if we didn't have that language and have to default to the higher of the two wages. The federal minimum wage right now is 725 so no danger of being preempted in that clarification yeah so the federal minimum wage also hasn't increased in a number of years so and we'll have a little bit of history of that coming up so the federal minimum wage started out at 25 cents per hour back in 1938 it's currently 725 per hour. Vermont enacted its own minimum wage in 1959 at a rate of one dollar per hour and for a number of years Vermont's minimum wage kind of increased in increments similar to the federal minimum wage where typically it would catch up or go slightly ahead and then fall behind and then catch up again and in nominal terms so in just raw dollar terms from 1959 through 2016 the wage increased by an average of 4.6 per year when you adjust that for inflation by the CPI though it was just an average of 0.8 percent per year so this next slide here which I can see is blacked out on the screen again and if you look online this will be easier to read this is a history of every minimum wage increase in Vermont all the way back to the enactment of the federal minimum wage in 1938 so the federal minimum wage increases outstripped to the Vermont increases through about 1968 and then we were regularly going ahead or equal to the federal wage until 1992 when the feds raised the wage to 4.25 an hour and then more recently we've stayed ahead of the federal minimum wage since then we were on annual inflationary increases from 2007 through 2014 when the last minimum wage increase was enacted and we reached the end of that series of increases and we're back to CPI increases unless this bill passes out of the legislature this year or is enacted so this is a chart here that Joyce prepared I apologize for the link with the screen it seems like we're continuing to have the same problems that we've been having but basically this shows the inflation adjusted wage is the red line at the top in terms of 2017 dollars is that right Joyce and the nominal dollar wage is the blue line so the high point for the wage in terms of the CPI was in 1968 where you can see that peak at 1136 and 2017 dollars and since then it's stayed flat well relatively flat but with a large dip in the 1980s and early 90s on this gradually recovered since then questions so far so would that diff be represented just simply by not raising the wage and having inflation change that so that go ahead so inflation was very high in the 1980s and this reflects the fact that the minimum wage was not increasing as fast as inflation so the real value the inflation adjusted value so you can see by the blue line the wage the nominal wage was increasing but inflation in the 80s was just outstripping so roughly 90% of Vermont employers have 20 or fewer employees this is just looking at the current conditions of those employers are responsible for about one third of Vermont's private jobs and pay 30% of private sector wages industries that have a large share of workers that would be affected by an increase in the minimum wage include gas stations retail stores food and beverage stores warehousing and storage food service textile and para manufacturing furniture and wood manufacturer large food product manufacturing nonprofits and child care and these are various categories of industries that are sort of generalized categories that have been clumped together and this reflects information from the various reports prepared by Quebec Rockland Associates so right now according to the April 2017 Quebec Rockland Associates report 42% of all minimum wage workers are the head of a family either a couple or a single parent family 40% of those workers are at least one half of their families income 59% of all minimum wage workers are over age 30 48% of female minimum wage workers are older than 40 while only 32% of male workers are older male minimum wage workers are older than 40 and then 49% of male minimum wage workers are under age 30 that does not make sense well only 36% of all female minimum wage workers are younger than 30 that doesn't make sense it's the I'm sorry and could I clarify that that those statistics come from 2011 to 2015 Vermont is small enough so that any sample is very small so you have to kind of pull years together so these results were published in 2017 but they reflect the situation from 2011 to 2015 representative students so going I'll come back catch up to this but the previous slides talked about 90% of Vermont businesses have less than 20 employees but only account for 30% of the wages paid right so those other 10% of the companies so what do you have an understanding of the breakdown of those wages even though these industries seem to match up with but not all match up with what you've put on the on the that list yeah we could get you the breakdown that's from Department of Labor data on employer size and and so forth and I think we can get your breakdown of the percentage of wages and the percentage of employers right because I mean my point being that large employers are also people who retailers in particular or service industries that that aren't common 90% are also people who pay the minimum wage right and we don't have necessarily a breakdown of what the wages are by employer size but we can tell you roughly where the employers are and what percent of the total wage picture they represent when you think about the larger employers they are universities colleges hospitals places that tend to pay better wages so that's that's how it stores and restaurants and fast foods some of those yeah yeah yeah so there's a mix yeah but but you can sort of think that the higher paid jobs are probably in those those larger industries and that's why you see that that the smaller employers pay and I just want to be sensitive to the fact that night if 90% of the employers that's a large number of employers with a smaller share of the total picture thank you okay so income distribution in Vermont about 25,500 jobs or eight and a half percent of Vermont jobs are estimated to be at the minimum wage currently in 2016 when the minimum wage was 960 the hourly wages at the 10th percentile meaning 10% of jobs were below this wage were 1045 obviously this is a couple years old and hourly wages at the medium or the 50th percentile were 1823 an hourly wages of the 90th percentile meaning 90% of jobs were below that wage were 3885 an hour so growing disparity in incomes in the United States which is sometimes referred to as income inequality is a well-known phenomenon growth in hourly wages in Vermont from 2004 to 2016 was larger at the top of the wage distribution than at the bottom and during that time what you can see is the nominal wages of the 10th percentile increased by about 2.4% per year at the 50th percentile they increased by 2.6 per year percent per year and at the 90th percentile by 2.9 percent per year and over the same period for Vermont's minimum wage rose by 3% per year. Yes, so in addition to looking at wages we can also look at total income which is not only earnings but also earnings on assets interest dividends and so forth and so on so we can compare incomes at the top of the distribution to incomes at the bottom. So one way to measure income disparity is to look at the ratio of the income earned by the top 5% of average household income and the average in the lowest 20% of US households so that ratio has increased from a thousand point six in 1967 to about 29 in 2016 so so that illustrates growing income disparity over this time period and again that is for all US households not specifically for Vermont. Excuse us just a moment we're going to loop in a member by phone. Okay. Hi there. Hi Diana. Hi. Okay. Thank you. Thank you. Just to wrap this slide up we just had a dollar value for what 2016 top 5% versus lower 20% was in actual real dollar terms. And let me just add that there's a little bit of evidence saying that Vermont has somewhat less income disparity than the rest of the country but again we implemented data so I don't want to go too far down that. And so this is just kind of a chart showing what's happened with the wages from 2004 to 2016 so as you can see the 90th percentile is increasing at a somewhat faster rate than the lower percentiles and then the minimum wage is that solid black line at the bottom that's closing in a little bit on the top percentile there. Do you have anything to add? Okay. Yes Representative Smith. I'm looking here back up one slide here. This means in 2016 the average income of the top 5% was 375 compared to 129 for the lowest 20%. Yeah. If minimum wage amounts to about a 40 hour a week is $420 a week that's not $12,900. Yeah so this is nationwide and this would include income for households that may not be working full time or something like that. Okay thank you. Is there anything else to add to that? Okay. Thanks for that question. So the next piece here is the basic needs budget. Do you want to talk about this? Sure. Sure. So every two years the joint fiscal office calculates what is known as the basic needs budget. It's a market based analysis meaning we look at actual prices for food, housing, transportation and so forth for estimated monthly living expenses in Vermont. So here's a list of the essential items that are included food, housing, transportation, childcare for different household types, clothing, household expenses, telecommunications charges, health and dental care, rentals, insurance, life insurance and savings. So all these things are added up for different types of households. So the budget differs based on family size and also whether the family lives in an urban or rural part of Vermont. The basic needs budget was last done in 2016. So these numbers apply to 2016. They would presumably increase a tiny bit together in 2018. But you can see for example a single person living alone in an urban area would need to earn 1764 per hour in order to meet their basic needs budget in a rural area. It's a bit less 1578. You can see for example two adults with two children with one wage earner gets up to the highest wage that we see on the page and that would be 3263 for a family living in an urban area of 3067 in a rural area. Question, Representative Stevens. This basic needs budget still does not yet include college debt or consumer debt of any kind. Is that correct? That is correct and it also does not recognize that many people earning lower wages would receive some public benefits, right? So many of these folks would qualify for Medicaid, for example, but we do not include Medicaid in this exercise. This is for people who do not have any other public supports, okay? So this is the cost of going to Vermont Connect, for example, to get health insurance. So there are lots of things that are not included. This is just a straight up. What does it cost? How much would you have to earn for in a two person, two wage earner family? Well, it depends. You can see we have a one wage earner family. We have a two wage earner family. So these are all different family types. But doesn't it assume that it's that the wage is in a household that has two earners? So the want livable wage, which is the next slide. Question for Representative Stevens. Just to, that's based on four reality. Yes. Yeah, one particular household type is designated as the household type we look at to find the Vermont livable wage. And that's defined in statute. So the Vermont livable wage is the hourly wage required for a full time worker to pay for one half of the basic budget for a two person household. This is a two person household. Each of them works full time. No children with employer assisted health insurance average for both urban and rural areas. Okay, so this is a detailed part of the basic needs budget defined to be the Vermont livable wage. And the Vermont livable wage is now defined as 2016 to be $13.03 per hour. So another way to think of this is that if you have two people living in a household with no children together, they have to earn $2606 per hour, right? But each person divided in two must earn $1303. Okay, so that's defined to be the Vermont livable wage. It rose by 2.6 percent per year between 1998 and 2016. Over that same period, the Vermont minimum wage increased 3.4 percent, but from a lower. Representative Stevens. Let's get it. This was a 40 hour work week. Absolutely. Do we have any way of knowing the reality of lower income or minimum wage jobs? In fact, how many hours they do? We use 40 hours because that's a traditional nine to five thing. A lot of people go to 35 hours. A lot of companies go to 28 hours as as the limit on those service oriented jobs. Do we have any data that would break that down? So instead of saying if $15 an hour or 40 hours is $31,000 a year, we can. So it would certainly be possible to say if 1303 corresponds to 40 hour week, what's the wage that corresponds to a 35 hour week? We can make that calculation. I can also tell you that on average, we usually think that there are 1.3 jobs per worker in Vermont, which tells you that a number of people are working two or three or sometimes more jobs. So we have data on the number of people who work. We have data on the number of jobs in the state and on average that's something like 1.3 jobs per worker. So based on that comment, when we use a 40 hour assumption, and also you're saying that we can assume that that might be, that could be two jobs or more in order to make up 40 hours a week. Sure. Thank you. All right. So this here, and I apologize for the micro print again, but there are 50 states to fit on here plus the District of Columbia. So what this is is a consolidated table of all the state minimum wages. The left hand column is the states that have gone to a minimum wage that's above the federal minimum wage. The three tables to the right are the states where the minimum wage is at the federal minimum wage, either because they've set by statute that their minimum wage is equal to the federal minimum wage or they've set a minimum wage that's below the federal minimum wage. So they default to the higher federal minimum wage or they actually have no minimum wage law like Alabama or Louisiana, in which case the federal minimum wage law governs. But for our purposes here, what I've done is ranked the wages above 725 from highest to lowest. So right now, Washington DC has the highest minimum wage in the country with the caveat that there are a number of municipalities in states like California and Washington where the states allow the municipalities to have home rule powers and set their own wages who have gone to a higher wage. I think Seattle is under 13 currently. Some of this, there's I think at least one city in California that's already at 15. And I could get that information for the committee. But then among states here, Washington state follows up at 1150. Massachusetts, our neighbor is at 11. And then Vermont is tied for fourth with California and Arizona with the caveat that for employers with 26 or more employees in California, minimum wage is currently $11. And California is on its way to 15. Arizona is on its way to $12 an hour. And Washington state is on its way to 1350, I believe. Washington DC is on its way to 15. And their wage is going up to 1325 until by one. So just for the rest of our region, Rhode Island is currently at 1010 along with Connecticut. Maine is at 10, but their wage is set to increase to $12 an hour in the next couple years. And then New York state is just behind us at 1040, although their minimum wage ranges up to $13 an hour depending on location and number of employees. So for a large employer with just 10 or more employees in New York City, it's $13 an hour right now. Then 12 for smaller employers in New York City. And then I can't remember what the rest of the downstate is at right now, but it's between 12 and 1040. And that's Westchester County and Long Island. Representative Strong. So Jamie, you just were referring, I hope I have a question here. I'm trying to understand the difference in the different states. We're talking about the cost of living. And I'm sure every state kind of takes that formula you were sharing and it would fluctuate based on all the elements of cost of living. So would you say these minimum wages reflect a little bit of the cost of living? Like let's say Washington DC, I know it's expensive to live there. It's slightly higher versus some states have a lower minimum wage. Their cost of living would be somewhat lower. Does that correlate? I don't think that it's a safe correlation necessarily. I think there are some states that have a high cost of living and also have a high minimum wage. And there are other cases where there are states that may have a high cost of living, at least in some parts of the states where they have a lower minimum wage. So New York has broken out their state into regions going from what's perceived as kind of the economic engine of the state of New York City. And then as you get further from New York City, the wage goes down. So upstate is at 1040 an hour, whereas downstate is at higher wages going all the way up to $13 an hour. But I don't think it's safe to necessarily say that this is a one-to-one correlation on the cost of living. For example, I think if you look at, well, for example, number four, California, Arizona and Vermont, I think our wages are tied, but we probably have three different costs of living. Costs of living and even in California, there are probably regional variations within the state between the Valley and the San Francisco area, the LA San Diego area, and then Northern California. The sort of, is it the Fremont region as you get closer to Oregon there. And then the same thing if you look down at line 19 where it's Delaware, Florida, Illinois, and Nevada, I think you have some pretty different costs of living across those states. But I don't know for sure. So I think in some instances you've seen states with higher costs of living raise their wages, but it's not necessarily a guarantee. Okay. Representative Reed. If you can just follow me up on that. Excuse me. I did notice New Hampshire, kind of our closest resemblance, if you will, economically is just on the federal minimum wage. Do they, so they're a lot lower, do they have any gradients so to speak? No, it's a flat 725 minimum wage. There one difference from the federal minimum wage is they've set their tipped minimum wage at a higher rate than the federal tipped wage of 213 per hour. I think their tipped wage is 60 or 65% of their minimum wage. And New Hampshire is kind of regionally the outlier in that they've stayed with the federal minimum wage. But you see on the previous slide that they've joined several other states. Let's see. Yeah, more than 10 states that have kind of set their wage, the federal wage. So I think interestingly, with New Hampshire, they have one of the higher actual average wages regionally, but a lot of that's driven by the southern part of the state, which is in the Boston, greater Boston metropolitan area. Yes. You done? Yes, thank you. Representative Christie. Being one of those communities that's on the river, when we increased our minimum wage to the 1050, New Hampshire went to 11 on the river because of the competitive nature of the upper valley. Every sign that you see posted is at $11. And that's because the rate of unemployment is so low, they're like under 3% in the valley. So it's very competitive. It's just a unique feature of the region. I think we'd see that along different parts of the state too. When you go down to Brattleboro and you look at the mass correlation, you probably see the same thing. Right, so that's just a way of saying that employers have to compete for the available labor supply that's out there. And so, yeah, they're definitely watching what the other side of the border is doing. Absolutely. Good questions. So this is just another visual representation. Vermont is the green line over on the left. The red lines are the other states in New England, as well as New York state. And then the blue lines are the rest of the countries. You can just kind of see visually where we fit in with the rest of the country. And this doesn't reflect perspective increases. So I'll get to the states that are increasing in a minute here, but this doesn't reflect that. So the 18 states began this year with higher minimum wages. Eight states automatically increased their rates based on the cost of living. Ten states had increased their rates due to previously approved legislation of ballot initiatives, including Vermont. And the minimum wages are going to be increasing in Washington, D.C. and Oregon on July 1st. So they're set on a state fiscal year rather than a calendar year. Do you recall what those increases are in Washington, D.C. and Oregon? I'm actually going to get into that in the next slide. Okay. And I don't recall on the top of my head. So for 2018 in Washington, D.C., they're at 12.50 now and they're going to 13.25. Oregon is kind of fine. They have a standard minimum wage that covers about a third to a half of the state. And that's going to go from 10.25 to 10.75. The Portland metropolitan area, which is three counties that include Portland and its immediate suburbs, is going from 11.25 to $12 an hour. And then the non-urban counties, which are essentially their rural counties in Oregon that have relatively depressed economies, are going from 10 to 10.50. And what they've done over time is they're going to go up to 13.50 as their standard minimum wage. And from there on, Portland Metro will be standard plus $1.25 and the non-urban counties will be the standard wage minus $1. So they have three sort of regions similar to what New York State is doing. Other states like California considered that and ruled it out. California is going to $15 if for larger employers in 2022 and then 15 for all employers in 2023. And then after that, it will increase by the CPI or 3.5%, whichever is less. And then Washington, D.C. is going up to $15, followed by increases by the CPI. Washington State, Arizona, and Colorado are all increasing to lesser amounts, 13.50 in Washington State. And then $12 in Arizona and Colorado. And after that, they all have CPI increase to keep the wage, the real value of the wage steady over time. Are there questions on those states? And so those are the states that are kind of going to be increasing the more than Vermont in the future. The next slide here compares minimum wages across New England and New York State. And so two states that were left out of the previous slide for space reasons were New York State and Maine. New York is going to $15 for everywhere but upstate New York by 2022. And upstate New York is reaching $12.15 in 2021. And after that, it's increasing by an inflationary percentage determined by the director of the budget until it reaches $15. There are no mechanisms in New York to increase past $15 under current law. So it doesn't have a CPI increase after you hit the $15 mark. That's not to say that they couldn't enact one in the future, but that's just where they're at right now. I just have a question on what is considered upstate New York. It used to be anything north of the Kipsy. That's actually roughly accurate for this. So this is north of where? The Kipsy. So having formerly worked for the state senator from the Kipsy, what this covers is downstate is New York City and then Westchester County and the two counties on Long Island. So once you get up into Duchess County and north, you're getting into upstate New York. And so it's the Kipsy area. And I'm going up through Albany and then through the rest of the state from there. It's all covered by that lower minimum wage. Okay. Representative Stevens. Did New York ever have a CPI attached to their minimum wage? I would have to check. I'm not sure that they did, but I would have to take a look. They've had a handful of minimum wage increases in recent years. And I'd have to look if at one point they had a CPI and took it away as part of the most recent increase. So just a quick summary across the region. Rhode Island will increase to 1050 next year. Connecticut is currently at 1010, although legislation is under consideration to raise the minimum wage. They're kind of at the same point we are. Although I'm not sure if their legislation has passed out of the House, but the governor there has indicated his support. And both houses have indicated support, although the numbers within the legislature are closer to 50-50 on the legislation. So there's a lot more question about whether it's going to move forward at this point. In Massachusetts, it's currently set at $11 an hour. There are two bills to increase it to $15 an hour. Both bills are currently stuck in the legislature, although they're in time. They've been given an extension to get out of committee. There is a ballot initiative that is going to be on the ballot in Massachusetts, which would raise the minimum wage to $15 an hour. A copy of that ballot initiative is in the minimum wage study and report, which if it's not on the committee's website yet, I'll send it to Ron later today so he can post it. But you can see that and that has broad support, or at least according to current poll numbers, is expected to pass in November along with a couple of other ballot initiatives. So currently the legislature there I think is trying to find and compromise that the members of the legislature have their own ballot initiative, but it's not clear whether they're going to reach that point. And the Massachusetts ballot initiative would go to $15 by when? I believe by 2022, but I'd have to check. There may be folks in the audience who remember that date better than I do, other than Tom. And then New Hampshire, there were bills to raise the minimum wage. Oh, there's another question here. Representative Smith. On that chart, if I'm reading this chart right, by 2020 Vermont's minimum wage should be somewhere to ascend to $11.50 an hour. Is that right? That's actually not accurate because it's increased by the CPI or 5%, whichever is less. Okay. So it's likely to be increasing by somewhere around 2.25%. Okay, so it'd be 11 then by 2020, maybe 2021. Yeah, I've actually on the next two charts here, or the next two slides, we've got charts kind of showing you where Vermont will be based on projected inflation. Thank you. But yeah, we haven't had inflation above 5%. In the last 30 years, I think it's only three times in the last 30 years has it been above 5%. So typically, in recent years, it's been closer to about 2% rent choice. So and Rhode Island has bills in to raise their wage to $15 an hour, but those have all been tabled until next year for further study. So really Massachusetts and Connecticut are the two states that may raise their wage. I would say Massachusetts looks like the one that's more likely at this point. And let's see. Beyond that, Maine raised their wage just a couple of years ago, so they're likely, I don't see any chance of or likelihood that that's going to change anytime soon. Questions about New England? And of course, this reflects Vermont's current law right now, not S40. We do a comparison with S40 a little bit later in the presentation. We're going back before we instituted this four-year thing to go to 1050, we were at 873 or so rates, you know, in 870, I'd have to look at it. Would that have been considered? Where would it be considered in New England at that time? Was it the top? We could find that out. Yeah, there is actually, I can get that information for you. There's a really great tool in the US Department of Labor's website where they actually have the historic minimum wages for all 50 states going back to the late 60s, I think. So if you're into that kind of trivia, it's out there, but I'll provide a link to that to Ron and get, I can get you a summary of just where we were at when we raised it the last time. So here's that chart I was talking about. So for New York State, I just did the Highways, which is New York City's largest employers, and that's the sort of crimson line at the top of the screen there.  The orange line is Maine, which goes to $12, so it gets a little bit ahead of upstate New York, and then it goes at an inflationary increase and falls a little bit behind. The dark blue line is Massachusetts, which is currently ahead of us, but you can see we're the green line and we're going to actually pass Massachusetts and coming years. Rhode Island is the purple line, Connecticut is the gray line, and then at the very, very bottom there, you'll see New Hampshire is sort of the bright yellow line. The next slide here is just another visual representation of that. It's busy, but it kind of shows you everything possible together. So again, you can see that New York City is just really way ahead of the region, and then the rest of the region, upstate New York and Maine are kind of the leaders with Vermont. Again, in the 2020s would be the fourth highest wage in the region. So questions about these charts. Okay. Going on to the next page here, we're going to get into a walk through of S40. I've tried to just call it to the really substantive provisions here. So what you'll see is in the first part here, I've cut off about half of the minimum wage language for space. And what this is providing that in 2019, the wage would go to 1110 in 2020, the wage would go to 1175 and 2021 to 1250 2022 to 1325 2023 to look 1410 and 2024 to $15. So it waits the increases. They grow larger as time goes on. And one note is that this bill was introduced in 2017 when the wage was still $10 an hour. We could strike out that $10 an hour language and strike out everything from the very first sentence that where the strikeout begins all the way up to 1050 since we're in 2018 now. I just missed that in the Senate. So we can shorten the green books a little bit there if this bill moves forward. And then the other change in section one of the bill is it adds language. If you'll remember the bill introduced by Representative Wright, which would have provided in law that a tip is the sole property of the worker who receives the tip. This would put that language in here. So that was added as an amendment on the floor in the Senate. And if you'll remember, there's a pending federal regulation which would allow an employer that pays tipped employees at least 725 an hour to determine how the tips are distributed in Vermont. They would be able to determine that for any tips that are over the amount required to get to the minimum wage in Vermont. They could, for example, create a tip pool with servers in the kitchen or use tips to pay, tips about that amount to pay wages, something like that. And this would prevent that from happening. It would only allow tip pooling with other tipped employees. So a server could be able to pull with bartenders and other wait staff. Questions on that? Okay. The next section here, we're going to be talking more about this tomorrow. Most of you have probably heard about what's called the benefits cliff at this point. And this is to address that. What the summer study committee found this past summer is that big factor in Vermont's benefits cliff, and it varies from state to state depending on how their public assistance programs are set up. But in Vermont, what seems to push families over the edge is that they're receiving childcare financial assistance subsidies. Once you add that in, the decrease in all their other benefits goes from being a little bit less than their increased earnings to actually being more daring than their increased earnings. So you see a dip. And essentially it's really more of a downslope and creates a valley where there's an area where their wages are not increasing as fast as their loss of benefits. And so there's actually a distance to take a higher paying job or work more hours. So what this does here is it adjusts the sliding scale with the childcare financial assistance program to score correspond to each minimum wage increase. It doesn't eliminate the valley because that would cost a great deal of money. But what it does is it shifts the valley over so that if you're currently receiving a childcare financial assistance payment and your wages bump up because of the minimum wage increase, you're not going to be harmed because of the statutory change. So that's what this does. Representative Stevens. And just to be clear, childcare financial assistance program affects a family and 100% of poverty. The U.S. determined poverty level receives 100% childcare financial assistance. And then it goes down up until only up until 200% of poverty for family for whatever your family size is. Is that still accurate? That's correct. And this would change that a little bit because it would be changing relative to federal poverty level. And we're going to go into a lot more depth in this tomorrow. Right. I mean, this is an important cliff, but it affects the families at the very lowest end of the financial spectrum. But that decreasing aid up to that 200% is really, I mean, by the time you get to 200% of poverty, you're only receiving 10% of the, what are the numbers of the original benefit? Right. And we'll have some more tomorrow's presentation has information on exactly what the 100% of federal poverty looks like. And also information on exactly how this works with childcare financial assistance. And we'll have Deb right with us tomorrow. We did a lot of work on this for the summer study committee. And she can show you sort of dollar for dollar examples of what changes and how that would look with the proposed legislation. I should note that this is subject to appropriation. So it does say at the very beginning to the extent funds are appropriated. So this is assuming that the legislature will appropriate the necessary funds to make this shift. Currently, the subsidy payments are well behind the current market rates. And so this would not adjust the market rates except to the extent that it's necessary to offset the increase in wages that would be paid to childcare workers as a result of this many childcare workers are currently paid less than $15 an hour. So as the wages increase, you're going to see changes in the market rates for providers because they're going to have to pay the workers more. And so this will adjust for that, but it won't completely eliminate the benefit slope here. We had some testimony this summer with the study committee that had a very rough estimate that it would take something like $66 million to eliminate the benefits that value altogether. And this is significantly less expensive and is projected to be covered by increased tax revenues as a result of increased income tax receipts received from workers who are now earning more wages. So as well as decreased costs and public assistance programs elsewhere as a result of the increase in wages. More details tomorrow. Yes. All right. So the last piece here is a report on adjustments for inflation. And this would require this is the longest study I've ever written. So this would require legislative council and joint fiscal to submit a written report on or before January 15 2023. I'll have you know, I still plan to be here then. So hopefully, for those of you who are still still here, then I'll deliver that report to you. I can't find you. You could repeal this. But or just choose not to include it in the house version if you pass this. So the but basically it's a report on potential mechanisms for indexing the minimum wage for inflation after 2024. So assuming this went into effect as written, right now current law provides that it would be the CPI or 5% whichever is less after 2024. One thing we have testimony about this summer and Joyce can talk about in much more detail than I can is alternative measures of inflation. It's something that other states have actually been looking at. Although to date, I think everybody follows the CPI. But there are potentially better measures of inflation out there that the state might want to look at. And what this would look at is examine the alternative mechanisms and the benefits and disadvantages of employing those mechanisms. And so that's something for the future. But it wouldn't actually propose legislation to change or anything like that. It's just sort of a report. Should the legislature want to take a further look at it at that point? I would just say that economists will tell you the CPI overstates inflation. So you're getting too much. The measure is higher than actual inflation is. So for example, the Federal Reserve Board, the Congressional Budget Office have adopted the personal consumption expenditure deflator, which is a different measure. And you may recall that in the recent tax bill, the thresholds for various tax rates are now adjusted by the chained CPI, which is a different way to measure inflation using the same underlying survey of market prices. So we did have some discussion of all that. In the summer, it was decided that we would stick with the CPI that the people are familiar with, but that this study might lead to something else. Representative Stevens? Before we go on to the text of S40, for a state employee, the state has legislation that creates a different minimum wage than what we have in the private sector. Well, it doesn't state that it's not going to pay certain people less than a certain amount, like $12.50. I mean, I don't know how to hold this whole contract. It's just in the contract line. I thought there was a thinking of some recent legislation that asked the designated DDS. Yeah, the designated agencies. So they're designated service providers and so forth, asked them to raise their wages. I think it was 14. And then as far as state government goes, the pay for permanent state employees is set by the contract and the classification system. So it's really a grid of pay rates, depending on your your your your job and where it fits in on the what its classification is, and then how many years in the position you have there. And then the pay act each year authorizes the increases pursuant to the contract. There are some requirements around temporary employees, but we do have temporary employees who work close to the minimum wage. And we'll actually talk about that. Do we talk about that today? Or tomorrow? Yeah, okay. So we're, we may get to that today. And that's Joyce has done some looking at what those costs would be. But for state permanent employees, I don't think you actually have permanent employees would be affected by this bill. It's really temporary contract employees. So so the last change here and this relates to the tip. The tip pooling provision earlier. And it just defines what a tip is. Because what you might notice sometimes at restaurants, for example, I was out to brunch on Saturday. And the restaurant some restaurants have started doing this where they have a what they call a kitchen tip or a kitchen service charge. It's a mandatory charge that's added to your bill. That's actually a service charge. So and that's an employer sort of mandated charge that's added on top of the cost of the food. And they use it to pay their kitchen workers a higher wage. So that is not considered a tip. But a tip is something where on in addition to that kitchen service charge, I chose to leave the server, you know, whatever it was 18 or 20% of the bill that morning. And that's something that I chose to leave as a gratuity. In addition to what what the charge wasn't. So this is just defining the tips are gratuity. They're not a service charge, which an employer is allowed to actually use towards the employees wages. And employers do that. And it's that's that's perfectly allowable thing. But this kind of differentiates what that is for purposes of tip pooling, because we're not prohibiting employers from using service charges, for example, be able to afford a higher wage for the staff or something like that. Although they could also just include that in the cost of the items on the menu. So that's, that's something that's up to the employer. Questions on that remind me do we have a tip analysis of surrounding states and provinces? As far as like what their tip to age wages, that's a I have that information for a separate day. So I chose not to cover that today because I thought it would just be a little bit too much to absorb in one day. But I can come in and to give you guys the same presentation I gave to the Senate Committee on the tip to age issue. And then the last piece is the effective date, which is July one. So I guess the big question is, how would things compare? If if S 40 was adopted as currently written. So this is taking that same comparison of New York and New England, although I've limited it to just upstate New York for simplicity. Since they're really closer to us than New York City. But what you'll see is Vermont under S 40 on the right hand side. And then the rest of New England and upstate New York, as set for current law. So you can kind of see how Vermont would be increasing here. What this doesn't track is the increases by CPI. So I've estimated those and these charts. So you can see here that under S 40, assuming nothing changes in the surrounding states, Vermont would move to having the highest wage in this New England and upstate New York area in 2022. As I mentioned, there's legislation in Connecticut and Massachusetts that the very least proposes to raise their wages up to 15 by that point. And the ballot initiative in Massachusetts as well. So without making predictions for how those will go, there's a chance that even if S 40 passes as written, Vermont would not be the highest in the region. And then the same thing just kind of clustered showing Vermont against those wages. So and now we're getting into the effects of raising Vermont's minimum wage. And this is where I hand over to Joyce. Thank you. So I'm going to give a quick overview today of various economic effects and fiscal effects of raising Vermont's minimum wage. If anyone is interested in more details, there's quite a nice write up in the final report of the minimum wage study committee. There's also a JFO issue brief that looks at some of the effects on employment. And there's a various background materials under the study committee's website. So I've given you the links for all those things. So today we're going to focus on the Vermont specific effects. And as you probably know, Tom Covet has done a series of analyses looking at the effects of raising Vermont's minimum wage. The first that I'm aware of was done in March 2014. When he looked at the effects of raising the minimum wage to $10 for 1250 an hour in 2015. Then in February of 2017, and again in April of 2017, he looked at the effects of raising the wage to $15 an hour by 2022. And finally, in October of 2017, for the summer study committee, he did a rather rough analysis of looking at 1250 in 2021, 1325 in 2022, and $15 in 2022. So three different scenarios. And again, when when he does his analysis, he's using a big economic model called the Remy model. And it's a way of trying to think about all the interactions that would happen in Vermont's economy, looking at the labor side, the business side, the public side, all of those things rolled into one. So it's it's the best analysis that we have of the effects. So I'll start by talking a little bit about effects on employment and employees. So remember that we're talking about raising the minimum wage that employers can pay to $15 an hour by 2024. We know from nationwide studies that raising the minimum wage results in reduced employee turnover. So people feel more attached to their jobs and increased productivity, which means that they are being more productive, they are doing more on the job to make themselves worth more. And of course, those employees end up with increased disposable income, which means after taxes, they have more income to spend in the economy. And that means an increased demand for goods and services by those folks who are paid higher wages. There may be some negative effects as well. And again, these have been documented nationwide. In some cases, there have been job losses that have been documented. There may be folks who aren't putting out $15 worth per hour in 2024. And so it may be robots, it may be high school kids who can be paid less who might fill in for those folks or it may be a closure of the business. It may also be that some folks lose some hours. So instead of working 30 hours a week, they're reduced to 20 hours a week. All this is going to happen. Some employers may look at this and say, okay, we have to put more money into wages. Therefore, we have to cut back on maybe health care benefits or maybe retirement benefits. Maybe we cut back on training. So these employers are making decisions about how to make how to keep their their firms profitable. And there may be slower wage growth overall, if you think that employer has to allocate wages to all employers and the folks at the bottom are not being paid more. Maybe the folks towards the top or the middle get paid a little bit less as time goes on. So those are all possible negative effects. What about effects on businesses and consumers? Well, as I've previously indicated for businesses, increased labor costs from changes in the minimum wage could result in low profit margins. Some businesses might choose to relocate. Some might choose to invest in automation in an effort to reduce labor costs. And for consumers, increased labor costs could lead to higher prices. For example, there has been evidence that restaurant prices can often rise in response to an increase in minimum wage. And that's because restaurants in general hire a lot of people at the minimum wage. So higher prices might mean higher, I'm sorry, higher wages might mean higher prices on the menu. So the most recent analysis was done for the fiscal note on S 40. So we did this fiscal note on February 8, 2018. There's a link to it. And I'll just show you the path for the minimum wage. And Damian alluded to this earlier. You'll see under current law, given the CPI inflation projections that are read upon by the administration and the fiscal office, we see the minimum wage rising from 1050 this year to 1080, 1111, 1138. All we have to about 1216 by 2024. So that's based on today's projection of what inflation will be. Of course, we are wrong in our projection. We know that right now. If we go to $15 an hour in 2024, I've shown you the path, which Damian talked about. I've shown you the annual increase in the cents per year. And you can see that we start off with an increase of 60 cents. And gradually over time, go up to an increase of 90 cents. And then I show you the difference from current law. Now, some people are interested in the inflation adjusted value of that minimum wage path over time. So I won't go through all the details, but you can see that if you if you adjust for inflation as projected today, by the time we get up to 2024, the inflation adjusted minimum wage under s 40 would be about $13 1295 under these assumptions of inflation. So that that is an increase from 1050 to 1295 in constant dollars, but it's not as big as the 1050 to 15 that you think about in nominal dollars. Any questions about that? Well, given the consensus, CPS inflation, if we if we stayed with the current model, how long would it take us to get to $15 an hour? So we knew that at one point. Sometime after Oh, gosh. Yeah, I don't want to try to. Right, and we have new inflation projections since we made that calculation before, but we can find out. Okay. Thank you. So now I can talk a little bit about the direct fiscal impact for the state budget. And since I'm continuation of the earlier discussion, so we would expect some increased state revenue because people will be earning higher wages. They'll therefore they will have higher incomes, they will pay higher income taxes. They may other, they may also pay higher taxes in other ways. And also in fees. So there will be increased revenue coming into the state. And we'll look at the exact numbers are estimated numbers for all of these things in just a minute. We would also expect that the state has to pay some higher wages to state employees, state workers and mostly to contractors, temporary workers and contractors. We would expect possible impacts on state program benefit levels because of changes in eligibility. And we'll talk a bit about that today and more tomorrow. It is true that last summer we were thinking about moving to $15 an hour by 2022. We've now stretched out that path. So we're moving it out to 2024. And that means that the impacts will be spread out over six years instead of four years. So we'll slow things down a little bit. So here are some numbers regarding the net fiscal impact because you remember we're gaining some and we're losing some so the net fiscal gain to the state's budget from increased tax revenue and increased benefit payments almost together. For fiscal year 2019 would be about $150,000 in today's dollars in 2018 dollars. Now that's a relatively small number because remember this change doesn't go into effect until halfway through the fiscal year. Starts January 1st 2019. In fiscal year 2020 the impact would be about $2 million in today's dollars. About 40, 42% of the net fiscal gain comes from higher revenues. The rest comes from less benefit payments because fewer people would be eligible. Some of the programs that are most affected would be the state earned income tax credit, the rent to rebate, property tax adjustment and the homeowner rebate. And again, we'll see more of all of that tomorrow in depth right this year. Let me talk just a little bit about increased wages paid by the state. First thinking about state employees, the estimated yearly cost on average over fiscal years 2019 to 2024 would be about 600,000 per year. Now that amount would be quite a bit less in the early years and a little bit more in the later years. But just to give you a flavor of the size of the impact on average it's about $600,000. And that figure includes both direct pay, the wages paid, but also state contributions for Social Security and Medicare and also retirement contributions where relevant. And I say where relevant because temporary employees do not earn retirement benefits and a lot of the cost comes from. Historically it is true that about 40% of the cost of the state workforce has been covered by federal or other funding sources. Let's decline wouldn't have me hastily add that that share could change going forward given what's happening in Washington, D.C. Representative Reed. Historically, when the minimum wage has increased for state employees for all employees has has the range of state wages raised also at that time or is that just pretty much based on the So we had Harold Schwartz who is the Human Resources Director for Human Department of Human Resources. He's sort of the top dog of the Department of Human Resources. He talked to us this summer and also I went back and forth with him about spreadsheets and figuring out what happens. It turns out that most state employees earn better than whatever the minimum wage was and today's minimum wage. So the impact has been very small for state employees. Now moving away from direct state employees and moving on to state contracts, we do have to think carefully about those contracts in part because there are contracts with people that have less than the average state wage, so perhaps as low as the minimum wage. So the agency of transportation contractors generally are not affected because they are subject to federal Davis-Baking wage requirements and that now stands at $15 an hour. It depends on the occupation of the worker. In many cases it's above $15 an hour. It requires them to pay the federal prevailing wage for each occupation. So if you're like a heavy equipment operator or something like that, you earn whatever it is in terms of the wages there. In many cases they're already over $15 an hour for these jobs because they're skilled road construction contractors. Okay, the state does have contracts with designated agencies and with specialized service agencies. We mentioned earlier that last year's legislation paid those wages at $14 an hour or better. So anything about going up to 15 by 2024, there's not much of an effect until they get way out in the 2024 range and by that time who knows what the wage will be for those folks. There could be a bit of an impact with home health organizations and personal care organizations. The problem here is that many of those organizations are reimbursed by the federal government based on the federal government reimbursement rates, which do not change as wages change in the state of Vermont. So they may be squeezed if they are asked to pay their workers higher and higher wages, but their federal reimbursement rates aren't changing commensurably. So that could be an area of concern. Moving back one point, do members understand who the designated agency and specialized service agencies are? Okay, can you help with that? So designated agencies are things like the Howard Center in Burlington that serves the substance abuse and mental health needs of that area. I believe there are 14 designated agencies across the state. They hire lots of coaches, counselors, as well as higher paid psychiatrists, psychologists and so on. But they have had trouble attracting workers because they can't pay a lot. And so the legislature decided that in order to help them attract workers and to fairly reimburse the workforce at those organizations, they would like to see the lowest wage raised after $14 an hour. Thank you. Okay, moving on to public education employees. So we tried to get statewide data from the State School Board Association and so forth. It was very, very difficult to get statewide data. So instead, we looked at two maybe representative supervisor unions. One was in Addison County, it was Addison Northwest, and one was in the Northeast Kingdom. It was North Country Supervisor Union. So we asked the budget folks at those SUs to please help us understand what impact raising the minimum wage to $15 an hour would have on their budgets. And what we found was that it's less than 0.1% of their overall budget. It turns out that most of their employees are paid more than the minimum wage. There may be some janitorial staff, maybe some kitchen workers, a few folks are paid closer to the minimum wage. But generally speaking, it's a relatively small share. Representative Stevens. You said you had trouble collecting data from the statewide perspective on the schools. Were you just looking for a central source that may have already had this information? Which doesn't exist. There is no central source that has that information. By the time we figured out that we needed to go to all the budget directors for all of the SUs across the state, they didn't have time to collect the information and get it in a sort of consistent manner that we would use. So we tried. We also talked to budget directors at the University of Vermont. They looked carefully at all of their wages and came up with a cost of about $75,000 per year to raise all of their staff currently below up to the minimum wage path. We also talked to the budget director at Vermont State Colleges and their cost was about $60,000 on average over those years. So it seems to be a relatively minimal cost for public education. There is one caveat with the University of Vermont, Vermont State Colleges, and that's that this could affect student employment. So college students are subject to the minimum wage. But many of those college students work is funded through like federal work study grants, or other grant programs. Those grant dollars may not increase. So they mean that some of these students may have to find different sources of aid, or the Vermont State Colleges or UDM might need to increase their budgetary allowance for student workers. But this money wasn't included in their calculation, because there are a lot of factors that they'll have to look at in order to make that decision. These aren't the sort of like rank and file permanent employees that are students who are higher than the semester or school year basis. But you know, like work study money tends to be a fixed pool of money. That's a lot of the school, and it doesn't change with increases in the minimum wage. And so the school would have to look at what are other options there? Is it more loans? Is it dipping in grant funds? Are there grants available to fund the student work? That sort of thing. So that's, it's a little bit more complicated, but the actual dollar amounts there are not included just because there are all those other questions around that. We can now move on to the State Employees Retirement and Vermont State Teachers Retirement Funds. It is true that to the extent that there are state employees whose wages would increase at the low end of the scale there, there could be a higher liability. But we've seen that that effect is relatively limited. And you also should recognize that the benefit that's paid out from these retirement funds is often based on your ending salary, your ending wage, and also the number of years that you work. So the likelihood that a minimum wage increase would affect your final retirement benefit is rather small. It's also true that temporary employees don't receive a retirement benefit. So it's not an issue. One other thing to add on that is that also your contributions as a state employer tied to your wage, it's a percent of what you earn. So that is for employees who are eligible for retirement whose wages go up as a result of the increase, the contributions being made would also go up. So there may be a small, budgetary cost of the state for the state to manage. But that the money would likely be flowing in there unless you have someone who's earning a relatively low wage who's very close to retirement. And so you can see them have their final average wage not really reflect what they've contributed over time. But for employees who are just starting out, they would likely just be contributing at a higher rate. So that's why there would be relatively minor liability impact for the state. We mentioned earlier the effect on other state benefit programs as we said before. The largest effect is seen in child care subsidies and we will have more discussion of that tomorrow. You would also expect to see effects on Medicaid. That's very much tied to a person's income relative to the federal poverty level. So as that income goes up, they have perhaps a smaller chance of being eligible for Medicaid. Also reach up LIHEAP, which is the housing assistance program, housing energy, heating assistance program and the EITC, which is the earning income tax credit. So that's the way that we would see a reduction in program benefits going out the door in the state. So overall economic effects. Well, it is true that many minimum wage workers would be earning more. It is also true that some minimum wage workers might work fewer hours or lose their jobs. The estimate from the economic model, the Tom Kovetz model, suggests that in calendar year 2019 there might be something like 200 fewer jobs in the state. In calendar year 2020 something like 350 fewer jobs in the state. And a rough estimate. Now this is going out many, many years. A rough estimate suggests about 2,250 fewer jobs each year on average during the period 2028 to 2040. So that again is based on the economic model. It's projecting lots of things out into the future. We don't expect that number to come true, but that's our best estimate as of today. And so just to be clear, that's not a loss of 2,250 jobs per year. That's a difference from sort of a baseline. If we didn't, if this bill didn't enact where would the jobs be? And if that's for years enacted, where would the jobs be? And so that's what that number is looking at is the average difference between those two lines. You kind of have a graph of employment going forward. During expensionary years, we would expect that more people might be induced to enter the labor force knowing that a minimum wage is $15 an hour rather than whatever it's projected to be. And we have that projection. I forget what the number is. We would also expect fewer federal funds coming to Vermont as eligibility for federal benefits drops. And this is where we're going to see a negative effect on the state's economy. We would also see higher federal tax liability for some. Of course they're paying federal income tax at a slightly higher amount as their income rises. And those two things together lead to a slightly lower level of GDP relative to current loss. So again, you have to think in your head, where would GDP be without the change in the minimum wage? And where would it be with the change in the minimum wage? And the modeling says that Vermont GDP would be lower by about 0.3% in those out years in 2028 to 2040 on average. So a tiny bit lower. And a lot of that occurs because fewer volunteers are getting federal benefits that are just money coming into the state, right? It's been spent with the services. If you lose some of that in the water, then there's going to be a little bit less activity in the state's economy. And of course, we also have the effect of a few minimum wage workers either working fewer hours or losing a job. So those two things together would lower the GDP by a touch. Questions about that? Does that analysis also accommodate the increased spending that's available to those workers who have the increased income? Absolutely. Okay, now this is the table from the fiscal note that we put out in February that sort of summarizes the effects in calendar years 2019, 2020, and then makes a projection in 2024 of what these effects might be. So we've talked about a lot of these already, but let me run through these because we haven't talked about all of them. Let's see. First off, the percent change from 2018 minimum wage in place injustice about 3% in 2019, about 6% in 2020, and 23% that's quite a sizable increase in the minimum wage by 2024. The approximate share of jobs at less than the proposed minimum wage, and here we're looking at jobs, not orders. Okay, so about 10% of jobs would be affected in 2019, about 12% of jobs in 2020, and maybe 22% of jobs by 2024. Let's see. The number of jobs that would be affected by this increase in the minimum wage, about 32,000 in 2019, 38,000 in 2020, and a little over 65,000 in 2024. So fair number of jobs. We have about, what, 320,000 jobs in the state's economy now. Initial wage bill as a share of total wages and salaries goes up by 0.02%. So very small increase in 2019 goes up by a quarter of 1% in 2020, and by one and a half percent in 2024. The aggregate initial income gains of low-wage workers who are paid more, again, in the constant dollars, in today's dollars, would be about 3 million in 2019, 30 million in 2020, and 174 million. So that's additional wages that are going into the economy. Fiscal gain to the state from increased tax revenue and decreased benefit payments, so this is all rolled into one, is about 0.3 million in 2019. And remember that that's a calendar year estimate for 2019. So when I talked about 150,000 for the fiscal year, that was half of this calendar year. So I myself got confused about this from yesterday. Oh no, but that is correct. Okay, and for calendar year 2020, the net fiscal gain to the state would be about three and a half million, about 20 million gain by 2024. The net reduction in federal funds to the state economy, this is from decreased federal benefits and from increased federal taxes. It's about 1 million in 2019, about 9 million in 2020, and as high as 54 million by 2024. So that's a substantial pulling away of funds from the state by 2024. The approximate net unemployment, so again here I'm talking about the number of jobs, not the number of people. So we expect to see about 200 jobs less in 2019 under this minimum wage bill and the current law, about 350 less in 2020 and about 950 less in 2024. And that's according to the model that we've used here based on a long history of economic analysis. Oops, there are some fields. So this model that we used to determine how many jobs might be lost compared to current law, was that the same model that was used in the last minimum wage increase and if so do you know how accurate it was? The estimates were? So we would have to ask Tom Kovac those questions because he's the modeler here and has been for a number of years. I would say, having worked with these models many years myself, it is extremely difficult to go back and compare your projection to what actually happened because so many things happen in addition to the change in the policy. So it would be very difficult to go back and see how close it is. Wouldn't that also be true going forward? Absolutely, there's so many more things that will happen. And seeing at lunch today of the table of people talking about changes in direct to consumer selling and how that's going to affect our retail environment. There's just so much. Weather in the industry? I'm sorry. I have another question. For the net reduction of federal funds to the state economy, this looks like it was done in October of 2017. Has that changed with the federal tax laws much? So let's see. I don't believe the federal tax laws have done much to the eligibility for the federal program so I can't off the top of my head think of the increased federal taxes could change a time but for people at low income levels? Probably a fairly minimal change in those levels. Quite small. Yeah, I mean that's always a question that is what's federal policy going to be going forward. You know that could have a significant impact one way or the other depending on you know whether new dollars come into the state or dollars that we rely on in the past dry up or disappear. So that you notice again one of those many factors that goes into it it's I think always the challenge with modeling is there's only so many factors you can plug in and anticipate. Representative Stevens. So you said that this the net disemployment or jobs doesn't count people but you did say that there's 320,000 income tax payers. Income tax payers. Yes. So what is 950 jobs in 2024? What does 200 jobs mean? In terms of people. Yeah. So one quick conversion would be to say 1.3 jobs per person. However we're only talking about low wage jobs for the most part here and it's probably safe to say that more low wage workers have less jobs so maybe you divide by 1.4, 1.5 to get a quick estimate. I'm guessing here. Okay and then regarding Representative Fields question about finding out what the outcome of these projections are we're asked to make decisions based policy decisions based on these projections which are not perfect. Absolutely. And I think I think it's a valid question to see if there's a way that you can see that it pay off. I mean if I make it a decision based on numbers that you can't track five years later just that it kind of would be nice to get a better way of figuring that out. Yes. Representative Smith. Who puts all these arithmetic together? A firm of 500 people or a computer? Or are these all guesstamets? So the ready model is developed by a group in Amherst, Massachusetts. They are partly PhD economists who have looked at the literature. There's a vast amount of literature out there on the effects of minimum wage increases. As you can imagine many many people have studied this. So exactly where this estimate came from I don't know. I will also tell you that it's possible for the user of the ready model to tweak things so that the same model can be used in different ways to come up with different answers. But this is the the middle of the road estimate that Kavetta and Associates and the Joint Fiscal Office have agreed on. We could go into more detail. There have been more recent studies. It's been using more than Kavetta. Right. So there are a number of interesting studies out there. I think the issue brief that I wrote last summer may have something to say about all this. There has been a new study of raising the minimum wage in Seattle that used fantastic data on both hours worked and wages paid to low wage workers. And it's the first time that we've been able to pinpoint exactly economists have been able to pinpoint exactly who was affected by the minimum wage and what happened to their jobs. There are two studies of that particular increase in the minimum wage. One finds no effect on employment. The other finds a significant decline in jobs and take home pay for low wage workers. And the study that finds the reduction in jobs and pay is the one that uses the very precise data about hourly wages and hours. So as a profession I think right now there's a lot of conflict out there about what is the effect of raising the minimum wage.  So if you do it over a longer period of time if you do it in a stronger economy where there's more demand for goods and services the effects on the low wage workers will be mitigated. It should be noted that the Seattle raise is a very quick and steep raise. So I think for large employers in Seattle minimum wage went from $9.67 to $13 an hour in the space of two years. Is that right? It was a little quicker. What was it then? It was 12 plus nine months. Was that 21 months? Yeah. From April 1st to a year later January 1st. Yeah. So they rose over three dollars. I mean basically a 30 percent increase in the wage in less than two years. So that's very different than what's planned here and what's been done in other states. So that also makes it kind of an interesting case study to look at you know because it is it is relatively different. A lot of the other minimum wage increases over you know history have been much more moderate. In fact most of them have been. I will also say that the Seattle increase went to $13 an hour in 2017 2016 and now has gone to $15 an hour. So there will be future studies looking at the gem from $13 to $15 an hour. So you have to think how quickly did it rise, how high did it rise and what's the state economy where it's all happening. All of those are important questions. Okay. Representative Reid and then Christie. So thank you. There's a numbers geek who loves the stuff statistics and economic forecasting modeling. This is great. And I will say that there's so much literature out there and the research I've done. It's like any issue we deal with here. There's these issues and then these issues and this does seem to be a very middle-of-the-road kind of report. So to speak just based on some of the other research I've seen. And I just wanted to thank you for presenting it in that fashion. Thank you. Representative Christie. Ditto on Representative Reid's comments. What's fascinating about when you start looking at the demographics involved in some of these changes.  Then the whole gig economy that's going on in that area as well. It's actually supported all of that change. And you know when you factor that into the data. I think that's going to show why its impact is going to be so different than it might be in other places. You know the same thing goes through in New York. When you look at New York State and the nature of the population and then the economic driver centers around the state. You can see that. You know it's got an economy of its own. This is like one of the top ten economies in the world. You know, just here in my country. So there's a lot more going on, like you said, that meets the eye when you drill down. But thanks a lot for all you know. This is incredible. You're welcome. So we have one last slide. Okay, so just to put a few numbers on the long-term outcomes. So again we're looking at an average annual effect on the economy. But we're looking at a long period of time, 2028 to 2040. Of course things are fluctuating throughout those years. But on average each year we expect the net annual long-term employment effect to be about 2250. And again that means that Vermont would have 2250 fewer jobs in any particular year than they would have without this change in the minimum wage. That's the best estimate. Disemployment as a share of total jobs is about 0.5 percent. So half a percent. Disemployment as a share of minimum wage jobs is 3.3 percent. And the effect on the level of Vermont GDP, as we mentioned before, is a decrease of 0.3 percent. Representative Strahm. As we move forward, I do not understand this now, but I was intrigued to see that some of the states are dealing with rural versus urban in terms of how would that affect Chittenden County versus Northeast Kingdom. I'd like to talk more about that as we go forward. So in fact the Summer Study Committee did think about that to some extent. Because as I said before the effect on low wage jobs and low wage workers depends on how strong the economy is, wherever your jobs located. I believe the Summer Study Committee decided that in a small state like Vermont it would be quite confusing to have two separate minimum wages and to know how to enforce that and so forth. So the decision was made to stick with one minimum wage for Vermont. But there are a number of states that do have differences by geographic area and so forth. So it's an idea. Okay. Representative Stevens. Following up on Representative Strahm's question, the New York City wage calls a business that is 10 and below a small business and 11 and above a large business, which is different than the way that we, no surprise, that were different from New York City in that respect. But why do you have any idea how you research that, why they picked that particular effort? I think that was part of a legislative compromise in most of these instances. I mean it's part of the sort of legislative deal making that occurs. You know, for example, in California, they have an employer difference and it's set at 25 or 25 and below and 26 and above. So it's different than New York, but they opted not to go with original difference, even though that was on the table. Instead, they adopted an offering of provision, which allows the minimum wage increases to pause up to two times if the economy runs into difficulty, which is something the governor asked for there. And that was, so that was part of the compromise with the governor. They couldn't agree on where to draw the regional lines. You know, should Fresno be included in this wage or that wage and what about Sacramento and is San Francisco should it be its own wage group and that sort of thing.  It's making a policy judgment about, you know, where that's reasonable and where that's easy to regulate and what makes sense. But then they, you know, in their case, they found a different compromise to address some concerns about the impact on the economy and in California that the governor had, which was those potential pause buttons if there is a negative impact. In New York, I should note also has a pause button provision in there, which I can talk about at some future date, which is also again tied to a negative impact on the economy. California's is either negative impact on jobs and sales tax revenues or a negative impact on the state budget where the reserves are projected to go into negative territory. So they would exhaust their reserves and run them into the red. At that point the governor is the option of hitting the pause button. Both the pause button and the regional model were proposed as amendments in the Senate and both of them were voted down on the floor. So it's just worth noting that those proposals were out there. But again, I'm actually not sure if the pause buttons, maybe that was withdrawn or not. Anyway though, those options were discussed in the Senate and in the Summer Study Committee, but I think a lot of this just comes down to sort of a legislative compromise where they said, you know, we need a slower uptake for smaller employers and where's that line? And you'll notice for New York State they didn't do a line between small and large employers outside of New York City. It was just within the city. Representative Stevens. So going back to the fact that 90 percent of our businesses are small, what numbers here can we look at that might be that might illustrate a potential effect positive or negative in simply the number of loss of jobs isn't enough to say that this will have a negative impact on the general store or the supermarket. Is there anything in here yet that or in the report that talked about the impacts particularly, unless it personally, but particularly on smaller businesses? So if you think about the list of industries where there are large number of minimum wage workers can we go back to that? That's my fault. Too far. Yeah. Okay. So think about these employers. So we have gasoline stations, retail stores, which could be your local general store, food beverage stores, housing services. Probably not manufacturing is probably a bigger one. Maybe furniture with product manufacturing could have small businesses, large production product manufacturing in Vermont is probably a lot of smaller operations. Not profits and social services, child care could be the family to take care of providers, right? So a number of these industries could be the small businesses in Vermont that would be hard hit by an increased minimum wage. The most recent Quebec report too has charts kind of showing and this is in the minimum wage study that's one of the hundreds of pages of appendices in there. But it has charts showing kind of the share of jobs that are directly impacted by the increase and then jobs that are expected to have the indirect impact. In other words, they're slightly over the minimum wage, but they might see their wages, you know, pressure on their wages because the workers below them are coming up. And so there might be wage compression or something like that or the difference between those employees and other employees grows to be less or there's pressure on the business to raise the wages of those workers, you know, to reflect their experience, something like that. And that's in the Quebec report. I'm trying to think. And there is more sort of detailed discussion of this in the Quebec report and also in the Summer Study Committee report. What we did today was give you an overview of most of what's in the Summer Study Committee minus the benefits cliff piece, which is fairly complicated and probably better to break out as a separate piece, which we'll do tomorrow. Tomorrow. Right. And we have a little bit of other testimony tomorrow morning as well. When we will be back in our committee room, is my understanding. So a little bit tighter quarters. I want to thank those who've been here this morning to join us. And also asked that if you come to the committee room, some of you who are regulars may know this. Others who are new may not. We have some strong sensitivity to scented products. So if you come in, please leave your perfumes after shaves and other scented products behind. And otherwise you're very welcome to join us as we continue the discussion. Tomorrow morning at 9. Yes. No. Okay. 10. We'll have introductions on the underlying bills from 9 to 10. Okay. So we're talking about this 40. It's the tip. Okay. And then the presentation will come at 10. So related testimony from 9 to 10. Resumption of the presentation. Okay. Thank you. Great start. Appreciate it.