 Welcome, Tom. How are you? Good. We'll take a quick run around the room just to introduce ourselves. Okay. But I wanted to thank you for coming in. We did invite you in to provide kind of a little bit of the background of all the deeper work that's been done on minimum wage from an economist standpoint. And you also wanted to talk about some of the material, some of the contemporary material that's been presented. And so we just, as we do our work on this, we needed to hear some kind of nuts and bolts as we see it from an economic perspective. So thank you for coming in. Representative Tom Stevens from Waterbury. Representative Matt Byring, the gents. Who's up? Who's ordered? This hangout from the Berkshire. John Galaki's out for a visit. Tommy Waltz, Spirits City. Chip Triano, Senator. And we will see Representative Howard, I'm sure, at some point today. And Representative Gonzalez is out. And Representative Long is usually not running around the building, so we may not see her. So. Okay, fine. Well, I'd like to keep this informal and mostly be a resource for you with respect to Q&A. There's a lot of material on this and there's a lot that's been done. And I'm not sure where you're at, but I think that's probably the most effective way to go about it. The official fiscal note on this was produced by Joyce Benchastier, who's here, and is one of the handouts that's there, this item. And it's just a couple of pages, I think, but it gives a synthesis of a lot of different analyses that were done in connection with this. And ours was one of those pieces. So I can talk about that if there are questions about the broader fiscal note. Joyce is here and can comment on those. We've done minimum wage analyses in the state of Milan since 1999 was the first one we did for a summer study committee on the minimum wage. And I have gotten a number of them since then. They've been similar in scope and approach. We've gotten data that are unpublished data from the Department of Labor so that we can look at the wage distribution within the state and see how many workers are going to be affected, what industries they're in, what occupations they're in, things like that, and then use that to input that to an economic model that we use on a regular basis to look at economic impacts from various policy proposals and we use it in connection with revenue forecasting and a few other things too. So we use this model to try to quantify potential impacts. I say try to because no model is a perfect representation of what happened to the real world. And especially when you propose things that have not occurred in the past and there's no historical record for, the impacts are much more uncertain and this falls into that category. There are sub-state political jurisdictions that have raised the minimum wage $15 an hour or more but nothing at the state level that's been in place and been in place long enough to study any of the impacts from that. So I understand that in the context that we talked about because these models will spit out data that are three or five or ten decimals or whatever you want but you know it's an estimate based on prevailing economic theory, the best data that are available but it's not the last word on it. So in that kind of conversation though, what about look-backs? I mean I think I best used this question before but you know you did work in 1999, I would look forward when we got up to 1050 as the most recent one. Do you grade yourself afterwards? Do you see that given the realities, the economic realities, the pieces that you're using to put it together, do you grade yourselves and say hey five years later you can go oh we nailed that or we were off by 0.5% or you know we guessed wrong here and I use that word probably incorrectly but you made a wrong as you know maybe an assumption was off. I'm trying to say like because credibility of anyone's information informs the future use of that kind of information. Yeah part of the problem in grading oneself the two really important components of that that made it difficult the first is that we would need to collect more data than we collect now to know if the projected impacts came about or not and there are a few political jurisdictions that have done that. The state of Washington after the Seattle mid-wage increase had some some very thorough data collection recommendations which they followed through on such that there could be analysis done. Now the preliminary results from that resulted in two different analyses that came the two different conclusions but over time with an up here review I think the data wouldn't lie and then you could look at it and say okay this is the impact you need good data and some of that needs to be collected with governmental precision and thoroughness. So the government's in a position to both request and to require certain information and that would be a great benefit. One of the things in the third handout that I that's there there are three groups of handouts is a collection of three memos that were recent memos on minimum wage proposed minimum wage changes and one of the things that we recommend in the first of those that is a is an impact monitoring capacity so it costs a little bit of money it's maybe 15 or $20,000 of analytic work but then you do have an idea is this working like we thought it would or or there are there some effects that are problematic and we should change course especially if you have a multi-year change like that. So that that I think is is an important aspect of it. The other thing is that everything else doesn't stay the same so it's not like if you say all right what did we forecast let's hold everything else constant and say well then what would have happened everything else doesn't stay constant so I in general I'll say this I think the economic impacts of the minimum wage changes that were projected back in 1999 and subsequent rounds of this were the impacts were smaller than we would have guessed that said quite often there were several minimum wage levels that were projected and the most aggressive was never the path that was taken so and that's true the last round where the $15 I think in 2022 was the last set of analyses we did on this before the current one and that's been you know pushed back a couple more years to to soften the impact it is though more aggressive than anything that's been done in the past but in general I'd say that negative impact were not as pronounced as as some of the levels were saying they would have been and I think this is true in general in the literature is that the minimum wage changes that have been passed through many many states have not been so large as to generate a lot of blowback negative blowback and by the most common negative impacts are you know companies that are closing or reducing hours and creating economic loss that's substantial now there's still offsetting benefits that you could look at and say even with job loss and all the rest this could still make sense to do but the changes have been so modest and this is across a lot of jurisdictions I think this is why the literature typically shows there's not a whole lot of impact as wages are getting pushed up through free market forces right now the prevailing wages are exceeding minimum wage changes then there's not really a whole lot of impact that you expect I don't think there's any economists though left right center otherwise that would say at some level if you you know pick a number of $50 minimum wage or a $35 minimum which something like that that you wouldn't get a lot more substitution away from labor a lot more negative impacts so as a practice that's how that's how I did sure thank you I just wanted a clarification on the term impact you you're talking about the impact on the economy overall you're talking about a quantitative that's right not qualitative that's right this is really important point because at some level this is both a societal standard and a labor standard I mean if we if we looked at child labor laws and I ran the economic impact analysis and say oh you're gonna reduce the labor force by X number of people by eliminating child labor you can end up with job losses and negative economic effects and you still say you know what this makes sense or even the beneficial effects that you could postulate like children staying in school and later on being much more productive in life and all this sort of thing are difficult to quantify it's like measuring you know health benefits from warmer homes and things like that that that are harder to quantify but the I think this aspect of its important aspect is just an economic issue or an economic question so the metrics that some model come up with is is part of the background to consider but it's also an issue that's labor standard and a societal standard because when people can't earn enough to cover what society is defined as being sort of essentials and if they can't earn that through 35 or 40 hours of work a week then there are public benefits that they're getting and if you shift that towards a wage-based standard then you get savings in terms of reduced public costs for transfer payments and support payments both at the state and the federal. So it's not just an economic question right? We received it in the memorandum in the JFO memorandum and also a testimony that we took earlier information that Joyce provided earlier there are a couple things that stood out. One was the difference in jobs over time and then there was this kind of odd to me piece of oh between 2025 and 2040 that this much change could be expected and I'm thinking isn't that a long time to I mean again how do I treat something like that that says you know that says well the GDP is gonna go down only 0.28% over 15 years as an average or not even as an average but it's but it's I think what I want to add the key part of my question that I want to ask is that and if I understood this correctly was that if 10,000 if 10,000 jobs were created were to be expected to be created with today's numbers being extrapolated out and if there was going to be a displacement or I think you call the disemployment of 800 jobs that would simply mean that we would have to just ratchet down our expectations to say that 9,200 jobs would be created over in that time frame or that would change the baseline so that now we need 10,000 jobs but after this we only need or we're only gonna have 9,200 is that that's correct yeah so this is this is always a tricky thing with a big structural change in a model is how do you express the impacts so typically the impacts are expressed in terms of a baseline that's going on here's the economy if you don't do anything and then you make a policy change and you say what's the difference and so that's how that's reported so typically it's reported as an average annual number but sometimes there are effects that don't occur right away so it can take years for there to be substitution of capital for labor if you raise the price of labor or it can take a long time often for the full effects to be realized so it's not going to be year one year two year three and then this phases in with a series of steps up so each of those gets lagged and phased through so it's not really to in running the model and again it's this is a theoretical baseline it's not to get out to like 2025 and kind of let the long-term effects go for about 10 years that you sort of see order of magnitude here's what the full effects are if you just took the first year second year third year they'd be quite small because many of the facts have our lagged effects you have population responses to that you have all those things that end up accumulating so that's why we chose a long-term period after the last minimum change and took an average annual number there but it's just to give a sense of quarter of magnitude you know that's a small percentage of the total labor force it's you know of all the minimum wage jobs that are affected less than 3% of that so it's you know I mean it's to give you an order and jobs again not people yeah so that's full-time part-time and actually it could also be a blending of hours I mean it in theory you could have no jobs lost but all the hours go down or something like that you know I mean it's a it's a it is jobs but that's the way the model expresses it but that substitution can occur in a lot of different ways okay so what you just said they're right there with a tribulation from 2025 on given the timeline of the current proposal yeah the timeline was to be adjusted again after that because it seems like we're just wrapping up like a four or five year incremental growth in minimum wage are talking about another four or five year growth of incremental wage now we used to say that they're not going to introduce another proposal but we that time doing so now we're just pushing that timeline out where there's no real if there's another policy change or else beyond what's been pushed to model it again exactly yeah so but that's so what you're saying is that's just sort of given the existing proposal that's right that end at 2020 for 2025 and then goes up by inflation inflation index there after yes okay so but if say theoretically if there was a proposal to you know the fight for 15 over an hour time for 20 yeah it would actually exactly 15 by then we'll look a lot different correct yeah yeah there might be which case should do another analysis yeah that's a new policy change new environment there'll be new data I mean that's the other thing is you get data you can help understand what's happening and if there are things that are happening that are unintended or or really negative then you can respond to that and either you know have a different policy to achieve the same thing I mean one of the things we found in the very first study no other study had identified this that it done on minimum wages was the impact on the on the the social assistance programs and that you could have a family that could actually be worse off by getting a minimum wage increase because they lose benefits faster than their income goes up and when we saw that we said that doesn't make sense the purpose of this is to assist people you know low-income people and so there's no way to talk about that issue without also talking about how to structure benefits in a way to preserve incentives to work and then the net result is the people better off at the end you're saying you were saying before there's been no no really sense of luck back on that well on on that we've updated with every time yeah so that that's that's that's what it forms the current proposal and recent proposals but there are many states that do a minimum wage change blind to social assistance programs and I think we're way ahead of the game here in thinking about it with that component as a part of it what's the turnaround time I'm actually calculating that how long we're going to take for the organization well they did the big benefit studies it's a benefit that's what you're saying yeah that was the benefit itself yeah and that's a debt right and we heard from at the beginning of our conversation is coming back next week now that we can contextualize the information we've heard over the last two weeks she's coming back so we can ask her the same questions that yeah yeah did the 1999 studies and I was involved with others so she has a really good perspective and it was her initiative that that developed and the amount of work that went into that was phenomenal I mean they you know just pouring through all the regulations and all the cutoffs and how many people should be participating versus how many people actually participate you know she just went to a very detailed level of depth on that and I think you'll appreciate hearing from her on that she really is expert she said something that was different one thing that stood out her testimony was this notion and it goes to seeing the benefit clips it goes to that chart that shows the clip that struck me was she changed up the definition of what the minimum wage salary is in the sense that she's she went back to 35 hours okay rather than 40 which you know I can say well 15 bucks an hour is 31 30 1 8 if you may if you're lucky enough to make 40 hours a week whether that's one job or two job you three jobs 40 hours of work gets you to that but she she dropped it down I think based on some of her research that showed well most people they can work 60 hours or they can but the average is 35 hours at this at this at this rate that yeah I'm not aware of that so that didn't that didn't interact with what we were doing at all in this last round but I would I would raise that with her again there are a lot of assumptions like that you need to make at different levels I remember the first summer study committee trying to figure out like you know which food plan should be used as a minimal amount of food that people get you know and there is these USDA plans and and the bottom plan was was called the 30 right so I think it was $50 a week for a single person at the time and you know there was debate among their committee is like well you know which one should we use should we use a moderate plan or the 30 plan or what plan and and somebody realized that the per diem for the legislature at the time was higher than the weekly thrifty plan or the low one that was being considered and they you know chose one that was a step up from that as the minimal coloric input that was needed and so those are judgment calls and that's a shopping for food and cooking it yourself yeah that shopping and cooking and not eating out yeah yeah and the per diem here obviously is assuming just something out but still that it was sort of stark contrast one day per diem versus a week of you know buying bursaries and it is pretty bare bones but you know what things you include and those change over time there were landline telephones when that first started and now by and large cell phones so planted that and those are kind of requirements for working for the most part being able to be in touch with the employer so those are judgment calls and and you can ask also run it both ways if you want to see all the impact be if we assume 40 hours or 35 or 30 or whatever well it makes a difference on looking at how that far dips absolutely what you know the difference being gross and that yeah and then family configuration is the other big thing so are you a single parent with two kids or three kids or are you married with five kids or no kids you know all those things single people that are roaming with others that kind of stuff so all of that changes it and you're trying to pick one kind of you know number that you sort of say alright that's a livable income it's a really hard thing to do the changes in health care also you know the federal changes in health care also changed a lot of the calculations that they do on them so the rest of the two memos in those reasonable wage memo things talk about the approach to use there are a zillion charts and things like that and this this was that analysis that was done October 2017 that at $15 an hour in 2022 and and then these other you know approaches but the things in this if you scroll a little bit farther down that are still germane is sort of what industries are affected or what industries are most affected you know some of the breakouts on things I have some updated charts I'll show you on this but yeah keep going it's down there's some bar charts that just show them keep going okay and keep going anyway depending on your level of interest in the issue you can pour through some of this stuff these are expenditures for wealthy and poor people keep going impacts and how they run this table we've updated it alright these here by industry so we're showing things like the percent of total employment is affected you know but what what sectors of the economy are most affected what industries by different wage changes and then the next chart I think shows like total wage bill are these the Vermont jobs yeah these are Vermont jobs yeah so keep going because this is 1325 and then 1250 there were all these things but this one for example is the actual change in in millions of dollars in 2015 dollars you know by industry so food services and drinking places for example has the total biggest change in you know like the wage wage bill change and food and beverage stores educational services social systems combination of this and all that goes into the model when we look at what are the economic impacts because some of these sectors are that are export oriented can be much more vulnerable to negative impacts than industrial sectors that are basically serving a local population so they're not competing with firms that are out of state for the most part now some of them like in combination you could say well the hotel industry is an export industry if we raise our prices here we're going to lose people to other states but I think you find probably the elasticity of the van there is fairly inelastic and and I'm not sure that would occur in in that so it's so even once that you could think of as being export oriented may not be too price-sensitive but but there are others that are and in particular wanted to look at some of the manufacturing sectors that we might be losing jobs to and one of the things you know that's it's up-concerned is the proximity of Vermont to New Hampshire where we have a long border there are 29 bridge crossings over the Connecticut it's not that hard to get back and forth there's a pretty good flow and to what extent might there be some industries that be vulnerable to cross-border movements and for that let's go to the third set of handouts actually I'm going no no no I just stood out that it's gonna be the next no that's I'll go ahead I was just very striking with the little box that said that the 10 most affected industries represent 63% of the oh yeah right the wage bill change right you'll hear from all these I mean we have already you know that's and then their individual company differences so it could be you know so even within an industry you can have one company that's operating a really thin margins for whatever reason whatever variation and others that are able to pass prices on with no problem you know so there's all there's a rich diversity of impacts even within an industry so the the the next one I want to reference is in a whole different is in a third keep going and no it's I think it's a no be the bottom select the charts yeah bottom right now so this this is the current analysis so that's that same table it's in the other memo and Joyce has incorporated a lot of this into her fiscal note which is the is the best excuse me best synopsis of what's happening but those are just some of the basic methods so this gives you just a visual on the nominal change this goes all the way back to 1939 and so the effective current law is that green line which is the max of either the remand minimum wage over the US minimum wage and then that blue part at the end is the proposed change those are nominal rates and the red line is showing the the US which is also the new Hampshire minimum wage if it doesn't change so let's go to the next chart this is the same thing with an inflation of just a basis for just the higher of the Vermont minimum wage or the US so the effective Vermont minimum wage over time the highest it had ever been I was back in 1968 where it hit and in a 2017 dollar basis 1147 and and so we'll be at the end of this we'll be up above that current laws right about there I've got one next one over this adds in then the Vermont I mean the New Hampshire and US rate for that green line which over time if it doesn't change a nominal rate is flat and then inflation brings down the real rate there so that would drop not to the lowest level but it'd be six dollars and twenty-nine cents and constant dollars and the constant dollar projector raised twelve dollars and eighty cents in 2017 dollars the dollars that are used in some of the other presentations are different basis 2019 I think 2015 in some cases but 2017 was the year that we had the employment data and the wage data so we just based it on that but it doesn't change the shape or the distance between the things and we just shift everything up or down so that just gives you a little bit of a visual in terms of long-term history of where it's been you know what's projected taking away this so that the highest historical level whatever was was 1147 back in the late sixties yeah now let's take away the current legislative trajectory of we know which increased just the 2.4 percent unemployment already pushing up wages naturally do you have any idea of where we would meet that line just given the current market conditions for labor at that level well that current that blue line that goes straight across is what would be expected to occur this is a real basis so it's an after inflation adjustment yeah this it would stay basically flat in real terms so even if inflation is higher the the rates going to go up by inflation so that the natural of room pressure just sort of like low unemployment with people having to pay more for labor at this rate you think it's just well by definition it does because it's adjusted for inflation so yeah every year if inflation goes up 3% then correct that goes up 3% if it goes up so on a nominal basis it might actually be higher but I think I'm real basis is going to be that exactly the same because by definition it is this you know it just to inflation no because I just I know I'm talking to a lot of employers right now we're saying that they're raising their wages naturally in in this price in this way oh yeah just to acquire labor yeah absolutely the prevailing wage yeah is accelerating yes and so that's why I could look very different part do you have any idea whether prevailing wages accelerating at right now about 3% right now okay so I mean they've been like two ticks over 3% for quite a while it had been pretty stagnant I mean for a very long time it had been quite stagnant so we're just talking about labor markets being tight but it wasn't translating in wages if markets are really tight that's where it shows up otherwise you've got slack in the labor force you know unused capacity of people come in but there's been very little wage growth the last you know several readings on it not only is inflation been low but the wage growth has been up around 3% so that's real growth in wages okay you know alright so the baseline has a forecast of that and it does include a cycle you know we've continued tightening but then a slowing you know after that so between now and 2024 there's likely to be something of a slowing whether it's a recession or just you know a pause or you know whatever but before that you'll get an increase in wages a more a faster acceleration wages during that they'll they'll flatten off so hard to say but I think probably $15 isn't going to you know if anything it's going to be more muted that that suggests the impacts are going to be more muted beneficial and negative will be more muted because you know Amazon now is a $15 in the ways Bank of America the other day said $20 they're not doing this because you know the goodness of their hearts they're doing it because that's what they need to do to get halfway decent workers and you know you need somebody who shows up on time that's you know not too drug affected who you know you're gonna have to pay something more like that when we look at some of the New Hampshire data and I want to share some of the preliminary work that's been done this this is this is very much a work in progress but it takes off from that recommendation that we get data and study it relative to New Hampshire because that's a vulnerability that we have it's it's really fascinating to look at how the wage distribution differs in New Hampshire to Vermont but what we see and I'll show you with some of the charts is you get a pocket of people that are sub Vermont minimum wage that are you know it's about 13% of all workers in New Hampshire are learning earning less than the Vermont minimum wage but then very quickly in almost every sector because above the Vermont proof the Vermont wage that's unaffected by the minimum wage so in general wages are higher in New Hampshire and a part of that has to do with proximity to Boston but it it tells you the prevailing wages you know are are up quite a bit higher yeah it also suggests that there's an effect called wage compression that we know about and expect but but some employers will give you know meet the minimum wage standard with wage increase there but they'll lower wage increases throughout the rest of the workforce so that those are not quite as highly paid in order to keep total labor costs about the same and you know if that's a really pronounced feature in it that changes the distribution but a lot of the other effects don't show up because you're you're not getting a whole lot of net new income you're getting a change in the distribution yeah but anyway I'll show you that with some of the charts look just to get to that or is there another question for you sir The 3% increase you spoke of over what period of time? That's like the last month year over year basis the last two months so the labor report came out yeah they looked at average hourly earnings and other compensation cost measures and it was I think 3.1, 3.2% so that's nominal so you adjust that for inflation but that's still pretty good so as compared to what we got before which was flat or even declining in some periods so that's just indicating that there is you know there are labor pressures you also hear about these companies that are you know voluntarily increasing wages and and that's a reflection of what they're having to pay to get you know good enough people So what is what does that mean though in terms of I'm looking at this chart here it says if New Hampshire well I mean let's just say for today there's a 49% differential between our minimum wage and their minimum wage so what what does what you just said mean in real terms okay well let me give you a peek at you know this isn't a thorough analysis because you know every time we do this issue this comes up and we say oh we really need the same data from New Hampshire we need you know all this base information we have to use to be able to start to analyze it and each time we try to chip away a little bit about it but you know that's why there's a request to say if we go to this it would be worth doing this right and studying it but we were able to construct estimates of the wage distribution for New Hampshire using unpublished DOL data that we ran the same methodology for Vermont and it was virtually identical with the actual DOL data we got from Vermont so we have confidence in the approach and Chloe Wexler joint fiscal did a lot of the work on this and so we generated data for New Hampshire to try to get a sense of this so let's go to the next and I'll just give you a brief picture of it this this is this is a table again with all the industries and we're trying to look for vulnerable industries and what sorts of things might be happening what it has in the first column is total New Hampshire employment for each of those industries the next column is the share of total employment that that industry represents so it's saying how important is that industry for the state of New Hampshire so general merchandise stores are 2.4 percent of that there are 15,610 workers and that's 2.4 percent of all New Hampshire employment so you'll see a sector that's either over represented or under represented relative to something else the next column is the number of New Hampshire workers that are earning less than $15 an hour in 2017 is the time period and so again that's not $15 further and we can do this for different wage points if I were doing this analysis relative to this proposal I'd use $12.80 and and run the analysis that way so that means there are 42 percent 41.9 percent of the workers in that sector are earning less than $15 an hour so they only start to go to Vermont and say all right total these are sort of mirror things just if you look at it so there's 3,510 workers in Vermont and it's a much smaller share of the total Vermont labor force about half it's 1.2 percent but 74 percent of the workers in Vermont are earning less than $15 an hour versus only 42% in New Hampshire so so when when I'm when I'm looking at this this other metric that out there if you take total employment in New Hampshire it's about 2.13 times what it is in Vermont so it's about double population is about double the number of workers about double and so if there's a number that's above 2.13 over here it would be a sector that New Hampshire is overrepresented in relative to Vermont a sector that it's doing really well in and most of the retail sectors in New Hampshire are overrepresented they're sort of shaded more yellow red and the sectors in which Vermont is over represented are less than 2.13 so the number would be less than that and they're shaded with green so there are sectors that you know might surprise you and others that don't so that retails a little bit overrepresented it's not a big surprise we know where the retail establishments are also New Hampshire benefits from a lot of retail demand from Massachusetts that that also affects that but if we looked at we did a study maybe four or five years ago on on just sales and use revenues in the and and the competitive pressures from New Hampshire and and we know that virtually all the big box stores up the Connecticut River on that on the New Hampshire side of the river and that's been attributed to the sales tax and if you that differential you look back over time and it pretty much starts about when the sales tax starts but it also starts and so just not to jump ahead but so we went all the way up around in Maine also as a sales tax it's about the same as Vermont it's a little bit lower but about the same well there you don't have all the big box stores on the New Hampshire side they're almost equally on the main side and the Hampshire side even though they're close and could easily have been placed on the other side so the thing that turns out also occurred at the same time sales tax was at 250 which really discouraged development of those types of stores made it difficult or more expensive to do that and and that I think is a is the is a bigger factor than either a wage differential that exists or a sales tax on that so you know there are there are a lot of things look at for example now at gas stations so when gas stations are much more highly represented way over represented in Vermont is 1.3% of total Vermont employment is gas stations and it's only 0.7% of New Hampshire well the interstate runs up on the Vermont side of the of the river and and also just the way pricing has developed if you look at the way gasoline is priced in New Hampshire right near the Vermont border they run it up close to the Vermont price the deeper you go into New Hampshire the cheaper it gets but the profit maximizing approach is not to try to get people clear across the river but just let's just stay a little bit underneath that and and that shows up here as that's not we're not losing gas stations to New Hampshire even though there's a differential in the gas tax even though the other items like cigarettes and things like that that people buy at gas stations a lot of these things like that are affected so anyway each of these analyses has as some part of but let's let's go through to some of the charts so let's go out to one of the manufacturing ones that one's not yeah let's see text them there's a wood products that's the next one yeah furniture yeah so this this is a sector that look at that chart so furniture manufacturing is is one that you would that has a high share of relatively I share of low-wage workers for a manufacturing sector in general manufacturing is not that high but there are only a thousand furniture manufacturing jobs in New Hampshire and they're 1,340 in Vermont and you say well if the wage differential is what's you know might be driving potential loss there because it's it's you know it's a low-wage industry and and if we keep raising our minimum wage we're gonna lose even more there look at the distribution of the jobs so this is a percentile of employees this is an hourly wage so here at the minimum you know you know Vermont ends at 10 that was a minimum wage in 2017 and there's some workers in that first 10 percentile of employees that are below them but then all the way up the rest of the way they're higher paid it it sort of suggests that there's there's much bigger things that are affecting some of the sectors like manufacturing that if you're competitive in manufacturing you're not you're not competitive globally because you're paying you have access to cheap labor in this country so there's either you mechanized what you're doing you've found some niche in this sector but this doesn't suggest that just because of a minimum wage increase in this sector we'd be losing a lot of a lot of there'd be a strong pull across the board so we can go through a whole bunch of these we have for every sector but this is not an uncommon shape for the two curves to have you know differential down low but then as you go up it's the spread is wages are higher in the mansion so does their correlating information that shows that the higher wages reflect or where job I mean yes they have less of those higher paying jobs than we have in this case we have 1300 they have we have 1300 total jobs what I'm saying is that as a share of our total employment we have a higher mix of furniture manufacturing we're we're you know it's more important to the Vermont economy than it is to New Hampshire and yet you'd think if low wages was the thing that was making or breaking that sector they'd be doing better because they don't have to pay people what this is is that you can't make furniture using minimum wage labor you can pay the bottom 10% of your employees less but your total wage bill in New Hampshire or Vermont or almost anywhere in the United States is going to be higher and and that's fine as far as it goes but that does I mean does it take into account these jobs are in Manchester closer to Massachusetts where it's more expensive to live and that's the next level of analysis you really want to do we really want to look at if we could do something county county you know right on the border that would be useful but these are the sectors that we were most concerned and and again this is just like a little toe in the water of analysis here but I just I share it because there are some interesting things that will come out even from just looking at you know a first cut of it and also the the need to do more if we do go with a more aggressive minimum wage state to keep our eye on things like this now we go through some other sec I'm sorry doesn't this show that the market's adjusting it doesn't need to state to adjust the nature is significant I want to make sure I understand yeah you're going really very quickly yeah I'm sorry yeah I grass but you're saying yeah so if the answer is a significant lower minimum wage and this wouldn't this perhaps show that actually places are better in New Hampshire this because of the market in the sector wages are better yes if you're in the bottom 10% they're worse you know if you're the guy sweeping up the shop at the end of the furniture manufacturing day you'd be better off working in Vermont and they say a little bit of money on that person or those people but then everybody else in the shop is getting more than they get in Vermont so what a Vermont company moved to New Hampshire to save on this doesn't look like so that's that's more of the the direction that it's the it's like you know the but again it it's preliminary and it's and it's worth looking into both where they're located and exactly which companies they are because sometimes one or two companies can really bias in a gift to the point at least in this particular case to where if we have more bite by statistical margins they should have twice as many they should have closer to 2,800 or 2,600 good workers yeah just by just by that percent right they don't and that means maybe nothing but except for how important the industry is to their well when we do statistical analysis out we take a lot of industries after we clean that data and then we run regression analysis looking at like all the industries and say you know what jumps out you know is there a correlation between the you know low wages and the share of the importance of that industry to the state so if we look at accommodation for example you know so hotels motels Vermont is much more highly dependent upon tourism and hotels and motels than in Hampshire and yet if we look at the wage spread there again this is not something that you know you you would expect they say oh I have my hotel in Vermont but the wages are lower in New Hampshire all move to New Hampshire and have the motel there it that's unlikely to happen and so there we get a wage spread maybe scroll through it's going to be one where the two lines stay above so I organize these by the shape of the lines keep going keep guys pretty far that construction is another interesting gasoline stations where you talk about those food and beverage yeah keep on it's like food and beverage social assistance okay accommodation there so there the Vermont line is higher all the way through so wages in hotels and motels in Vermont are higher than New Hampshire now at the bottom they're quite a bit more but all the way up the spectrum and that's kind of unusual they're not too many industries that are like that so you wouldn't say they're yeah they're wage bill you know you could shift your wage bill down if you were sort of an average hotel motel but that's not a sector that moves easily it's not you know so so am I concerned about job loss there no but I would be in you know the the furniture manufacturer thing I would have had that looked like this I would have said that could be a no-brainer you know that would be an easy thing to go with so anyway it's it's I'm just showing this to illustrate the importance of trying to dig down with real hard data and figure out what's happening and what could be affecting them a wage and where the risks exist so unfinished do you have the one thing people have started asking me about the mom-and-pop stores or the family of small stores in rural towns do you have a graph of that kind of sector so that would probably be miscellaneous store retailers or food and beverage stores and the problem is that's going to include a lot of big stuff maybe the miscellaneous store retailers would not might be smaller but a lot of them are food beverage and sometimes gas too so depends how they classify that they got to dig into that more I think the problem there more is if you have thin profit versions yes so you you know you you would want to pass on costs so to the I don't I don't think your client tell will disappear but how price sensitive as a client tell to that and there you could get a reduction in hours if they just say we're going to provide lower quality service because we can't you know have two people in the store at the same time because of the wage bill so there are a lot of different responses you might get but you could get some labor loss from there is there in any of your houses there kind of an urban world separation of this to look at this because I'd love to be able to do that but we have it so true I don't know with all of us how to calibrate this for the rest of the state yeah yeah no that's a that's a good point and you know there are a lot of subgroups of companies industries and geographies that would be great to look at I'd love to do it but so far that is present from are any of these indicators taking into consideration New Hampshire workers coming to Vermont to work for the higher-rate wage well that's that reflect anywhere here yeah I mean that can happen your as well so some it include are based on place of work and some are based on place of residence okay so you can look at both of those things that sort itself out yeah I mean you've got again you would then expect to see a labor shortage say and a bigger labor shortage in retail in New Hampshire than Vermont if you know how you're going to wage and that's a sector where there are a lot of workers yeah doing or an ability for restaurants to get to find people in Vermont and they can't in New Hampshire yeah I even heard anecdotally that sort of thing I think what ends up happening is they pay what they need to to get people and price according yeah so to get back to the original question not to ask you whether or not our minimum wage is too high or too old with the policy question well we can make terminations based on living livable wage which is where it came out in 1999 right that was I think when the basic needs budget must have come out of but how how can we best look at this and I'm not put you on the spot but you had a larger you had a larger idea of like the larger financial world you know some of your concerns were about the we just sort of like that is where we are really global economy right now going into a recession and what that looks or theoretically going into a recession a lot of people are anticipating that there's been some signals with it given you know my concerns with that are a few things with the global recession the yield curve inversion recently I know raise a lot of bells we're not looking at some crime learning warriors they were looking at some kind of money with like car loans and credit cards and I kind of see that as a rinse repeat just in a different box than what we did in 08 and taking a look at if we are heading into a a retraction you know what this 10 to 20 percent retraction on a business is revenue look like if we're putting policy in a place that obligates you know what does that look like when we're already experiencing low unemployment how does that celebrate things I know that's kind of a big question but yeah but I mean that is something else we look at because in doing the revenue forecast we're running different scenarios of the broader economy and so all those are things that we're looking at what we have as a baseline forecast right now is a slowing of growth in fiscal 21 but not a recession but I you know there has been more chatter about it recently the inversion is one signal but it also is a false signal sometimes so there needs to be something that's that's an imbalance that corrects and you point to I mean I think corporate debt is probably more vulnerable even than some of the other financial areas but but there there are plenty of candidates for that sort of thing but I don't I don't conclusion I think it's always good though to be re-evaluating what you're doing if there's a multi-year thing based on how it's doing and you know I mean you have that power even if you pass something that says this is going to go you know for five years or whatever I is you can revisit it and there's nothing like actual information to try to understand well what's the impact having yeah and and let's evaluate that and let's do what's best a lot of my concerns in that is we're bouncing a lot of growth since the recession and I'm in the restaurant yeah and I wanted to storm and that was a really dark place yeah for a lot of years so where we see an expansion state hasn't only been in retail hospitality but it's also been in sort of the higher end disposable income level of life alcohol boutique in a fashion whether it be beer dark of socks things of that nature so when people start to see it you know there's quarterly statements on their 401ks or whatever that's when I notice actually spending slows in 20 years of retail or the food sector the people are not necessarily always making less money but they freak out when they see 401ks right you know they're not cashing it in for years it's just kind of like this funny you know that yeah so trying to like anticipate here we've seen the largest you know economic expansion since well the world war two not the largest but the longest excuse me the longest yeah and just part of why it's been the longest is it hasn't been it hasn't been a large it's lower yeah okay so this look there so that's sort of like my concern being a tourist economy and even like we are manufacturing and exporting their sort of disposable income so is that disposable income becomes less accessible to people we're going to see the slower sales slower employment capabilities yeah that's my fear of this sort of this fight you're playing right now sure it's are we are we putting the throttle down into a bad environment yeah I mean you can argue you know the other side of that would be you know labor markets never been tighter it's you know wages are going to start accelerating on their own it's going to be more growth than people anticipate and it could be better too typically those risks are handled in the private sector by running alternative scenarios so firms that we work for in the private sector that we're doing economic forecasting for will run a scenario that's like a full-fledged recession will run one it's like almost no just continuing the good times because each one has different implications for how the risks they take with respect to marketing hiring new production facilities things like that the state of Vermont almost never does that but you know occasionally we have typically around really bad events like 9-11 we did a whole bunch of alternatives emulations when it was clear it was a different world kind of so you know so you could do things like that it was so you sort of understood the range of risk and what the implications would be but even if you knew those you'd probably just want the flexibility to adjust if you needed to in the future because nobody can tell the future it's not you know so it's going to be how quickly you respond in general the sector you're talking about is doing pretty well and it's demographically driven and income driven so older people spend a much higher share of their disposable income on services rather than goods and tourism travel eating out things like that are a higher share of their expenditures than on stuff durable this morning so that's why that sector especially in New England has grown more quickly than a lot of other sectors and it was hit by the recession but it it came back stronger a lot of other things didn't come back much stronger or came back later so so in terms of secular trends that's apt to be in better shape 5-10 years from now that will still be a strong component of the state economy but around that you can get a recession that'll collapse everything if it was severe you know yeah and I guess I was just wanted to ask your opinion on like I mean I know it's economic key things right but what the dissentments were about and I know and I do understand that when there is a recession Vermont doesn't take it as typically it doesn't take them to financial well it depends what's driving them go back to 1990 for way worse than the national okay session yeah and it came right over yeah so yeah there are a few things with it with long some real estate sometimes very much that one was real estate real estate it was it was a huge as at more severe than the last one for local stuff and for New England but there have been regional real estate yeah regional real estate cycles that have been huge it rarely happened at a national level and this last one was one of the only ones that affected almost every state there was one state that didn't drop you want to guess didn't drop yeah one state that right through the real estate crash and the recession had no decline in home prices yeah that's when the oil boom the oil boom was going on they have a state bank and they also had a lot of wind investment right around that same time and they just sailed through it anyway so you I mean that was a risk you have to hedge against but probably the best way policy wise is just give yourself flexibility if you have to change course and you can do that without it being explicit but some states have written in some review policy each year I think in New York or some of them and they'll like check in and see if yeah is it okay to keep keep going up okay some schedule interesting it's an interesting book and as we as we wrap up to think that 1990 you had you had made some other mention about another no but 1990 was about the same time that we started this pension situation where because of that recession we started not putting money and then the and then the other bookend is the 2038 2040 when we're going to stop paying 170 million dollars of general fund money into that fund you know because we will have squared it in 2038 right I mean I mean what I'll be 77 not that I'm applying for the pension but but you know it's a long time away in a lot of ways but that's a whole other topic it's huge but it but it plays into all of this economic stuff because again we can't provide we took so much testimony from the vna's and the home adult daycares and Medicaid stuff that we we're not obviously it's not easy for us to increase those numbers to take on the minimum wage for those particular industries or at least overtly that is it's not a clear way to do it it's still pulling them funds out of appropriations because 170 million dollars plus is being put aside to pay off these pensions made decisions that were made back in the 1990s so it's just no as a as a process that I think there's really important lessons with that and it is hard for a government to look you know beyond you know your terms your likely terms in office the you know what the impacts might be and I compare that to some of the private sector things that are done where because of economic interests there's a longer term horizon and there you know there was no stress testing and there were no credible economic forecasts that were associated with some of that and most of all there was no adjustment when it was obvious those returns were not coming in to say you know all right we've got at least four or five years of much lower rate of return let's at least crunch those numbers um but there's no like check-in it's kind of been a willful blindness that has occurred and it and it's a deep hole that now you're left with and um yeah it going forward even to get to 2038 is still what I would consider pretty optimistic it ought to at least be stress test you know a treasurer says I mean that's a whole different vocabulary for me but I think this the treasurer sure I mean the treasurer always says the same things you just said I mean if we're not getting extra set return if we get the assumption is off yeah you know on a year-to-year basis which you didn't you know a year to maybe five percent seven percent two percent eight percent yeah you may get the return that you get over time but I mean last year may not have been a great year this year maybe you know I mean it's yeah but you can bracket it and you certainly should have more than one scenario and if it starts looking like oh yeah that's the scenario that's that's actually occurring then you want to make an adjustment and and even then have some slack that's on the conservative side with all the other budgeting you know it's it's relatively conservative come up with a balanced budget all the time and and it's uh this could be done the same way but so many states because of the time horizon fail to do that and sometimes the interest of the parties that were advising the states and that's another part of this that I think is problematic because you're not getting independent always getting independent review right we're getting a lesson on what it means to bind the future legislature um sorry decisions you made that way back when yeah yeah well uh Mary one more I have a question regarding the p.m. sure who makes the lowest wages in the p.m. sure what group largely women so much the same kind of distribution and Deb right and did some charts with a run on some census data that show that distribution I think in the first in one of the memos anyway one of those old memos there's there's some charts that that show by educational attainment by gender by I don't know hours work different things you know who those people are but they're the least demanding people in society so they get a job you're not you know arguing for a pay increase every year you're not threatening to leave and go somewhere else and you're just taking advantage of quite frankly so um it does tend to be disproportionately female like almost 60 40 and that's something I'd like to look at more closely that 13 percent of the New Hampshire workforce is earning less than the Vermont minimum wage because essentially that's who you're protecting here the market will be affecting everybody else but it's that pocket of people that you're saying in Vermont that's not how we do so they would be the people that would be left behind if you didn't have them and if you just kept the federal seven and a quarter probably our profile would look pretty similar thank you yeah if there if there are other questions that come up I'm happy to respond to them either emails whatever and Joyce is also around Joyce all the same thank you so much