 Actually, I should say a good week to everybody. We work together this morning. We must have a military children there. Yes. And I understand that Governor gave them a hall pass. Oh! He did a good what? One of them came running out and said, Helen, Helen, look at this. Signed by Phil Scott. Oh, space from school. That's right. That's right. Yeah, future votes, right? Yeah. You're going to be on that show. Okay, so welcome back, Tom. Thank you. It's good to have you as we take a little bit of a deeper dive into some of the things we talked about last week. I see we've got up a memo about impact monitoring capability. In any case, perhaps that's what you want to address and there may be some other documents, so I encourage you to jump in. Well, we had just sort of left off last time with Q&A on various, a wide range of different things. And so I wanted to pick up there, but I asked Ron that if there were any questions in the interim that people had to go ahead and send them. And essentially there was one that had to do with recommendations. So, you know, were there recommendations that we had made that we'd like to talk about with respect to it. In the general, the broader memo of October 2nd, and there are four memos that Ron passed around last time as part of the testimony so that I might refer to any of those. But in that memo, which is done for the Minimum Wage Study Committee, we weren't asked to provide recommendations. We were asked to analyze the impact of, you know, three different variants. And so we did that. In prior analyses, we have been asked to come up with recommendations. And so, you know, we've been doing this several times and most of those recommendations are reiterated each time there's a change. But we didn't have a set of recommendations with this. If we were to have had any recommendations, you know, they would have been along the lines of preserving incentives for people to work. This is really important so that as wages go up that there's not a loss in benefits. It makes it uneconomic and against somebody's interest to get a job instead of getting a federal or a state subsidy. And the other was just to ensure that to the greatest extent possible, and these are related, that the wage change represents an income change to the intended beneficiaries. And so again, understanding this interplay between transfer payments and earning income. And I think the summer committee tried to address those. What's always hard is the federal government plays a big role in two aspects of that. One of the transfer payments that they have that are separate programs that we don't control. And the other is the taxation of income that's earned. And the federal taxes are non-trivial part of a loss in income that a low income person can get well before they're at what we would consider a livable income level. So those things are coming into play in all of this. But the specific recommendations that we were asked to make before testimony at Senate Economic Development had to do with monitoring capacity, and we touched on this at the last meeting that I was at here. And that is the minimum wage that's proposed is above the level that has been studied previously. So it's not like we have analyses that say, okay, New York or somebody else went to that wage and here's some analysis of what happened. Washington in the Seattle area has done some analysis at some wage levels that are approaching what we're talking about. So it's not like there's nothing, but there has been very little in the way of academic work on any wage change at the level that's being proposed. So we felt both that and the growing spread with New Hampshire. And I held up this chart last time, but it's in the documents and we went through it last time. But it just shows that, you know, we have a border in the state that we do a lot of commerce with where they're not even talking about changing the federal minimum wage and there's no discussion in Washington about changing the federal minimum wage. So it's likely that we're going to have a pretty persistent differential there. And so we feel like it would be beneficial to study that and track that and identify whether there are any things that are problems or everything's fine and no problem or whatever, but it should be studied. It would be useful to study that a little more depth in the event that we find something that's negative impact that was unforeseen. And then there could be a response to that. So this note just outlines these two areas. The one with New Hampshire is fairly straightforward to require a little cooperation with the New Hampshire Department of Labor. And we've had contact with them before and they've been pretty cooperative. And our counterpart here at the Vermont Department of Labor works with these people regularly. And I think we could get the information we need to do that level of analysis. And most of that could be done by joint fiscal or it's fairly small analysis. The other analysis has to do with changes in hours worked and possible job losses that would occur from raising minimum wage in Vermont. And that would require the collection of some data on hours worked. This information is requested on unemployment insurance forms, but it's not organized and assembled by the Department of Labor. And it's not always entered by employers. So there would need to be some changes made there. And we could work with the Department of Labor here to try to zero in on that if that's something that people wanted to pursue. I don't know what costs might be involved from the Department of Labor side. I think most of it would be filling in information that's already requested and getting employers to do that. It's not a totally universe of all the employers does it pay into unemployment insurance, but it's most of them and most of the ones that would be likely to have an impact on hours work. So this is done in Washington State and a few other places. And that's why they were able to do an analysis after the last wage change in the Seattle area and start to say is anything happening and then academics and other can get at that data and take it apart and analyze it. So there's a little bit of expense involved that I've outlined here, but it's not an enormous expense given potentially what the expense could be for the Vermont economy and those involved. But that's kind of, you know, this sort of summarizes just these two recommendations that we had that were following and might be things that you want to consider. So that's the only specific question that was raised in the interim. I don't think there are other things anybody would like to ask about in any of those four reports. I'd be happy to go into more detail. Thank you, Tom. I just wondering when you mentioned Seattle, was the minimum wage increase just in that area or the whole state? Yeah, what makes it hard in terms of the analysis was just in the Seattle city proper. And they had trouble getting data from companies who were operating both in the minimum wage area and outside of it. And so it was harder for them to break that apart, which made it more difficult to analyze. But even that was useful to have. So when it's a state, it's an easier political and data jurisdiction to work from. So it's a lot cleaner. And yeah, but they collected at the state level and then they tried to get it down to a city level. Unless you had vendors reporting by establishment, it would be hard to do a city level thing. Okay. Thank you. Any other questions for Tom? Well, if things come up. Are there any other documents that we refer to earlier ones that we did not look at with you last week? They're mostly background analyses. You know, it's just that there are, there were different graphic depictions of some of the things that were analyzed each time. So, you know, the way the benefits interact that chart was from an earlier analysis. It holds true even if some of the numbers differ with variations in it. But you know, I had that just to be illustrative. The other thing was in one of the early memos last year, we did touch on New Hampshire related data. And I also mentioned that in the gender mix of the low income jobs. I thought was really interesting of the sub, what would be sub Vermont minimum wage jobs that are in New Hampshire. There was a very high proportion of those were held by women. So that was of interest and that was in an earlier note. I just wanted to have those as reference pieces since it wasn't like in every memo we reiterated everything else that had been centered on before. Representative Christie? So Tom, thanks again for your work. When we disaggregate that data looking at the gender piece and then looking at those intersections that you talked about on the river. Being that Vermont's unemployment rate is so low. Is some of that, do you think, just the function of availability as well of some of those jobs? You mean the difference in wage or you're saying the movement, the female movement from Vermont to New Hampshire. I don't know anything about female, the data that we have on people who journey to work from one state to the other doesn't break it apart by gender. So we know the total flows by state and there's a lot and they go in different directions at different places on the Connecticut River. So in the Brattleboro area, the flow is to Vermont from New Hampshire. In the White River Junction Hanover area, it's definitely from Vermont to New Hampshire. And then up north in Colbrook, even though the flows aren't huge, it's from Vermont to New Hampshire net, even though there's a lot of back and forth. But we don't have a way to break that up by gender and even then we can't even see what wages are people getting that happen to be traveling versus those that are people that live in this state. But it was just interesting to see that if we say, or even though the prevailing wages and the market wages seem to be quite a bit higher than these low numbers that many people that are getting between $7 and $8 an hour even $8 to $9 an hour in New Hampshire, those wages are below what you would be paying somebody new to come into even an entry level job. It means that there are people that have jobs but aren't squeaky wheels. They're not demanding pay increases all the time. And the collection of people that are in those lowest categories tend to be almost 70% women. And so that's just significant to me. You know, you're saying if New Hampshire had had a minimum wage change like Vermont, who are the people that would be swept up with that? It's the people that haven't yet gotten wage increase. Even though they might be able to, if they jumped jobs or if they did something else, they'd probably be able to get more. But those are just interesting characteristics when you get two states that are close to each other and they have a different wage regimen. Representative Stevens. So all of the work that you did last fall and the studies that you did last fall and this presumed 2022 as the day, as the year when we reached $15, the numerical analysis that you did. Is there a factor we can think about considering that this proposal is for 2024 rather than 2022? Yeah, so we did three different variants in that analysis that were designed to be kind of stakes in the ground that would kind of frame the outside edges of what might be likely to be passed. And there was $15 an hour in 2022, $13.25 in 2022, and $12.50 in 2021. So those are the three that we did. And that middle one, $13.25 in 2022 is actually part of the path to $15 in 2024. So it happens just by chance to go up and hit that $13.25 in 2022, but then it keeps going. So Joint Fiscal has tried to kind of say, all right, if that's 15 in 2022 and here's the path that it's on, it's somewhere in between that and has produced some metrics that I think are probably reasonable. But it's not like we did the analysis of exactly what's in the bill right now. So I think Joint Fiscal's approximations are in the right ballpark. But I can't say we ran the whole analysis and that's the exact number. Okay, and just going back, I'm going to do a little adjacent to what Representative Christie was saying. Last week you testified that under certain economic conditions where employment is really low that we're seeing. Unemployment or employment? Where unemployment is really low. Okay. That you mentioned that we're seeing people who have been out of the workforce re-entering it. And we talked about how the 2.8% doesn't necessarily include these people who are coming in. You know, they're just people who have stopped looking for work. Are you seeing that here in Vermont or is that just a net? Is that just a nationwide phenomenon but something outcome of a tight market? No, we're seeing it in Vermont also. I mean, you could have an increase in the unemployment rate just from more people entering the labor force and even employment growing if more people came in than the increase in jobs. But this is happening all over the country and it's happening in Vermont also. You know, the tighter the market gets, you get a wage response which has been long awaited by many people but as the labor market wages go up, it pulls more people in. A lot of times they're more marginal workers so, you know, there's a mix but you're bringing in people that were less employable before. And that is occurring in Vermont as well. So we traditionally think that the tight market place means rising incomes and Vermont doesn't have highs and lows it seems over time. Is the influx of workers who weren't counted before, who were working marginal jobs, is that one? Can I stipulate that wages are lower or slower to rise in this particular recovery? And would that be, can you make a connection between the fact that there actually are people available who are coming back into the workplace so there's not really, you know, people don't have to pay more because they can find people that would accept less? No, I mean that goes hand in hand. So the fact that it's drawing people in is connected to wage increases and those two conditions exist at the same time. So wage growth has been very, very slow in this recovery in general. In large part because there were so many unemployed people and so there was very little bargaining power except in particular industries that had shortages of workers. So there are a lot of factors though that go into slow wage growth. Global and technology considerations are the two most important and then the cyclical nature of the economy will create periods where there's either a lot of slack or they're very tight. There's been a tremendous slack for a long period of time that's slowly over a long, you know, long slow recovery finally starting to impact wages and we're getting wage increases. So that's what's happening now, that's the condition we have now. And the deficit spending that's occurring with the tax act. So, you know, tax cuts without spending cuts, you know, so tax cuts that are financed by deficit spending at the federal level is just going to pump the economy up even more. So if anything it's going to put more pressure on wages. Already there are stories out about areas and professions that have real job shortages and what to do and this kind of thing. There are going to be a lot more of those and what it will do is it will bid up wages and so that's going to be happening outside of anything else that occurs. If there are other questions that come up, feel free to two e-mails or whatever else and we'll respond to them. Great. All right. Thank you. Thank you. Thank you. Thank you. Thank you. Being so close to that border. Not just what vacations are. I was watching the traffic yesterday. Okay, so we are, our next up on our list is Joyce Manchester is going to comment on this note. She's in Senate education right now and will not be able to get here before to, at the earliest, maybe a little later than that. So we're going to switch gears for information for the committee as well as others in the room. I'm going to switch gears and look at a couple of other Senate bills that are headed our way. First is honor member flag which is on notice. Thank you for being here with the fiscal note on S40. Thank you for having me and good afternoon. This 40 seems to be making a round. Thank you. So I'm happy to talk through the fiscal note and I'm sure you remember 95% of what Damien and I presented what was that two weeks ago? It was over an hour ago. So I'm happy to answer questions as we go through. So please feel free. Let's see. So you remember that the idea is to raise the minimum wage from its current 1050 per hour as we go forward up to $15 per hour in 2024. And you can see on the first page of the fiscal note how the path would happen over time. So for your information, I'm showing you the CPI inflation projection that is the product of JFO and the administration working together. So this is the most recent projection from this winter. Is that right? So it's from this winter. So it shows you the projected path of inflation. You can see a little bit higher for the next few years and then dropping down to 2.2%. Under current law, the current minimum wage of 1050 grows by the CPI or 5%, whichever is lower. And you can see that we're not projecting inflation as high as 5%. So the minimum wage grows with inflation and reaches something like 1216. Of course, these projections won't come true, but something like 1216 by 2024. In contrast, S40 would bump up the minimum wage in steps so that it reaches 1250 in 2021, 1325 in 2022, and $15 by 2024. Now, if you want to remove the effects of inflation, $15 in 2024 is equivalent to almost $13 an hour today. So if you want to have a comparison in your head, it's as if the minimum wage today would bump up to $13 an hour. But of course, we're spreading out the effects over six years, so you're not going to have a big change in labor markets. You'll have a small change over time. Okay. Representative Walz. Yeah, I'm sorry, I'm trying to follow that. It seems if you're increasing by CPI every year, basically in 2016, you're still earning in 2018 dollars, 1050. Yes, and that would continue going forward, right? And it's always going to be 1050. Always 1050. The equivalent of 1050. Correct. Right. In today's dollars, yes. Right, in today's dollars. So I'm not sure where the 13 something comes from. Ah, the 13 happens if you implement S40 to raise the minimum wage according to this path. Oh, I'm sorry. Right. I misunderstood you. Right. So $15 in 2024 is approximately $13 today. Okay, thank you. Okay, so the purpose of the fiscal note was primarily to look at the effect on the state budget. So I'm going to talk first about the direct fiscal impact. So that means do we have more dollars coming in as revenues? Do we have fewer dollars coming in as revenues? Do we have more dollars going out the door as expenditures? Do we have fewer dollars going out the door as expenditures? So the direct fiscal impact will arise from primarily three categories. The first is increased state revenue coming from income taxes and other taxes and fees. And that occurs as workers in Vermont get paid higher wages, right? They used to be paid 1050 or the equivalent. And as time goes on, that wage increases, the minimum wage increases. And so they would be liable for more income taxes. They might also buy more, who knows what, liquor. They might buy more cars, you know, all these things that more income would bring. And those would have revenues associated with them as well. The second category would be the cost of higher wages paid to some state workers and contractors. So of course that means less money in the state's coffers because the state has to pay more for the workers at minimum wage who are now earning higher wages. And the third factor would be possible impacts on state program benefit levels because eligibility will change. If the minimum wage means that today you're earning 20,000 but as the minimum wage bill goes into effect you're earning 23,000, for example, and you might be eligible for a lower level of benefits from some programs or perhaps you're not eligible at all for some programs. So we saw examples of that with child care, with Debra Eton, and certainly for low income housing assistant, heating oil assistants and so forth. So we would expect fewer dollars going out the door for some benefits. Okay, so turning the page. So we think the next fiscal impact on the state from increased revenues and reduced program benefits expressed in today's dollars, 2018 dollars and roughly estimated would be about 150,000 in fiscal year 2019. Now remember that's only six months of the new minimum wage because the new minimum wage would go into effect January 1st, 2019. So it would only be the second half of FY 2019 that's affected. And then in FY 2020 we expect about $2 million. Additional coming into the state on net. Okay, so I've talked about the fact that we've got increased tax revenue coming from workers who earn higher wages. They also have more spending power, so more sales taxes, other revenues collected by the state. We think about 40, something like 40% of the net fiscal impact to the state comes from those higher revenues. I haven't mentioned specifically the state earned income tax credit, rental rebate, property tax adjustment, homeowner rebate. But you can understand that all of those credits would have fewer dollars associated with them if people in the state are earning more money. Now number two, an increase in the minimum wage would increase costs to the state as wages rise for some state workers, contractors, and other associated workers. We looked at a ripple effect on the state pension funds. We didn't really see much there at all. Often pensions are based on the final three years of earnings. It looks like that would not be affected very much at all. And the temporary state workers who are most likely to be affected by an increase in the minimum wage generally don't qualify for pensions either. So there's no effect there. There may be some contractors, for example, you're trying hard to think about where the contractors might be. For example, food service contractors that get paid the minimum wage and the state would end up paying a bit more to those folks. But again, they tend to be temporary workers or contracted, not part of the state pension system. Okay, so what about state employees? Direct state salaries would see limited impacts because not very many state workers are paid the minimum wage. Most are paid more than the minimum wage. So we did talk with Harold Schwartz, who's in charge of human resources for the state. He estimated about $600,000, averaged 2019 to 2024. So smaller costs at the beginning and larger costs towards the end of that period. And again, most of those folks would be temporary workers. Excuse me. And that does include costs for direct pay as well as Social Security taxes, Medicare contributions, and so forth. Okay, I do want to mention here that about 40% of the cost of the state workforce has been covered by federal or other funding sources. That may change, of course, going forward as federal government decides to be more or less involved in state budgets. Okay, what about state contracts? State vendors include agency of administration. I'm sorry, agency of transportation? No. What is AOT? Agency of transportation. Thank you. So there are some contractors, not very many. Most of them are subject to Davis Bacon rules, which means that they get paid more than the minimum wage. There may be some designated agency and specialized service agency organizations where there are employees who get paid something close to the minimum wage or less than $15 an hour. And there are also home health and personal care organizations. Now, just in time. You're just in time. I'm about to talk about these home health and personal care organizations and how the employees might be affected by the minimum wage. Okay, so the summer study committee spent a good bit of time trying to collect data on wages paid to home health personnel and visiting nurse association personnel and so forth and so on. It was a little bit hard to collect the data. I will say that. We worked very closely with the executive director of the visiting nurse association. And in the end, we did not have very usable information. So it was hard to explain that even though we were raising the minimum wage to $15 an hour, it was not appropriate to say, okay, here's my payroll today. How much bigger would my payroll be if the minimum wage today was $15 an hour? Because in today's dollars, it's only $12.96 or back in 2017, it was only $12.68 or whatever it was, right? So that was hard to explain. And also, what we want to know is what's the impact on payroll if you move in one year's increment and then the second year's increment and then over time you finally get up to $15 an hour, right? So it's not like they would get the full impact all in one year, right? But that means that you need very detailed information about what each individual person is earning and how those person's annual wages would be affected over time, right? That's a lot of data collection. And these folks are not used to that kind of data collection. So it was difficult to get an estimate. I spoke with a few people in V&A and Orleans, Essex and they're anticipating with this minimum wage increase not having the funding to pay. So ultimately the people that are going to get hurt are the poor people that are at home and rely on this help. Yes, thank you. I was about to get to that. So both... Excuse me, I should have left. That's fine, that's fine. You teed me up. I'm sorry. So both the home health organizations and the personal care organizations, including visiting or associations, are paid largely by Medicare. Medicare does not look at what minimum wage or prevailing wage or anything else. They pay what they pay. And they're not going to increase their payments as the wage in Vermont increases. So the fear is that the budget stays the same, the personnel cost goes up, and what happens? Either you cut care or... I don't know what else you do. I mean, that's your budget. You find another source of funding, perhaps. You have 10 people working for instead of 15 for the same kind of money. Yes, that's right. That's right. So that means fewer people get care. Absolutely. And that is a big problem, and it's not obvious how you solve that problem, right? So unless the state finds the money to fill in the hole, I'm not sure what else would happen. So that is a concern, absolutely. Good? And that has been a concern for each minimum wage increase that we've gone through over the last few months. Yes, and when we heard executive directors of those agencies or organizations testify, it was clear that they, you know, they were just downtrodden, right? They've been through this several times before. It's a very serious problem. May I ask another question? Yes. A lot of minimum wage people, at least where I live, don't just work a 40-hour week. Correct. They work 50 or sometimes 60 hours, in which case, once this becomes $15 an hour, they'll be making time and a half still. So that's going to take a lot of extra expense from an employer as well, isn't it? No. Why? Well, it depends on the way they're working. The time and a half rules are very strict in this state, and it's not necessarily true that people will be making time and a half. There are a number of people who make time and a half very, very limited in Vermont. Okay, and I would also add that we know from surveys and so forth that low-wage workers often tend to have multiple jobs. So they may be working 60, 70 hours a week, but they're working two or three jobs. Other jobs. Right. I'm guessing you've given us the answer here since it's so hard to collect the data on visiting nurses, but if you had any idea how big a hole that would create? We tried really hard to get the data, and we were not successful. Part of the problem was that the data are, you know, they're sensitive, confidential payroll data, and so I could see the spreadsheet. I could see what needed to be done, but I wasn't allowed to play with the spreadsheet myself. So I can also talk for just a minute about the designated agencies and specialized service agency organizations. So you may recall that the legislature passed a bill last session that would raise all pay for DA and SSA employees to $14 an hour. So assuming that those increases happened, we don't really have a good way to check on those, but assuming that they happened, that means that they are now at $14 an hour, and so they won't be affected for quite some time until they get above $14 an hour, right? The gap between $14 and $15 might be an issue, but at least for the next four or five years, they would not see another raise. Okay, I've talked briefly about agency of transportation employees. Most of them subject to Davis Bacon, therefore not affected by $15 an hour. There's designated agencies and SSAs, home health and personal care organizations, and then the service contractors, maybe for building maintenance, maybe for food service providers and so forth. So we think that we sort of covered the waterfront with some regret about the home health and personal care organizations. Okay, moving on to public education. So first we looked at pre-K through 12 employees. So these are public school employees. We looked at Addison Northwest over near Middlebury, and we looked at North Country Supervisory Union up in the Northeast Kingdom, sort of as two different corners of the state, and we got very good information from them about the impact of, you know, slowly raising over time up to $15 an hour. Addison Northwest said the increase would be about $4,300 on average over the six years. So again, less at the beginning, more towards the end. As a percentage of their budget of $21 million, that's a very small percentage. We also less than .05% if you want to be precise about it. In North Country Supervisory Union, their wages would grow about $36,700. Again, as a part of their annual budget, which is $46 million, it would be less than .1% of their budget. So again, relatively small costs. Representative Reed. Those numbers are those just for minimum wage and poison cells? Yes. Well, so... For others? You may be talking about wage compression above $15 an hour or above the prevailing minimum wage. So this would be up to the minimum wage. We try to talk to people about over the minimum wage. It's very hard to know how that compression would work because of course it's all a matter of negotiation. So there could be additional costs. How big they are is hard to know. Okay, let's move on to the University of Vermont and Vermont State Colleges. So, right, we had to do a little interpolation because when the summer study committee was looking at this issue, we had a faster ramp up to $15 an hour in 2022. So these estimates were done back under the fast ramp up. We did some back of the envelope re-estimation. Okay, so using the faster ramp up to 2022, we came up with a cost of about $75,000 per year on average in wages and benefits. Again, smaller is the beginning, larger towards the end. I'm sorry, let me read the sentence again. Oh, we did convert that. Okay, right. That was after converting to the 2024 path. And for Vermont State Colleges, wages and benefits would write us about $60,000 through 2024 on average per year. Now we have to add a footnote here about the students who are on work study. So we think that the minimum wage would apply to the work study students, meaning that some of them could get paid higher wages. But the work study budget is fixed. Again, we have the same old problem. The federal government, they pay work study based on a dollar amount, not based on the wage level in the state. So it's unknown whether the number of students who could qualify for work study, who would receive work study, would drop. Or whether the hours worked for each work study student would drop, something would have to give. Because the budget stays fixed, but the minimum wage for some of those students goes up. So again, we're not sure of the outcome, but we know something would happen. Okay. Representative Stevens. In the high school or in the supervisory meetings, you made a percentage calculation. Were you able to do that for the colleges? We did not. We did not. I'm guessing it was a very... Substantive law. Substantive law. And I thought in both cases, because we talked about negotiated salaries, I don't know how you project what could happen under the minimum wage and what would happen under... Just above. Yeah. Just a normal, like... Remember negotiating, being on a slide board and not negotiating 50 cent an hour increases for the parrots and... Absolutely. So, when we put the entire model together for the state, there are assumptions about wage growth in that model. So, we're projecting the baseline. What does the baseline look like? And then we're projecting what does the economy look like under this new minimum wage path. So there is built-in wage growth in the baseline. And this would be on top of that. So the 75,000 that you're quoting there would be on top of what you thought would be without raising the minimum wage. 75,000 is based on the real dollar amount... The real dollar... The inflation-adjusted dollar amount. So it takes into account rising wages. Okay. Thank you. Sure. Okay. And just a few more words about the state employees' retirement and Vermont state teachers' retirement funds. Again, we tried to look at effects for exempt non-Unionized state employees, for classified employees, for state teachers, and for teachers' retirement funds. Not much of an impact was found. Not very many teachers are down close to the minimum wage, not many state employees, and so forth. So it looks like a very small impact there. Okay. Now, there are some interesting effects when you look at other state benefit programs. So, for example, think back to Deb Breitman's nice pictures of the benefits cliff, right? And we know that as people move up in their income, they are eligible for smaller and smaller benefits. So, if you're a state budgetier, you think that's great because you're paying up fewer benefits. If you're on the receiving end of the benefit program, you may not think that's so great because here you are earning more wages to get ahead, and yet your benefits are cut. So in some cases, you may end up being worse off, especially if you have kids using the child for subsidy. In other cases, you still end up being better off, okay? But in any event, the point here is to say that all of those effects were taken into account when we did the Remy modeling, the statewide effects. So that's all part of what goes into the soup for looking at the overall effect on the economy. Okay. A final point is that fewer people will be eligible for federal programs as well, and we'll see in just a minute that that does make a difference for the state's economy. If we take in fewer federal dollars in terms of benefit programs, that's like missing free money, right? Right now, we have a flow coming into remark from the feds, and some of that flow will be diminished. Okay. Can you talk more about how that flow... So I'm thinking about the federal EITC program, the Earned Income Tax Credit program. You may know that Vermont's EITC is just a proportion of the federal amount. I think it's 32%, 34%, something like this. But the EITC payments to low-income workers is really quite significant, and so as they earn more, their payment from the EITC, that tax credit, will shrink. Right? So there are fewer of those dollars coming into the state. We'll see in just a few minutes when we get to the table the amount. Representative Stevens? But what happens to the money when a talent event testified that, I believe it was Tom, testified that we've reduced reach-up numbers? So because there's been more work, because more people are making more money, reach-up money is from the federal government as well? Reach-up money, I believe, is state money. It's a welfare program? Or is it TANF? It may be split. Yeah, reach-up is part of TANF. It's TANF, which is TANF. Split or all federal? I can't go forward. Funding mechanisms. I know that reach-up has a state program. And I can't go off the top. I have the exact split. So Deb Brighton is the super-expert on all things state-benefit related, and I can assure you that she accounted for any changes in reach-up benefits, lie-heap benefits. I guess I'm talking about the different measures of not an individual receiving less, but an individual working their way out of the system, which is a preferred outcome for those programs. And so we hear it reported as the state saved or didn't pay out millions of dollars less. And so the benefit and swale or whatever it is, is more related to what an individual might receive, a reduction in the benefits they might receive, not a complete and total excision of them from their project. Correct. Smaller amounts paid out to individual people. Okay, now we also have to think about effects on the state's overall economy. I'm assuming that everyone doesn't want to see the economy tank because of a policy change. So this is why we employ a model like the Remy model, and Tom Cabet has talked to you about how that works and some of the results. But if we can turn to those, the results on the table too, which is the last page of the report. Yeah, here we are. Okay, so I'm just going to walk through this table and please ask questions as we go through. This is sort of the summary of overall effects on the state. So, you can see that we're now talking about calendar years, not fiscal years, and that's because the economic model is set up by calendar year, and that's how tax revenues are, federal tax revenues are estimated and so forth. So, for example, the percent change from 2018 minimum wage in place to adjusted means that in 2019 the minimum wage would be 3% higher than under current law. In 2020 it's 6% higher, and in 2024 it's 23% higher than under current law. The approximate share of jobs at less than the proposed minimum wage, DOL basis. Now we're talking about the number of jobs, not the number of people, and that's because the quarterly census of employment and wages, which is the data collected by the Department of Labor, gets data from employers, and it's based on the jobs under that employer. So, we know aggregate wages coming from jobs for all the employers in the state. And so, we're guessing an educated guess that about 10% of all jobs in the state are at or less than the proposed minimum wage. And that, as the minimum wage rises, that increases to 12% of jobs in 2020 and 22% of jobs in 2024. So that tells you that a large share of jobs today are less than $13 an hour and a large share of jobs, 22% of jobs by 2024 will be paying less than $15 an hour. That's a lot of jobs. How can they pay less than what the weekly annual wage is? Right, so in today's world they're paying less than $15 an hour. In the new world they will be paying, they will have to pay $15 an hour, sorry. But what we're seeing today, right, is what's... Okay, and you can see the number here is $31,900 rising to $37,900 and then in 2024 as many as 65,500 jobs will be at the new minimum wage. Now, how much does the wage... I don't get this at all. I don't get this at all. Okay, so let's slow down. What numbers are you talking about here? There are... Right now it's $10,50. Right now the minimum wage is $10,50. So are we looking at the first line? Sure. Okay, so the first line says under this minimum wage bill the new minimum wage in 2019 will be 3% greater than the current minimum wage in 2019. Right? So right now the minimum wage is just growing with inflation over time. And this path says we're going to increase that hourly wage by 3% in 2019 by 6% in 2020. Then you say that the jobs of those making less than the minimum wage would be 22% but they can't make less than the proposed minimum wage. That's correct. So that's what we were just talking about. That is correct. If we look at today's economy and forecast it up to 2024 there would be 22% of jobs that pay $15 an hour less. Right? All those jobs are going to have to bump up to $15 an hour. So 22% of jobs... And that is because our economy is growing at what? No, that's because there are many jobs out there and under this minimum wage bill more and more jobs will be swept up into the minimum wage level. Okay. Think of a different way to say it. So can we look at it this way? Can we say that there's today at 1050 there's 31,900 jobs? Not quite, because that's in 2019. Okay, but it's something... I don't remember the number. Just for the sake of 2019 there will be 31,000 jobs almost 32,000 jobs that pay the minimum wage. Could you extrapolate and say in 2019 the next 34,000 jobs pay between the minimum wage and $15? Is that what we're saying here? Yeah. So if we looked at a chart of what people pay today everybody under $15 going across to 2024 that's where you get your 22%. That's actually $13 today, right? Okay. Yeah, so we could say that today it looks like about 65,000 jobs are paying $13 or less. What? I got it. You do? Wow. I'm sharing my idea. Yes. Does this take into consideration with minimum wage being increased and more jobs better paying jobs? Does it take into consideration the jobs that will be lost because companies aren't going to be able to afford to keep all the employees on? Yes. We're going to get there. Yes. Gosh, I'm one step ahead of you all the way. I'll slow down. I'll slow down. That winds are rough, Brian. That winds are rough. There we go. Okay. Could I add one more complication that I'm trying to think through? Representative Smith and then Wals. Yeah. When we think of a minimum wage job it's usually in my mind a job that someone starts at and literally within months their pay goes up depending on their behavior. So how does that fit in in terms of many of those minimum wage jobs are incrementally rising over months or a year? Yes. So we often think of where is my somewhere in all this. We often think of minimum wage jobs as being entry level job and people move out. However, however, it's not always true. Okay. Oh, this is the wrong wrong presentation. Somewhere in my stack we know that so many workers are over the age of 30 over the age of 40 and still working in minimum wage jobs. It's it's so we presented all this information back two weeks ago and if I could find in my stack of stuff the presentation I could quote you the numbers again. But it is really surprising how many workers maybe their high school graduates and they never got work experience they stayed home to raise the kids then they went back to work at age 40 and what they can find is a mom and pop store or maybe they're working on a factory line or something who knows what but there are a number of people a substantial proportion of minimum wage workers are not 20-somethings. But are they older? Aren't they getting those little increases based on work performance time spent there? So you may also remember that what 90% of jobs in Vermont are at employers with 10 employees or less. I think. 78% is 10 or less and 90% is 20. 20 or less, 20 or less. So they're working at small firms that may not have the capacity to give adequate wage increases over time. Yeah, we're asking them to raise it either capacity or or model operational model of doing that. Did you go work for someone else? Right, if you have the gumption to do that, you go work for someone else. Some people don't don't have the gumption or don't have the transportation available that's necessary or whatever. Okay, I'm still at C. So I'm going to one more shot at this. I really do not understand if you're paying the minimum wage and a minimum wage increases everybody increases with that minimum wage. So why is the number of jobs increasing? Okay, if you would prefer, we could change those words to say under S40 approximate share of jobs at proposed minimum wage. Right, because that's what we're really talking about. And under S40 approximate number of jobs at proposed minimum wage. Right, so you can think of this in two ways. You can think of the current economy and look at the distribution of wages and look at all the jobs that are under today $13 an hour. Or you can think of the new world. Isn't the current minimum wage $10.50, so why are you looking at the jobs? Yes, but I'm trying to think ahead to 2024. And I'm asking how many jobs will be affected by the new minimum wage in 2024. And my best way of thinking about that in my small brain is to think about the number of jobs today that pay $13 or less, because $13 is the equivalent of $15 in 2024. After accounting for inflation. Right? Okay. Okay, now in fact... That's $65,500. Yes, and it's a little bit more complicated because this is the result of the modeling and all the job losses and job gains and going out six years in the future. So it's a little more complicated, but that's a quick way to think about it. A little bit, and I'm just wondering what is really going to happen to those people. I think it's extremely difficult to project what's going to happen to those folks who are earning $13 right now. Are they going to end up earning $17? Oh, right. But there'll be new people who are coming into lower paid jobs. Right? There'll always be lower paid jobs. There's going to be churn, yeah. Right. And I also need to caution you to think about this as the number of jobs, not the number of people. On average, Vermonters hold 1.3 jobs per worker. Right. So this is jobs. Okay. All right? Okay. So, sure. I hope it's better now. Okay. So if we continue down the list, we have the change in the initial wage bill as a share of total wages because of the increase in the minimum wage. Okay. So we've got lots of wages being paid across the state. Some of those wages are going to increase because of the change in the minimum wage. And the question is how big is that effect? And this says that in the first year, it's pretty small. It's 0.02%. That means the aggregate wage bill might go up by 0.02%. In 2020, it's 0.25%. And by 2024, it's as much as 1.5%. Okay. So that says many, many people are earning higher wages. Those wages won't be affected. The people at the low end will be affected and they'll see an increase in wages. But for the whole state's wage bill, it's not a very large percentage. Okay. Just for clarification, what is low wage workers referred to? So here I'm talking about the initial wage bill change for minimum wage workers. Only for minimum wage workers. Yeah. I'm looking at the aggregate initial wage. Right. Absolutely. So the low wage workers are minimum wage. Okay. That's what I wanted to know. Yeah. Exactly. Yeah. So that looks like about 3 million in 2019. 30 million in 2020. 174 million in 2024. Okay. There we have. Okay. Right there. Yeah. The middle sort of upper middle. Mm-hmm. Okay. So shall we move on to the effect on the state budget? Absolutely. You're ready. Okay. It does look like by 2040, I'll be rolling in money. 2040? By 2040? We're going to be alive. I'm not sure about that. Okay. So the question is, how big is the net fiscal gain? And remember, we have more revenue coming in because of higher income tax payments, higher sales tax payments and so forth. We also have fewer dollars going out of the state's budget because either fewer people are eligible or some people are getting smaller benefits. So this is the net effect. And that net effect is .3 million dollars to the good. Ron, can you? Oh, sorry. Sorry. We want to be at net fiscal gain. There we are. Okay. Good. So on balance, the state's coffers will be better off by .3 million in 2019. 3.5 million in 2020 and about 20 million in 2024. Okay. That's the net result of more revenues coming in and fewer revenues going out because of the benefits changes. Okay. And we also have... As well as you're figuring in the federal funds that are coming in. Well, so that's the next line. Yeah. So the next line is the net reduction in federal funds to the state economy from decreased federal benefits to increased federal taxes, right? So as people earn more, they also have to pay more federal income taxes and so forth. So the net result here is that the state of Vermont will see a million dollars less coming into the state from federal funds growing to 9 million in 2020 and growing to 54 million in 2024. Okay. So that would have a negative effect on the state's economy. And finally, we have the approximate net unemployment. Now, we had lots of conversations about what to call this and Tom Cavett is the modeler here and he wanted to use the term disemployment. So that's what you see. I think of it as the net change in the number of jobs. Okay. So we're saying in 2019 the net change in jobs is 200. We're losing 200 jobs all across the state 20, 20, 350 jobs and in 2024, 950 jobs. Okay. But to keep that in context remember that the number of jobs affected by this minimum wage change is about 32,000. 31,900, right? That's the number of jobs affected by the minimum wage change. And that grows to about 65,000 in 2024. So there will be some loss in jobs but many people will be earning a little bit more because of the increase in the minimum wage. Jobs are not people. Jobs, that's jobs, not people. There was a reference earlier to the money that gets pumped into the economy from those wages that people earn. Absolutely. How does that in resulting tax gains enter into this? Exactly. So that all figures into the next block just a little bit, the long-term outcomes. Right. So, okay, now let me explain that when we're talking long-term outcomes we're thinking about the period of time from 2028 to 2040. So that's a long time out but the reasoning is that it takes employers and employees quite a number of years to fully adjust to the change in the minimum wage. Okay. So that's a long time out to take an extreme. There might be a business that decides to employ robots rather than people. And it takes a long time to invest in those robots and to get them working and to lose the job that used to be what the robot is now doing. Okay. The point is it takes time to adjust. So that's why we're looking at a future period of time, 2028 to 2040 and we're looking at an average because of course things are happening over time, things happen but we're taking an average over that period of time. So the modeling says that the net annual long-term employment or the number of jobs lost in any year. No, I shouldn't say that. The difference in the number of jobs in any year compared to the baseline is about 2250. So again, think of the current minimum wage continuing through time and it's rising by the rate of inflation and we have employment and we have employers and we have all the things that happen in an economy. So here we are on this path. Now we introduce a higher minimum wage and we're thinking about what's the number of jobs under the new minimum wage versus the current law minimum wage. And according to the modeling the answer is we have about 2250 fewer jobs overall in the economy. Representative Stevens. But there's no, is there a way to determine whether those jobs that are lost are necessary? Yeah. That, you know, if I hire somebody for a higher wage, you know, they work also that I don't have to hire two people for time jobs. Absolutely. So that's 2250 could be just part-time jobs. Right. So the number of jobs does not distinguish between part-time and full-time. It's just a job, right? And that's the data we have. And we did talk back a couple of weeks about the fact that higher minimum wage can lead to higher productivity, more attachment of the worker to the employer and so forth. So there may be more produced by each job or each worker, right? And that's all part of the soup here. That's all in the model. And we don't know, we can't say let's just say a large department store that usually doesn't hire people for 40 hours. They might say, well if I have to pay my people $15, now I'm going to cut them $18 to $23. But it's still a job. There's not going to be any five-hour jobs that are going to replace that person. Correct. So again, this is a rough count of the number of jobs but what does come out is the overall effect on the economy and that would take account of how much all the people are earning and how many hours they've lost, how many dollars they lost because their hours were reduced and also how much they gained because they still have a job and they're being paid more per hour. So to get the overall effect, you have to look at the effect on Vermont GDP and that's what you see in the bottom line there. So again, you want to think of the economy chugging along under current law is on one path and this says that on average in the long term GDP would be 0.3% below that baseline because of the increase in the minimum wage and again you want to think of why does that happen because we know we have some people who are earning more spending more being good consumers in the economy but we also have a few people who are earning less because they lost the job, they lost hours or whatever and we have some reduction in federal funds coming into the state. I think that does have an impact, a noticeable impact. So you end up a little bit below where you would have been in the long run. Three tenths of one percent. Three tenths of one percent according to the modeling. We didn't talk about those two middle lines there, we have disappointment as a share of total jobs about 0.5% so that's the difference between how many jobs would have been without the change in the minimum wage and how many jobs would be under the change, under the higher minimum wage and then if you focus in on just the minimum wage jobs you see a bigger impact as you would expect that's where the job loss would be so disemployment as a share of minimum wage jobs only would be about 3.3%. So again it's not a big chunk of those jobs, but it is noticeable perhaps. Representative Strong, I know there's not a way to track this, but how do you keep in mind the people who would have started a business or would have come to Vermont to start a business but thought I really can't swing that, I'm just starting and take that job somewhere else or move somewhere else, I mean that really isn't in there what we would have could have had but don't. So the modelers, and I used to be one of those would tell you that that is included because what we're measuring here is what's called the elasticity of demand for workers and that is measured over many different situations with many different changes in wages and so forth, but that would capture the way that the way that you estimate those elasticities is to look at an economy that's just chugging along, right? And then look at a sister economy that's similar in many respects but they experience a change in the minimum wage and so you look at how many jobs are formed in this economy, how many jobs are formed in this economy, what's the difference, and if all the other characteristics are the same you can attribute the difference to the increase in the minimum wage. So that's been studied many many many times. It is so hard to hold those other other factors that I'm thinking in particular of the retail world right now and how much conversion is happening to online direct to consumer sales as I'm hearing more and more. Right. Right. So again the modelers would say if you look at many situations over different periods of time and in different geographic locations those things wash out right, all the special factors might wash out and so what you're left with is the effect of the minimum wage change. That's the end. That's the end. That's the end. Got it. It's awesome. It's like a number. It's like math. It's awesome. Thank you. And now I'll never be able to look at the minimum wage the same way. Can we be off the record? I don't like this off the record. No you're wrong. That's the off the record. That's the problem. Okay. Thank you Joyce. Thank you. Thank you very much. Of course you know we may call you back. That's fine. Very enlightening presentation. Thank you. He's on his way. Okay. So shall we take our positive right and back it over after we've got it? Yes.