Small businesses face a critical list of legislative proposals this session that would raise costs and impose burdensome mandates that hinder their ability to operate. Vermont’s demographics have continued to erode over the past decade, aging population, declining enrollment, stagnant revenues and nearly $87 million of additional General Fund Budget pressures over FY’20, but getting much attention are proposals that put even more strain on the cost of doing business — requiring employers to allow workers time off for up to 12 weeks of family leave, a significantly higher minimum wage, and costly proposals intended to address climate change.
Minimum wage — The Senate passed a bill to raise the minimum wage over several intervals until it reaches $15 by 2024. The House, too, pushes to artificially increase Vermont’s base wage to $13 over the next couple of years. A committee of conference is sorting out the Democratically controlled Legislature’s political position as this column is published. Vermont’s base wage set at $10.78 in 2019 just rose to $10.96 on Jan. 1. An increase to $15 by 2024 would impose a 39% increase on Vermont’s base wage over a six-year period. Businesses most affected are in the retail, food service and seasonal sectors that struggle to remain competitive, so simply raising prices may not be an option. They may have no choice but to cut jobs, hours, or both, to cope with the increased costs. Even other business owners who pay $12 or $15 per hour now say the pressure to raise pay for all employees becomes a reality.
Paid family leave — The expansion of paid leave in Vermont will impact every employer (with 10 or more employees), allowing workers to take up to 12 weeks leave for the birth or adoption of a child, and six weeks to care for a family member (including children, parents, grandparents, grandchildren and/or someone akin to a parent.) The proposal under consideration will impose a payroll tax on workers and employers — the proposal in the House would raise $80 million and the Senate proposal would raise $29 million in payroll taxes. Also concerning is small businesses would see cost increases beyond a payroll tax — they would also face the complexity of ensuring their workload is accomplished every day, and if the employee is of particular skill or requires certification or licensure, would be doubly difficult to replace. Right now, small-business owners say they’ll do all they can when employees need to take leave — the Legislature should allow them flexibility, rather than a one-size-fits-all mandate.
Fuel price increases — House and Senate leaders say the threat of climate change will lead lawmakers to take a “strong look” at participating in a regional program called the Transportation and Climate Initiative (TCI) and the Global Warming Solutions Act (GWSA). Proponents of GWSA are pushing climate-goal legislation, because emissions have increased by 16%, that would impose mandates outside a public process. About a dozen states and jurisdictions are considering joining TCI, a cap-and-trade program at the wholesale level aimed at curbing emissions. The costs of which will be passed down to Vermonters by as much as 17-cents per gallon.
These legislative initiatives increase costs, making it harder for job creators to own and operate their small businesses. The Vermont General Assembly should take a hard look at the consequences of these proposals on small businesses and the inability for them to maintain and grow their businesses if enacted.
Shawn Shouldice is National Federation of Independent Business in Vermont state director.