Vermont’s minimum wage will rise from $14.42 to $14.91 an hour on Jan. 1, 2027, the Vermont Department of Labor announced Monday.
Though a 49-cent hourly increase could seem marginal, it amounts to about $1,000 more a year for someone who works 40 hours a week.
The raise is automatic. Under 21 V.S.A. § 384, the state adjusts the minimum wage every year by the lesser of 5% or the increase in the Consumer Price Index. The Department of Labor uses the CPI-U, not seasonally adjusted, from August to August. The Bureau of Labor Statistics reported a 3.4% increase over that period this year, which produced this year’s 49-cent bump. Last year, the minimum wage rose 41 cents, from $14.01 to $14.42.
The current version of the law took effect in 2020, when the Vermont Legislature overrode Gov. Phil Scott’s veto. It raised the minimum wage to $12.55 by 2022 and resumed annual inflation adjustments after that.
The minimum wage for tipped workers, which is set at half the regular rate, will also rise, from $7.21 to $7.46 per hour — though all tipped workers make more than or equivalent to the full minimum wage with their tips, or are compensated by their employers in the rare cases when their tips do not amount to minimum wage pay.
Few workers in the Upper Valley earn the minimum wage, according to Dartmouth economics professor Patricia Anderson.
“In the actual Upper Valley, it won’t have an impact,” Anderson told the Valley News on Tuesday.
Chris Winters, deputy commissioner of the Vermont Department of Labor, told the Valley News on Monday that the minimum wage is only one part of affordability for workers, and not one the state wants to prioritize above others.
“When it comes to wages and affordability, we really need to focus on the big picture, which is taxes, housing costs, healthcare costs,” Winters said.
Winters said a worker’s income goes further when those costs come down, and that lowering the cost of living has a bigger effect than small increases in pay.
Business groups have long raised concerns about minimum wage increases. In 2018, while lawmakers debated a bill to raise the wage to $15 an hour, Ashley Romeo-Boles, then a government affairs specialist with the Vermont Chamber of Commerce, told the Senate Economic Development, Housing & General Affairs Committee that every $1 increase in wages can raise an employer’s labor costs by $1.25 or more. She said wage increases can push businesses to cut jobs or limit benefits.
Anderson said studies on the minimum wage often point to a trade-off. A large increase over a short period can help workers who keep their jobs while costing others theirs. In rural parts of Vermont, she said, the increase could lead a few small businesses to hold off on hiring.
“But 49 cents isn’t really a lot,” Anderson said.
“The question really becomes: Are you growing slower than you would have if you hadn’t been forced to increase your compensation?” she said. Short-term studies can’t really answer that question, she said.
As of Jan. 1, 2026, Vermont had the 19th-highest minimum wage in the country and was one of 19 states that adjust for inflation every year, according to the Economic Policy Institute. Twenty states use the federal minimum of $7.25 an hour, according to EPI.
Vermont has the second-lowest minimum wage in New England. Connecticut, Maine, Massachusetts and Rhode Island all have minimums of $15 an hour or more. New Hampshire is one of the 20 states that use the federal minimum. It hasn’t raised its wage floor since the federal minimum went to $7.25 in 2009.
Still, typical salaries for most jobs are higher in New Hampshire than for the same jobs across the Connecticut River, according to the Massachusetts Institute of Technology’s Living Wage Calculator.
MIT’s calculator estimates a living wage in Vermont of $24.92 an hour for one adult with no children, based on the cost of housing, food, medical care and other basic needs. The state’s Joint Fiscal Office put Vermont’s livable wage for 2024 at $19.53 an hour in urban areas and $17.68 in rural areas, in its January 2025 report. The Public Assets Institute’s State of Working Vermont report from 2025 found that minimum wage growth has not kept pace with the cost of living.
In the Upper Valley, where the cost of living is high, companies know they can’t pay their employees under $15 an hour. Open jobs on Indeed indicate this, as pay for a cafe associate at King Arthur Bakery in Norwich starts at $18.04 per hour; at Abracadabra Coffee Co. in Woodstock, it starts at $15 plus tips. In 2025, 10% of Vermonters made $15 an hour or less.
