Question # 08: How will the minimum wage increase impact the Summer Youth Employment program and what are the costs to maintain the current number of participants?

Page updated on Mar 15, 2021 at 6:18 PM

Question:

How will  the minimum wage increase affect the number of teens able to participate in the summer work program and what would be the cost to maintain the current number of participants?  (Vice-Mayor Bennett-Parker and Councilwoman Pepper)


Response:

The Virginia 2020 General Assembly enacted HB 395 which increased the minimum wage from the current federally mandated level of $7.25 to $9.50 per hour effective May 1, 2021. The legislation subsequently mandates incremental wage increases to $15.00 per hour by January 1, 2026. Additionally, it should be noted that the scheduled increases for 2025 and 2026 will not go into effect if the legislation is not reenacted by the General Assembly prior to July 1, 2024. If not reenacted prior to July 1, 2024, the minimum wage adjustments will reflect the increases in the consumer price index.

The multiyear chart below shows the expected impact of the minimum wage increase on the City’s budget for the Summer Youth Employment Program over the next five years (FY 2022 – FY 2026). For FY 2022, the estimated fiscal impact of continuing to serve 170 youth participants per year totals $74,117. If there is no increase in funding, the program would serve 41 fewer participants in FY 2022 and 88 fewer youth participants in subsequent years.

City staff recommends increasing the Summer Youth Employment Program’s FY 2022 budget by $74,117 for FY 2022 as part of the technical adjustment process. City staff will increase the Summer Youth Employment program’s budget on an annual basis to reflect the General Assembly’s minimum wage and to maintain the current program participant rate of 170 youths.

Minimum Wage Changes Impact on Summer Youth Employment
           

Current Budget:

$238,822

FY2022 FY2023 FY2024 FY2025 FY2026
Wages (per hour) $9.50 $11.00 $12.00 $13.50 $15.00
Hours per Week 30 30 30 30 30
Number Weeks 6 6 6 6 6
 Cost (per youth) $1,710 $1,980 $2,160 $2,430 $2,700
Number of Participants (serving 170 youth) 170 170 170 170 170
Total (wages X # of youth) $290,700 $336,600 $367,200 $413,100 $459,000
Benefits (FICA) $22,239 $25,750 $28,091 $31,602 $35,114
Total Cost $312,939 $362,350 $395,291 $444,702 $494,114
Budget Gap (74,117) (123,528) (156,469) (205,880) (255,292)


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