Will Vermont's Proposed $20 Fast-Food Wage Help Workers or Hurt Local Businesses?
The proposed legislation would create a nearly 40% wage differential between employees at covered national chains and those working at restaurants that don’t meet the 60-location threshold.
House Bill 713, introduced in the Vermont General Assembly on January 16, 2026, would establish a $20.00 per hour minimum wage for employees of nationwide fast-food chains, effective January 1, 2027. The legislation, sponsored by Representatives William Greer, Brian Cina, and Troy Headrick, explicitly models itself after California’s Assembly Bill 1228 but enters a markedly different economic landscape characterized by Vermont’s rural labor market and hospitality sector dominated by independent, locally owned establishments.
The bill defines a “nationwide fast food chain” as a set of limited-service restaurants with more than 60 establishments nationally that share a common brand or standardized decor, marketing, packaging, and products. This $20.00 rate would apply regardless of whether the employer is the national brand entity itself or operates as a franchisee or licensee under that brand.
Vermont’s current minimum wage stands at $14.42 per hour, adjusted annually based on the Consumer Price Index for All Urban Consumers. The proposed legislation would create a nearly 40% wage differential between employees at covered national chains and those working at restaurants that don’t meet the 60-location threshold.
The Fast Food Council and Ongoing Oversight
Beyond the immediate wage mandate, H.713 establishes a “Fast Food Council” within the Department of Labor tasked with studying and recommending minimum standards for wages, working hours, training, and other working conditions at these chains. Starting December 15, 2028, and continuing through January 1, 2031, the Council must submit annual reports to legislative committees, suggesting this represents an ongoing regulatory framework rather than a one-time wage adjustment.
Representative Greer characterized the $20.00 figure as a “placeholder” during early discussions, indicating the final rate could shift higher or lower depending on committee testimony and political negotiation.
Who Actually Runs These “National Chains” in Vermont
While political discourse often frames such legislation as targeting multinational corporations, the operational reality in Vermont is more nuanced. Many locations bearing national brand names—McDonald’s, Subway, Dunkin’—are operated by local franchisees who own one or several locations, employ Vermont residents, and participate in their communities as small business owners.
The International Franchise Association’s testimony to the legislature argues that the bill “targets locally owned businesses with a two-tier wage mandate.” The bill’s language makes clear that the $20.00 requirement applies to franchisees operating under qualifying brand agreements, not solely to corporate-owned locations.
Proponents counter that the legislation aims to address perceived resource disparities. Representative Greer stated the bill would “level the playing field” between different groups within the industry. Jessica Nelson, a Starbucks worker, told VTDigger that higher pay would increase the applicant pool and improve work-life balance.
The Competitive Labor Market Question
The central economic question facing Vermont’s independent restaurant sector concerns labor market dynamics. When a national chain location is legally required to pay $20.00 per hour, it creates upward wage pressure for all nearby employers competing for the same workforce—even those not covered by the mandate.
A line cook or dishwasher in a town like Brattleboro or Barre can choose between a chain location paying $20.00 and an independent restaurant paying the standard minimum of $14.42. For the independent operator to retain or attract staff, they face practical pressure to match or approach the higher wage, despite lacking the economies of scale that national brands can leverage across thousands of locations for ingredient purchasing, insurance, and equipment.
Vermont’s hospitality sector, which represents a significant component of the state’s tourism-driven economy and cultural identity, consists largely of independent establishments. These businesses already contend with high property taxes, energy costs, and the state’s documented labor shortage.
Wage Compression and Skilled Workers
The impact extends beyond entry-level positions. When the floor for unskilled fast-food work rises to $20.00, experienced workers earning modestly above that level—a sous-chef making $22.00, for example—typically expect proportional raises to maintain professional differentiation. This phenomenon, known as wage compression, can multiply the direct labor cost increases across an establishment’s entire payroll structure.
The California Evidence Debate
Both supporters and opponents of H.713 reference California’s experience with its $20 fast-food minimum wage, but they cite dramatically different studies reaching divergent conclusions.
UC Berkeley’s Institute for Research on Labor and Employment found that the wage increase led to “no negative effects on fast-food employment” and that California actually saw faster establishment growth compared to the rest of the U.S. The study reported a 9% wage increase and price increases of approximately 1.5% to 3.7%—roughly 15 cents on a four-dollar hamburger.
Conversely, the Berkeley Research Group, a private consulting firm, found the wage increase reduced employment by over 19,000 jobs in California. Industry surveys cited in IFA testimony reported that 98% of operators raised prices and 89% reduced employee hours.
CalMatters noted that these conflicting studies obscure the reality, with methodological differences—timeframe selection, seasonal adjustment, data sources—producing dramatically different results from the same policy implementation.
Harvard’s Shift Project found no reduction in hours and reported that the wage increase helped ease understaffing issues, though this study relied on worker-reported data that may overrepresent larger, more stable chains.
Youth Employment and Career Ladders
Fast-food positions have historically served as entry points into the workforce for teenagers and workers without prior experience. Vermont Department of Labor data categorizes these as roles providing “short-term on-the-job training” in skills like customer service, oral comprehension, and active listening.
The economic concern is that when entry-level positions carry a $20.00 wage floor, employers become more selective, potentially preferring candidates with experience or education over first-time workers. This could make it harder for Vermont teenagers to obtain their first jobs, effectively removing what workforce development specialists call the “first rung” of the career ladder.
Unanswered Questions in Current Bill Language
Several technical ambiguities in the current bill text create uncertainty for potential compliance.
Vermont law currently requires that tipped restaurant workers receive at least one-half of the minimum wage as a base rate before tips—currently $7.21 per hour. If the “minimum wage” for a fast-food chain becomes $20.00, the bill does not clarify whether the base wage for tipped workers at those chains (such as Starbucks baristas who receive tips) would automatically rise to $10.00 per hour, or remain linked to the standard state minimum of $7.21.
The legislation also lacks a formal fiscal note as of early February 2026. State-contracted food services at universities, hospitals, and correctional facilities could face increased costs if vendors operating under qualifying brand agreements must pay the $20.00 rate, but without a fiscal impact study, the potential cost to Vermont taxpayers remains unquantified.
Additionally, the bill’s definition of “limited-service restaurants”—where customers order and pay before consuming food—does not address hybrid models that have become increasingly common. A restaurant offering both counter-service lunch and table-service dinner under the same brand could face administrative complexity determining which hours fall under which wage requirement.
Regulatory Precedent and Business Planning
The Fast Food Council represents a departure toward sector-specific regulation in Vermont. While initially advisory, such bodies in other states have evolved into more direct regulatory entities. The IFA testimony argues this creates “permanent uncertainty” for business planning, as franchise operators cannot accurately forecast costs for multi-year equipment leases or facility improvements when wage and training mandates may change based on annual Council recommendations.
The bill does not specify the Council’s composition, leaving open whether small franchise owners will have representation alongside corporate entities and labor advocates in shaping future recommendations.
What Happens Next
House Bill 713 has been referred to the House Committee on General and Housing, where it will undergo committee review, public testimony, and potential amendment before any floor vote. Given Representative Greer’s characterization of $20.00 as a “placeholder,” the actual wage figure could change during the committee process.
The committee will need to address the technical ambiguities regarding tipped wages and hybrid service models, and may request a formal fiscal note to assess impacts on state-contracted food services. The bill’s sponsors have modeled it after California legislation, but committee members will need to evaluate whether California’s experience—as interpreted through contested and methodologically divergent studies—provides applicable guidance for Vermont’s distinct economy.
If the bill advances from committee, it would proceed to the full House for debate and vote, then move to the Senate if passed. The January 1, 2027 effective date provides approximately ten months between potential passage this session and implementation, though that timeline would tighten considerably if the bill faces extended committee review or requires multiple revisions.
The broader policy question facing legislators is whether Vermont’s approach to minimum wage should remain uniform across all employers, or shift toward sector-specific standards that create different wage floors based on national brand affiliation and business size. That decision will ultimately rest with elected representatives weighing competing claims about worker welfare, business viability, and the structural character of Vermont’s economy.