New Jersey Assembly To Consider Minimum Wage Increase

TRENTON – The Assembly is scheduled to vote tomorrow on a Democrat-backed bill that would increase New Jersey’s minimum wage to $8.50 an hour and require that rate to be adjusted annually based on the Consumer Price index.

The state’s current minimum wage is $7.25 per hour, which translates into a $14,500 annual salary for a full-time worker. For a single person, that’s just $3,330 above the federal poverty level. For a single parent with a child, it’s actually $630 below the federal poverty line.

The proposed increase would add about $2,500 to a full-time minimum wage earner’s annual salary, and indexing it to inflation would prevent the minimum wage from further erosion. If the minimum wage had kept pace with inflation since the 1960s, it would now be more than $10.50 per hour.

Business groups point out that many New Jersey employers already pay more than the minimum wage and say that the ones that don’t will be unable to afford the higher minimum wage rate.

“Our members have testified that they’ll have to eliminate jobs, reduce work hours for current employees or find ways to stay afloat without creating any new positions,” Laurie Ehlbeck, the New Jersey state director for the National Federation of Independent Business, writes in an op-ed piece for the Times of Trenton.

Yet the Economic Policy Institute estimates that raising the minimum wage to $8.50 per hour would result in $277 million in economic activity that would create more than 2,000 jobs.

A minimum wage increase would also generate additional revenue for the state because the workers will spend more in taxes, writes New Jersey Policy Perspective senior policy analyst Raymond J Castro. “Eight states raised their minimum wages on Jan. 1, and ten states are considering following suit. They are doing that not in spite of the poor economy, but because of it. The fact that almost all of these states have a lower cost of living than New Jersey further demonstrates how far behind the state has fallen on this issue.”

Castro argues that raising the minimum wage on its own is not enough to help New Jersey’s working poor. He also calls for the state to restore funding to the Earned Income Tax Credit program.

“One option supports providing hundreds of millions in tax credits to major corporations with the hope more jobs will be created, even though there is no evidence that this approach works,” Castro writes, describing programs to give businesses tax credits for creating jobs. “Such tax credits tend to shift around jobs that already exist, rather than creating new opportunities. On the other hand there is plenty of research to show that supporting working families directly stimulates the economy while at the same time benefiting children. The payoff is direct and immediate, which is what New Jersey requires to begin its comeback.”

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