N.J. prepares to cope with minimum wage increase

By Bill Mooney | December 24th, 2013

TRENTON – The minimum wage hike does not kick in for another few days, but both sides in the debate are still weighing in with opinions about the consequences.

Maybe a year from now pundits will be able to look back and make clear-eyed assessments of how it played out. But for now, both sides are convinced of their respective points of view.

The folks at N.J. Policy Perspective, who admittedly take a more liberal view of such matters, believe that the boost from $7.25 to $8.25 an hour – with a cost of living provision constitutionally mandated – will help New Jersey’s economy in the long run.

NJPP issued an analysis this week in which they used the most recent Census Bureau data to conclude that the increase in the minimum wage will generate more than $173 million in economic growth in 2014.

In addition, they predicted that possibly 1,300 jobs will be created as businesses expand.

Whatever figures NJPP is looking at, they are not the numbers the folks at the N.J. Business and Industry Association are seeing.

“I think you are going to see shifts and hours being cut,’’ said Phil Kirschner, president of NJBIA, which admittedly has opposed this from the beginning. He sits on the governor’s advisory commission and he said the figures he sees from the state Department of Labor tell a different story.

“If I’m paying you $300 a week, I’m still going to pay you that because that is all I have. I don’t have a 14 percent increase in sales to match a 14 percent increase in salaries.”

However, the wage hike supporters continue to argue that the recipients of the salary boost will funnel that money right back into the economy to purchase necessities, thus helping businesses increase sales over time.

“Forget about the stereotypical teenaged burger-flipper. New Jersey’s low-wage workers are increasingly adults struggling to gain a foothold in this high-cost state. Raising the minimum wage will provide crucial assistance to these New Jerseyans,” says NJPP President Gordon MacInnes.

NJPP’s Jon Whiten says that opponents often talk only about the people who are precisely at minimum wage.

“This is intellectually dishonest,’’ he said, “because there are many more people that will be helped by the wage increase.’’

For example, returning to the Census data, he said all those earning between $7.25 and $8.25 an hour will see a boost, a figure they peg at 254,000 people.

But that is precisely part of the problem, opponents say.

More than 60 percent of a business’s costs are wages, Kirschner said, so it is entirely possible that even if an employer retains someone full time, that employee won’t see another raise outside of the minimum wage hike.

“You got your raise already from the government,’’ Kirschner said is the attitude some employers will adopt.

Kirschner also said that the people earning minimum wage in New Jersey represent approximately 3 percent of the population.

Regardless of the numbers, supporters often call the hike a moral imperative in such a high cost of living state.  Opponents often say that good intentions won’t prevent employers from making tough bottom-line decisions.

The issue played out in legislative corridors as Gov. Chris Christie vetoed a bill that would have hiked the wage, then it played out at the ballot boxes as voters OK’d the hike in November.

Now as 2014 is poised to get under way it will begin to play out in the real world.

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