Is New Jersey Ready to Ramp up Minimum Wage to $15 an Hour?

Any new change to the minimum wage could also have an impact on the state budget since many departments have service contracts with outside low-wage employers. That concern was raised by a leading Republican lawmaker during budget committee meetings in Trenton yesterday. But a noted Rutgers economist also lectured senators on a well-regarded study that found nearly $14-an-hour is needed just to survive in New Jersey.

The Senate Labor Committee is scheduled to vote Monday on a bill that would hike the state’s minimum hourly wage from $8.38 up to $15 over several years.

The measure calls for the minimum wage to increase to $10.10 on January 1, 2017, and then go up incrementally until hitting $15 at the beginning of 2021. After that date future increases would be tied to inflation, just as New Jersey’s current minimum wage is thanks to changes that were approved by voters in 2013.

The push for a $15 minimum wage has gained momentum across the country in recent months, with leaders in California and New York announcing deals to increase their own states’ minimum wage. Democratic presidential hopeful Bernie Sanders’ call for a federal minimum wage of $15 has also resonated with many voters.

But a presentation that Rutgers University economist William Rodgers delivered yesterday before several Senate leaders inside the State House put the $15 number in the specific context of New Jersey’s economy.

An estimated 1.1 million households here don’t earn enough money or receive enough assistance to cover basic costs associated with childcare, food, healthcare, housing, and transportation, Rodgers said, citing “ALICE” research compiled by the United Way of Northern New Jersey. ALICE stands for residents who are asset-limited, income-constrained and employed.

“Let’s be frank. It’s reached a crisis and we really have not fully recovered from the recession,” Rodgers said.

A wage totaling $13.78 would qualify as a “survival wage” in New Jersey, he explained, while a $19.73 wage would be considered a “stability wage.”

Senate President Stephen Sweeney (D-Gloucester), who is sponsoring the bill that will come up in committee on Monday, said the concept of the measure is simple. A $15 minimum wage in New Jersey would help eat into the amount of wealth that right now is concentrated in the hands of the very rich.

“It’s making sure that there’s wealth on the bottom just as there is at the top,” Sweeney said.

Business lobbyists are fighting hard to oppose Sweeney’s bill. They say a compromise Sweeney reached earlier this year with Assembly Speaker Vince Prieto (D-Hudson) that resulted in the bill calling for the increase to be phased in over several years instead of all at once makes little difference.

“Rather than artificially inflating the value of minimum-wage positions, we should focus on workforce development so that those now making minimum wage can develop the skills they need to advance in their careers and earn a better living for themselves and their families,” said Michele Siekerka, the president of the New Jersey Business & Industry Association.

“If enacted, this policy overreach will result in unprecedented increases in the cost of doing business, and a four-year phase-in does not change that fact,” she said.

Sen. Jennifer Beck (R-Monmouth) raised other concerns about the minimum wage during a Senate Budget and Appropriations Committee yesterday. While questioning state Department of Labor Commissioner Harold Wirths, Beck asked whether numerous nonprofit organizations that contract with the state would be forced to pay their employees more if the minimum wage is lifted. If so, that would likely add to what they bill the state for their services, she said.

“What would that do to our budget costs?,” Beck then asked Wirths. “Do we know what it will do to the state budget?”

Wirths said he didn’t have the information immediately handy but would be able to get her more data later on.

“Obviously it would be a plus increase for sure,” he said.

Christie has also raised concerns about the $15 minimum wage since Sweeney’s bill was introduced in March, and it was the governor’s veto of the previous increase in 2013 that led lawmakers to put the issue on the ballot later that year. The constitutional amendment passed by a wide margin, resulting in a lifting of the state’s minimum wage from $7.25 to $8.25 in 2014.

The amendment also tied future increases to inflation, and the first inflationary increase occurred at the beginning of 2015, lifting the rate up to $8.38. There was no similar adjustment in 2016 because there was no meaningful inflation measured last year.

Sweeney said that if Christie vetoes the latest minimum-wage measure this year, he’s already preparing to get enough support in the Democratic-controlled Legislature to put the issue once again before voters.

“We want to get it through both houses and get it on the governor’s desk, give him the opportunity to do the right thing,” Sweeney said. “After that, we’ll go to the voters again.”

Two Democratic senators who also questioned Wirths during his appearance before the Senate panel yesterday offered their own take on the issue.

Even though the state’s unemployment rate has fallen below the national average this year, that doesn’t mean the economy is rolling everywhere across the state, said Sen. Sandra Cunningham (D-Hudson).

“In my district, in the poor neighborhoods, we still have people who have not been able to find jobs,” she said. “We still have people who are standing on the corners. We still have people who have not been able to find work.”

“I think it’s always important when you talk about the numbers that they’re really human beings behind those numbers,” she said. “You have to ask yourself, could you live on $8.38 an hour? Could you live on $15 an hour?”

Sen. Teresa Ruiz (D-Essex) said focusing only on what the increase of the minimum might cost is just one part of the discussion. She argued attention should also be paid to what the increase would mean as an investment.

Rodgers, during his presentation, said an increased minimum wage would help an estimated 975,000 workers in New Jersey deal with challenges like food security, meaning they would have more access to sufficient and nutritious meals.

“We have to stop getting caught in what the cost would be and start focusing on the return on investment,” Ruiz said.

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