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Controversial Ballot Question Seeks to Boost New Jersey's Minimum Wage

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This is the fourth in a series of articles exploring the critical policy challenges that the next governor and Legislature will face, as well as their positions on these issues.

When New Jersey residents go to the polls on November 5, they’ll be asked to vote on two ballot questions. One is controversial, both locally and at the national level. The other is expected to pass so easily that the Press of Atlantic City said of it, “The Press urges a 'yes' vote on Public Question No. 1. But that's only because 'Huh? Of course' is not one of the options on the ballot.”

Public Question No. 1 would allow veterans organizations to host games of chance to benefit their own coffers. The far more divisive question comes second: Should New Jersey raise its minimum wage?

Both initiatives, if passed, would amend the state constitution.

Raising the Minimum Wage

New Jersey’s minimum wage currently matches the hourly $7.25 mandated by the federal government in 2009. The initiative seeks to immediately raise the rate to $8.25 an hour and build in automatic annual increases tied to the Consumer Price Index. Though Gov. Chris Christie conditionally vetoed a slightly more ambitious bill earlier this year, the Democratic-led legislature circumvented the governor by voting -- by a simple majority over two successive sessions, as required by law -- to place this version on the ballot.

According to New Jersey Policy Perspective (NJPP),if the measure passes, 241,000 working New Jerseyans who make between $7.25 and $8.25 per hour would be immediately affected, and the wages of 188,000 workers making between $8.25 and $9.25 would increase as pay scales are adjusted upward. All together, this amounts to 11 percent of the state’s workforce.

The proposed amendment is hailed by labor groups, several municipalities, Senator-elect Cory Booker, gubernatorial candidate state Sen. Barbara Buono, and The Fund for Jobs, Growth and Security, a largely union-funded, D.C.-based super PAC that supports Democratic candidates in contested New Jersey legislative districts. As of October 9, the PAC had spent $686,000 to push the measure.

It’s opposed by some business groups, the New Jersey Farm Bureau, and the Washington, D.C.-based Employment Policies Institute (EPI), which has run radio and TV spots to highlight research that shows an increase could reduce opportunities for the least-skilled workers.

Echoing a common refrain, Buono has argued for the amendment’s passage by saying, “It's hard to imagine that in 2013, people working have to live on $7.25 an hour. That's not a living wage. That's a starving wage."

The New Jersey National Education Association notes that the current rate amounts to $15,080 a year for 40 weekly hours of work. “This is below poverty level for a family of three, and is not nearly enough in our state to meet basic needs for food, housing, clothing and transportation,” the group advocated in a position statement.

If the wage rises, those workers would receive an extra $1,000 to $2,000 in their paychecks each year.

Holding it Down

But opponents counter that small-business owners will have a hard time paying the higher wage and will be forced to lay off workers, especially young ones, to compensate. New Jersey State Director of the National Federation of Independent Businesses, Laurie Ehlbeck, has said, "Ninety-three percent of our members said this was a big problem for them.”

A key bone of contention is that the law would constitutionally mandate increases each year in line with the cost of living. Critics also worry that constitutionally mandated increases will strip the market’s ability to adjust in leaner times, a concern that led New Jersey Chamber of Commerce President and CEO Thomas Bracken to write in an editorial, "The New Jersey Chamber and the business community recognize that competitive wages are an important part of attracting and retaining a top-notch workforce. A fair minimum wage is a key component of this, and it should be set by our elected legislators and governor through debate and careful consideration -- and not automatically raised in perpetuity via a constitutional amendment."

A report published by EPI also raises the point that a wage hike would be shouldered by taxpayers who pay the salaries of 13,000 state, county, and municipal workers who earn the minimum wage. The cost of paying for these workers’ salaries and additional payroll taxes would increase by an annual minimum of more than $12 million statewide, according to the report.

Jon Whiten of NJPP says that although the dollar figure is high, it’s dwarfed by what the state government would gain: $174 million in annual impact to the state’s gross domestic product, and a likely decrease to the $117 million federal and state benefits New Jersey fast-food workers currently collect.

Despite these projections, two polls released in late September show overwhelming voter support for the initiative. A Rutgers-Eagleton poll found that registered New Jersey voters support the question by a 76 percent to 22 percent margin, and a Monmouth University/Asbury Park Press poll showed 65 percent of registered voters in support, with 12 percent opposed and 22 percent undecided. Forty-one percent of voters would even favor a hike to $10.10 an hour.

A report released earlier this year by the Restaurant Opportunities Centers United, which has staged strikes and protests for higher food-industry wages throughout the country, estimates that more than half of Americans living in poverty would no longer suffer from hunger if the minimum wage were raised to $10.10 an hour.

Thirty-one percent of the Monmouth/Asbury Park Press poll respondents would oppose such a hike, and 28 percent were undecided.

The favorable numbers led Patrick Murray, director of the Monmouth University Polling Institute, to remark, “The minimum wage amendment is set to pass by a substantial margin. New Jersey voters simply do not accept the business community’s prediction of dire consequences.”

Indeed, the nonpartisan Center for Economic and Policy Research cites 10 major studies conducted over the past decade that have concluded that, as summarized by Princeton University economist and New York Times columnist Paul Krugman, “The great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”

Bloomberg News also made that assessment in April 2012: "(A) wave of new economic research is disproving those arguments about job losses and youth employment . . . The studies find minimum-wage increases even provide an economic boost, albeit a small one, as strapped workers immediately spend their raises.”

Nationwide, Americans’ support for minimum-wage hikes is stunning.

This past summer, Hart Research Associates found that 80 percent of Americans support raising the minimum wage to $10.10 an hour. President Obama is advocating for a federal minimum wage hike to $9 an hour; Congressional Republicans oppose his efforts.

Nineteen states have already raised their minimum wage above the federal standard, and while New Jersey is the only state with a question on the ballot this year, three other states are working to place similar initiatives on theirs next year. A few weeks ago, California Gov. Jerry Brown made news when he signed a bill to raise California’s minimum wage to $10 per hour by 2016. The increase gives California the nation’s most generous statewide minimum wage, though four other states are also considering raising their minimums to $10 or higher.

According to CNBC, only four states, including Alaska and Hawaii, have a cost of living higher than New Jersey.

Giving Veterans the Right to Fundraise with Games of Chance

Under current New Jersey law, only senior citizens groups can keep money they raise through hosting games of chance like bingo, lotto, and raffles. The constitution requires groups to use proceeds from this form of gambling only for “educational, charitable, patriotic, religious or public-spirited purposes.”

But in response to pleas from veterans organizations that warn they’ll have to close down if they can’t generate new streams of income to cover increases in the price of electricity, gas, oil, and other utilities amid dwindling donations and membership fees, the Legislature has launched an initiative to extend these courtesies to licensed veterans associations.

Robert McNulty, of the New Jersey Council of the Vietnam Veterans of America, has been quoted as saying that because of the restrictions on gambling proceeds, "We can't pay for insurance. We can't do building repairs or maintenance or upgrades. We can't do utilities.”

In a bipartisan show of support, both houses voted unanimously to place the question on the ballot, and Christie signed the bill in August.

There seems to be no public dissent, other than a cautionary comment by the League of Women Voters, which published position papers that examined both sides of New Jersey’s ballot questions, that notes, “There are many worthwhile organizations other than veterans and senior citizen groups. This amendment provides veterans groups with an option not available to some other groups.” It continued, “There are serious downsides to gambling, including addiction. Veterans' organizations could find less socially risky sources to procure additional funds.”

The Ballot News website says that with three states putting veterans’ issues on the ballot this year, the topic ranks as the nation’s second-most popular, after taxes. According to Ballotpedia.com, New Jersey voters last encountered ballot questions pertaining to veterans in 1999, though questions over gambling have appeared on the ballot three times since 1998.

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