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Phased-In Increase in NJ’s Minimum Wage May Go Before State's Voters in 2017

Sweeney’s proposal would add $1 a year until hourly pay reaches $15, while Assembly bill would boost wage immediately

Senate President Stephen Sweeney (D-Gloucester) speaking during a State House news conference along with U.S. Rep. Donald Norcross (D-Camden) about raising minimum wage to $15.

After hearing from fellow Democrats last week about the need for a $15 minimum wage in New Jersey, Senate President Stephen M. Sweeney yesterday unveiled his own plan to ask voters in 2017 to approve a constitutional amendment that would eventually hike the state’s minimum wage by more than $6, joining his party’s nationwide push to combat income inequality with higher pay for the working poor.

Legislation introduced last week by Assembly Speaker Vince Prieto (D-Hudson) also seeks to hike the minimum wage to $15, but all at once, while Sweeney’s plans calls for phasing in the increase over several years.

Both proposals have revived a debate that many in New Jersey thought was settled in 2013, when voters approved a constitutional amendment that increased the state’s minimum wage by $1 to $8.25 the following year.

The amendment also linked future increases to inflation, leading to New Jersey’s current minimum wage of $8.38.

Advocates for New Jersey’s business community say another minimum-wage hike would hurt the state’s economy and lead to a loss of jobs, while lawmakers and others calling for the increase to $15 maintain it would boost the economy by putting more money in the wallets of low-wage consumers.

The new efforts to increase the state’s minimum wage come as concern has grown in recent years, both in New Jersey and nationally, about a widening gulf between the very rich compared and those in the middle class and in the lowest income brackets.

One-third of NJ workers

In New Jersey, according to New Jersey Policy Perspective, a liberal think tank based in Trenton, a $15 minimum wage would give a raise to an estimated one-third of the overall workforce.

Where to set the federal minimum wage has also become a high-profile issue in the increasingly contentious 2016 Democratic presidential primary between former Secretary of State Hillary Clinton and U.S. Sen. Bernie Sanders of Vermont. Clinton supports a $12 minimum wage, while Sanders, the winner of last night’s New Hampshire primary, wants a $15 minimum wage.

Sweeney (D-Gloucester) said his plan yesterday strikes the right balance between the concerns of businesses and the needs of low-wage workers in New Jersey by providing a phase-in period, increasing the minimum wage by $1 a year until it reaches $15. He said he would also offer tax credits to small businesses that pay their workers more than minimum wage.

Taking the issue directly to voters, Sweeney said, acknowledges that Gov. Chris Christie is unlikely to approve Prieto’s bill or any other seeking to increase the minimum wage, even if it has broad support.

“The governor has already signaled he’s not going to do this,” Sweeney told reporters yesterday. “I’m serious about raising the minimum wage.”

Hopes to work with Assembly leader

He praised Prieto, saying he hoped they could work together on the issue. Prieto, meanwhile, issued a statement later in the day that said he welcomes “everyone to the minimum wage conversation,” but that his goal remains getting low-wage workers “greater relief sooner.”

Sweeney -- who many expect will run for governor in 2017 -- was joined for the announcement yesterday by U.S. Rep. Donald Norcross (D-Camden), a longtime advocate for a higher minimum wage.

Norcross said that in the 1960s, top corporate executives earned roughly 20 times the pay of the average worker. Now, he said, corporate executives make 300 times what the average worker takes home.

“The deck is stacked against those American workers who are doing exactly what they’re supposed to be doing,” Norcross said.

He said corporations and their executives are shielding wealth in offshore tax havens, while low-wage workers would spend their bigger paychecks right at home, boosting the economy.

“The fact of the matter is they’re spending it right here in America, and that makes it a win-win,” said Norcross, who’s introduced similar legislation at the federal level.

New Jersey’s business community pushed back yesterday, saying the proposed $15 minimum wage would have the biggest impact on small businesses, not big corporations.

Hurting small businesses?

“This is not about corporate New Jersey,” said Michele Siekerka, president of the New Jersey Business & Industry Association. “This is a hit on Main Street.”

She cited examples of how a $15 minimum wage, even phased in over several years, would affect businesses like gas stations and even nonprofits organizations.

She noted that a majority of business leaders said in the organization’s latest member survey that they plan to hike wages in 2016.

“This throws all that planning off,” Siekerka said.

Ryck Suydam, the president of the New Jersey Farm Bureau, said a $15 minimum wage would put New Jersey’s farming industry in a weaker position compared to other states.

“This new mandate by the Legislature will increase operating costs for these farming operations by nearly 80 percent across-the-board, something our industry can ill-afford if we expect to stay competitive with farmers in other states,” he said.

And Michael Egenton, executive vice president of the New Jersey Chamber of Commerce, raised concerns about making policy through ballot questions. Lawmakers get to listen to and weigh expert testimony on key issues in committee hearings that voters may not have the time fully evaluate on their own, he said.

“Some of these issues are incredibly complicated and sometimes the legislators need to be educated and informed,” Egenton said. “I get very concerned on the public policy side.”

He also said many employers in New Jersey already “do good by their employees” when it comes to wages, and suggested doing more to strengthen the state’s overall economy and business climate could lead to higher wages.

“Most employers, they share that prosperity with their employees,” Egenton said.

Would NJ economy be hurt or helped?

Brian Murray, a spokesman for Christie, repeated comments he made last week in response to Prieto’s proposal, saying yesterday that Democratic proposals would “kill jobs, drive major businesses out of New Jersey and destroy an economy that is on the rebound.”

Several Republican lawmakers also raised concerns about job losses that could result if businesses are forced to pay their low-wage employees more.

“We should discuss raising the minimum wage, but it must be done in a measured way and understanding that we must be competitive with other states,” said Assembly Minority Leader Jon Bramnick (R-Union).

But Jon Whiten, deputy director of New Jersey Policy Perspective, pointed to statistics showing that 81 percent of all income growth from 2009 to 2012 went to just 1 percent of the state’s households – New Jersey’s wealthiest.

“It's clear that paying people enough so they can get by, meet basic needs and more fully participate in the economy is one of many policies that can help slow the growth of income inequality in New Jersey,” Whiten said. “The pay gap alone doesn't explain growing inequality, but it's an important piece of the puzzle.”

Whiten, whose organization was on hand last week to support Prieto’s announcement, said an increase of New Jersey’s minimum wage to $15 – whether it’s phased in or instituted all at once -- would “clearly benefit a lot of people.”

But he added: “If a phase-in is the preferred route of policymakers, though, it should be no longer than three years in order to prevent the wage floor from losing too much of its purchasing power.”

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