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Business Lobby Sounded Alarm on Minimum-Wage Increase – Back in 2013

Jobless rate has actually dropped 3 percent since previous hike to $8.25 – but is $15 too high?

minimum wage job

While Democratic legislative leaders and labor advocates want to raise New Jersey’s minimum wage to $15, business-lobbying groups warn that such a change would crush the state economy.

It wouldn’t be the big corporations that would feel the most pain, they say, but the downtown pizzeria and other small businesses throughout the state.

But nearly identical concerns were raised back in 2013, when New Jersey voters were asked at the ballot box to approve the last increase of the state’s minimum wage. And after they did, the predicted job losses never came. Instead, New Jersey’s unemployment rate has dropped dramatically, by a full 3 percentage points since 2013.

Now, advocates for the new minimum-wage legislation, which would increase the minimum wage incrementally over the five years, are pointing to that economic success in the wake of the last increase. They say the concerns being raised by the business-lobbying groups should ring hollow.

And as the issue appears to be going back on the ballot as early as next year – Gov. Chris Christie, a Republican, opposes a $15 minimum wage -- New Jersey voters seem to be open to an increase, though maybe not up to $15.

Last increase in 2013

New Jersey’s current minimum wage is $8.38. Voters in 2013 approved a $1 hike up to $8.25, along with linking future increases to inflation. The first adjustment due to inflation occurred in 2015, but the minimum wage stayed the same for 2016 because there was no inflation last year.

Last month, Senate President Stephen M. Sweeney (D-Gloucester) and Assembly Speaker Vince Prieto (D-Hudson) announced they’re backing legislation to hike the wage to at least $15 by 2021. Under the Democrats’ bill, the minimum wage would jump initially to $10.10, with subsequent annual increases until it gets over $15.

Their efforts come as Democrats across the country have called for a higher minimum to address income inequality. For example, New York Gov. Andrew Cuomo, a Democrat, is backing a similar effort in his state, while lawmakers in California just struck a deal over the weekend to lift the minimum wage in that state to $15.

Such an increase in New Jersey would affect an estimated 975,000 workers, or roughly one out of every four, according to a report released last week by New Jersey Policy Perspective, a liberal think tank based in Trenton.

The report also determined that fewer than 10 percent of those who would see their wages lifted would be teen-agers, dispelling the notion that the minimum wage is earned predominantly by young people in part-time jobs.

The real impact would be on men and women raising children, trying to afford housing and clothes, said Jon Whiten, deputy director of New Jersey Policy Perspective and a co-author of the report.

“At $8.38 an hour, they can’t afford to do any of that because it’s so far below what it actually takes to get by -- much less get ahead -- in New Jersey,” Whiten said.

But Michele Siekerka, president of the New Jersey Business & Industry, said her organization firmly opposes the call for a $15 minimum wage in New Jersey.

Harmful to smaller businesses?

While the issue is often promoted as a way to combat “corporate greed” and rising income inequality, Siekerka said of the 20,000 companies that make up her group, roughly 85 percent have just 50 employees or less. And many have fewer than 25 employees, she said.

“It’s a hit on Main Street, the pizzeria, the small technology company,” Siekerka said.

And even though New Jersey’s unemployment rate has dropped dramatically since voters approved the last minimum-wage ballot question – from 7.3 percent in late 2013 to 4.3 percent last month – that decline has also coincided with a more than $2 billion business-tax cut that’s been phased in by Christie’s administration over the last several years. Those cuts were designed to benefit companies of all sizes, including small businesses.

“Let’s not kid ourselves. That absolutely had an impact on allowing companies some breathing space,” Siekerka said.

She said the minimum-wage increase approved in 2013 – just one dollar -- was modest compared to the nearly 80 percent jump that would occur if Democratic legislative leaders’ proposal wins approval.

“We’re totally out of whack when it comes to what they’re asking for,” Siekerka said. “The economics don’t work.”

More money to spend?

On the other side of the debate, supporters of the $15 minimum wage agree that small businesses would be affected. But they’ve argued that a $15 minimum wage would help those small businesses by putting more money in the pockets of lower-wage consumers.

They also point to the previous predictions by the business-lobbying groups of widespread job losses, which never materialized.

“These folks warned that even an increased wage of $8.25 would cause employers to lay off workers,” said Gordon MacInnes, president of New Jersey Policy Perspective. “Instead, we’ve seen the biggest increase in jobs in 15 years.”

Right now, New Jersey voters’ opinions on the minimum-wage issue seem to be split, according to a survey released earlier this month by Fairleigh Dickinson University’s PublicMind Poll.

More than 70 percent of the state’s voters approved the previous minimum-wage increase, but pushing the wage to $15 was opposed by 52 percent of those polled.

“The $15 mark is too much for many to stomach, but opposition can hardly be described as solid right now,” said Krista Jenkins, a FDU political science professor and director of the PublicMind Poll.

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