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Would Reforms to Small-Business Tax, Minimum Wage, Family-Leave Fix NJ Economy?

Nonpartisan group proposes a range of policy changes — including driver’s licenses and college tuition assistance for undocumented immigrants — to boost the state’s economy

Family-leave protesters
Supporters of improved family leave campaigned at the State House in Trenton yesterday.

Despite recent job gains and an improving unemployment rate, a new report on New Jersey’s economy suggests there’s still room for additional growth if state leaders are willing to do more in several key areas to help more people find good-paying jobs.

The report released yesterday by the Fund for New Jersey, a philanthropic organization that encourages informed policymaking (and a funder of NJ Spotlight), makes a number of recommendations that leaders could follow to help the state economy reach its full potential. They include reorienting state tax incentive programs to benefit small businesses and increasing New Jersey’s minimum wage to bring it more in line with what it takes to survive in a high-cost state like New Jersey.

The 23-page economic evaluation also recommends improving the state’s sick-leave policies to help support low-wage workers and enacting family-leave reforms that would make it easier for workers to take time off to care for a newborn or sick family member. It also calls for placing a greater focus on “on-the-job-training” programs and other workforce-development initiatives that would better link those who remain unemployed with industries in New Jersey that have job openings.

“In some ways, this is like matchmaking, matching skills to real jobs,” fund trustee Richard Roper, a senior fellow at the Nelson A. Rockefeller Institute of Government, said during a news conference in Trenton.

The report is the second in a “Crossroads NJ” series that the nonpartisan organization has been rolling out during the 2017 election year, which will see both the governor’s office and all 120 state legislative seats up for grabs in November. The first Crossroads report, released last month, analyzed state finances and made a series of recommendations to improve New Jersey’s fiscal standing, including cutting spending in some areas and increasing some taxes.

Politically controversial topics

Organization officials say the goal of the Crossroads series is to help inform the public-policy debates that are unfolding this election year by putting forward evidence-based recommendations for leaders to consider. They also made it clear yesterday that the organization is not choosing sides in any election or endorsing any candidates. But the new economic report also doesn’t shy away from politically controversial topics like immigration; it recommends allowing New Jersey’s undocumented immigrants to obtain state driver’s licenses and qualify for financial aid at state colleges and universities as ways to improve the economy.

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The organization’s report on the state economy comes out as New Jersey has been enjoying a long period of steady growth in the wake of the Great Recession. In fact, New Jersey had a banner year for job growth in 2016, and this year the state’s unemployment rate has dropped to 4.1 percent, which is several notches below the federal jobless average. But the long-term trend for New Jersey’s economy also reflects a pace of recovery here that has lagged the national rate.

The report released yesterday also raised concerns about wide disparities in per-capita income in New Jersey, and the likelihood that the new job growth is occurring only in the lowest wage sectors.

To take on those concerns, the report recommends an increase of the minimum wage that better aligns pay for low-wage workers with research that calculates what it costs to live in a specific region of the state. For example, the state’s current minimum wage of $8.44 is well below the $13.78 hourly wage that the United Way of Northern New Jersey has estimated a single adult would need to earn in order to cover basic needs in New Jersey. The report also recommends that an even lower cap placed on the wages earned by tipped workers like food servers be increased in New Jersey.

“We need to make the minimum wage in New Jersey a livable wage,” Roper said.

Double family leave from six to 12 weeks

Low-wage workers could also be better supported by enacting a law that would allow them to earn paid sick days, the report said, and the state’s family leave insurance program could also be improved, including by expanding the period that caregivers can take off with pay to 12 weeks. Current state law caps paid leave at six weeks, though lawmakers recently sent Gov. Chris Christie a bill that would expand it to 12 weeks.

Coincidentally, supporters of that bill held a news conference outside the State House yesterday to urge Christie, a second-term Republican, to sign it into law. “The (existing) program has a lot of serious weaknesses,” said Dena Mottola Jaborska, associate director of New Jersey Citizen Action.

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Another set of recommendations in the Fund for New Jersey’s economic report focuses on the state’s investment in small businesses, which as a group employs more workers in New Jersey than big corporations. Lucrative state tax-incentive programs provided through the New Jersey Economic Development Authority should be geared more toward small businesses than big corporations, and the EDA should also add a board member from the small-business community to better reflect its interests, the report said. “We should include small-business representation on EDA’s public board to ensure that the small-business perspective is available,” Roper said.

In the controversial area of immigration policy, the report recommends permitting undocumented immigrants to obtain driver’s licenses, a change it argues would allow more state residents to contribute to the state economy by increasing their mobility. The state could also collect millions of dollars in licensing fees from residents who right now are not legally allowed to obtain a driver’s license, the report said.

Tuition assistance for undocumented immigrants

Another recommendation calls for undocumented immigrants to be able to apply for tuition assistance at state colleges and universities as a part of a broader call for a more focused approach to improving college graduation rates. That change would follow a law enacted by Christie in 2013 that allowed New Jersey’s undocumented immigrants to begin qualifying for in-state tuition rates, which are lower than those paid by out-of-state students.

Other workforce-development recommendations include changing the state’s unemployment program to emphasize more job training and encouraging “on-the-job” training and other programs designed to equip job seekers with skills that New Jersey companies are looking for.

The fund’s economic report was influenced by input from several groups, Roper said, including Rutgers University’s Heldrich Center for Workforce Development, the Port Authority of New York and New Jersey, New Jersey Policy Perspective, and the New Jersey Institute for Social Justice.

The fund is planning to release other reports later this year that will cover the issues of climate and the environment, criminal justice, education, housing and land use, and transportation.

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