Explainer: What Changes May Be Coming to Wages and Benefits in New Jersey?

Tara Nurin | June 7, 2016 | Explainer
Gov. Christie may veto a bill raising the minimum to $15.10 an hour by 2021; employer associations oppose the legislation

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New Jersey voters believed they ended the discussion of a higher minimum wage in 2013 when they overwhelmingly approved a referendum to raise it to $8.25. But thanks to a nationwide push to raise pay for fast-food workers, state lawmakers are considering new legislation that would raise the minimum to $15 an hour and deliver other benefits such as earned sick leave and predictable scheduling to hourly workers.

Business leaders forecast these rules would force cuts in hours and jobs, damaging the economy. Worker advocates say a full-time employee should be able to live above the poverty line.

Are New Jersey’s workers going to earn $15 an hour? Hard to tell for now but eventually, it’s almost certain. The General Assembly passed a bill at the end of May — by a vote of 42-31-1 — to raise the minimum wage to $10.10 per hour on January 1, 2017, with annual increases that would raise it to at least an hourly $15.10 by the start of 2021. Hourly rates would either increase by $1.25 per year or in step with the consumer price index (CPI), whichever is greater. Beginning in 2022, the wage would simply be tied to the CPI or the federal minimum wage, whichever is greater at that point. The 2013 law was a one-time increase tied to future increases in the CPI, which puts it at a current $8.38. The federal minimum wage has stayed at $7.25 since 2009.

The Senate is working on an identical bill, sponsored by Senate President Steve Sweeney (D-Gloucester), that has passed the labor committee and now awaits a vote in the budget committee. That bill is likely to pass. The uncertainty arises once the bill reaches the governor’s desk. He vetoed the last wage increase in January 2013, a move that sent the bill to the ballot that year. Voters approved it 61 percent to 38 percent.

But some factors could make a similar change more difficult this year. If Gov. Chris Christie vetoes the bill, it could once again go on the ballot. However, voters might hesitate to approve it because the wage differential is much larger this time. In 2013, the minimum wage immediately increased by just $1 — from $7.25 to $8.25. This time, it would immediately increase by $1.72 and would grow by $6.60 from 2013 to 2021.

Prior to 2013, the state’s minimum wage last increased in 2009, to match the federal minimum. It was increased to $5.15 per hour in 2000.

This year, opposition to the hike involves prominent groups like the Business and Industry Association, the New Jersey Restaurant and Hospitality Association, and the New Jersey Chamber of Commerce. Supporters are less vocal, with New Jersey Policy Perspective (NJPP) being one of the only groups vociferously lobbying on its behalf.

Who would it affect? Some 975,000 New Jersey workers who make between $8.38 and $15, or one in four. According to NJPP, only 10 percent of those workers would be younger than 20, repudiating a claim by the restaurant association that one-third of the state’s hospitality workforce is under 18. Almost one-third of the people affected work full time, almost half attended college, 17% percent have earned less than a high school diploma, and 49 percent are white while the rest are African-American, Latino, or other.

Many minimum wage earners work in the service industry, with high numbers in hospitality. According to the state’s Department of Labor, in 2013 one-quarter of the state’s private-sector employees worked in leisure, hospitality, or retail (LHR) but were paid just 11.5% of the total job earnings. The average wage was $27,500. Fifty-six percent of Atlantic County’s private-sector employment falls within the LHR sector, while Cape May County’s share is just below at 55 percent.

Seasonal and Tipped Workers: Thanks to the Shore’s summertime economy, New Jersey has a high number of seasonal hourly workers, which the labor department estimates to run between 35,000 and 40,000. Many of these workers are teenagers and college students. Specifically, the U.S. State Department runs an international exchange program that supplies many foreign college students to the Shore’s amusement parks, concession stands, and beach shops. While businesses are able to pay them less in taxes than U.S. employees, they are still required to pay the minimum wage or above and to provide free cultural and educational activities for these workers.

More than half of Morey’s Pier’s 1,500 workers are below the age of 22, with one-third of the total workforce coming through the foreign exchange program. Denise Beckson, director of human relations and water park operations, says the wage hike would cost her company an additional $1.5 million each season in wages alone, something that could result in more automation, higher prices, shorter hours, or fewer rides opening. The $15 hourly wage hike also doesn’t take into account higher payroll taxes, worker’s compensation, and upward pressure on higher-paid positions. Like many other opponents of an increase, she argues that the minimum wage was originally meant to protect heads of households, not teens working a summer job.

“We’re talking about people who are holding jobs for three to six months. It’s a summer job; it’s not paying the gas bill,” she said.

For this reason, Beckson and other opponents are pushing for bills to create exemptions or restrictions based on age, seasonality, or geography. There are, in fact, several bills in committee that address these concerns, though for the most part no action has been taken. The bills seek to establish a training wage; create an exemption for certain summer camp workers; or provide for different wages based on regional cost of living and unemployment rates. One even proposes a five-year $20 hourly wage for residents of Essex, Hudson, Camden, Mercer, and Middlesex counties.

The primary wage bill that the Assembly passed a few weeks ago does not include any provisions for tipped employees, who earn $2.13 per hour. Under current law, tipped employees who earn less than this hourly minimum during any given shift must be paid the difference by their employers. Two bills to increase the hourly wage for these workers have been introduced into the Senate labor committee, but no action has been taken.

A few additional bills actually seek to move in the opposite direction — prohibiting municipalities from setting their own minimum wages for the private sector, in one case, and encouraging the governor to suspend the minimum wage during times of economic crisis.

What’s going on with earned sick leave? Though there’s been almost no action on several earned sick-leave bills, the business and restaurant lobbies are gearing up to fight them on the grounds that an unexpectedly absent employee makes scheduling nearly impossible, especially when that employee leaves in the middle of a shift. And Beckson worries that her international college students would save up their sick time and use it all during the last week of summer to “hit the beach and party.”
The one bill getting any traction is sponsored by Sweeney and Senator Loretta Weinberg (D-Bergen), which is up for a vote by the full Senate. Currently, hourly employees don’t qualify for mandatory paid sick time; under the bill, employees would accrue one hour of fully paid sick time per 30 hours worked. A small business would have to let employees carry over up to 40 hours of sick leave from year to year, while a large business would have to allow for up to 72 hours to carry over.

The restaurant association points to the City of New Brunswick, which implemented its own sick leave policy earlier this year, as a good example of a fair compromise. In New Brunswick, employees who work at least 20 hours per week and more than 120 days qualify for full sick time, as long as those employees take off a half or full shift, rather than a few minutes or hours. Marilou Halverson, head of the restaurant association, says this model allows employers to retain some control over the process and eliminates most of the major concerns about seasonal workers, who generally work fewer than 120 days; teenagers, who usually work fewer than 20 hours per week; and employees who leave an hour before their shift ends and make it difficult to find a replacement. However, Halverson doesn’t want a patchwork of laws.

“We would want to see one policy for the state because many businesses work out of various locations,” she said.

What is preemptive scheduling? No bills have been introduced in New Jersey yet requiring employers to provide advance schedules for hourly workers, but a dozen or so states already have such laws, which vary considerably, and Congress is considering federal legislation. The National Retail Federation opposes such requirements. “While each proposal varies, they generally include four common provisions: Advance posting of schedules, employer penalties for unexpected schedule changes, burdensome record-keeping requirements, and prohibitions on requiring employees to find replacements for scheduled shifts if they are unable to work,” the group said.

The pending federal Schedules That Work Act calls for employers to post written schedules two weeks in advance with penalties for changes made less than 24 hours before a scheduled shift. These regulations seek to prevent bosses from putting employees on call without reimbursing them for their inability to plan around their jobs. Retailers, restaurateurs, and seasonal employers complain that they would lose money, if they couldn’t add or cut staff based on bad weather or low traffic.