Most of New Jersey’s low-income workers are a big step closer to a $15 minimum wage thanks to a deal that was announced yesterday by Gov. Phil Murphy and top legislative leaders.
Their agreed framework for minimum-wage legislation is expected to move quickly through the Democratic-controlled Legislature; it calls for the $15 hourly rate to go into effect starting in 2024 for most minimum-wage positions in the state.
There will also be several incremental adjustments between now and 2024 to help businesses adapt to the increase, which — when fully implemented — will represent a nearly 70 percent jump from the current minimum hourly rate of $8.85.
The agreement includes a separate ramp-up schedule for seasonal workers and those employed by businesses that have fewer than five workers. Under the agreement, that group will get to $15 by 2026. There is also a carveout for farmworkers — they will only get to $12.50 by 2024, with an opportunity for state officials to eventually bring them up to $15 by 2027.
The breakthrough, announced yesterday afternoon via a press release, comes after several weeks of negotiations between Murphy, a first-term Democrat, Senate President Steve Sweeney (D-Gloucester) and Assembly Speaker Craig Coughlin (D-Middlesex). The main sticking point had been the carveouts, and the final agreement notably does not include a proposal that had been floated in legislation sponsored by Coughlin that called for a different ramp-up schedule for teenagers.
Raises to be phased in
Yesterday’s deal was generally applauded by low-income worker advocates who have long called for the minimum wage to be increased dramatically to help the state’s working poor make ends meet. Business groups had sought a phase-in schedule for the increase to $15, but they also raised concerns yesterday about mandating the higher wage and the impact it could have on the state economy and small businesses.
New Jersey’s minimum wage is set every year under language that’s written into the state constitution that requires annual adjustments based on changes in the rate of inflation. That policy led to a slight increase in the wage on January 1, from $8.60 to $8.85. As they’ve been pushing in recent years for a $15 minimum wage, advocates for low-income workers have pointed to studies that show the significant challenges that low-wage workers face in a high-cost state like New Jersey.
In fact, in 2016 Sweeney was the prime sponsor of legislation that would have gradually increased the minimum wage for all New Jersey workers to $15 by 2021. But former Republican Gov. Chris Christie vetoed that measure, and Sweeney and other legislative Democrats did not have enough support to muster an override before Christie left office last year.
Under the deal that legislative leaders have now reached with Murphy — who vocally supported a $15 minimum wage during his 2017 campaign — the minimum hourly rate for most workers will be increased later this year to $10. Subsequent increases would go into effect every year on January 1 between 2020 and 2024 to bring the rate to $15.
The minimum-wage for seasonal workers (who are employed for only few months in the year) and employees of businesses with fewer than five workers won’t get to $15 until January 1, 2026.
A different deal for farmworkers
For farmworkers, the minimum rate of $12.50 will go into effect on January 1, 2024. From there, the state’s Labor commissioner and Agriculture secretary will have until March 31 of that year to assess whether the farmworkers should also receive a $15 minimum wage. It would go into effect on January 1, 2027 if they decide to do so. If they can’t reach an agreement, a third person picked by the governor subject to the approval of the Senate would be brought in to break the tie.
The new agreement also calls for the state to offer tax credits to companies that hire workers with disabilities.
Murphy called yesterday’s deal a “historic step” and said it would be “good for workers, good for our businesses, and good for our economy.”
“I thank Senate President Sweeney and Speaker Coughlin for their commitment to this issue and look forward to signing this legislation into law,” he said.
Sweeney said the agreement, once enacted into law, would put New Jersey “at the forefront of the national movement to build a high-wage economy.” Coughlin noted the final deal takes into account the “concerns of our state’s valued small-business community.”
For low-income worker advocates, the agreement marks a mixed victory as the carveout for teenagers didn’t make the final cut but the lower rate for farmworkers did.
Advocacy for pay equity will continue
Still, Analilia Mejia, executive director of the New Jersey Working Families Alliance, called the deal “tremendous.” She predicted the higher wages for workers in other low-income sectors will eventually put pressure on farmers to give their workers raises that could outpace the proposed ramp-up schedule for farmworkers.
“I am going to continue to advocate for real and comprehensive pay equity in our state and that includes advocating for some of the most vulnerable workers and that is farmworkers,” she said.
Brandon McKoy, director of government and public affairs for New Jersey Policy Perspective, a liberal, Trenton-based think tank, suggested the agreement is also good news for those who don’t earn the minimum wage due to the effect it could have on the broader state economy.
“The positive impact of this increase will reverberate throughout the economy as workers will immediately have more disposable income to spend in their local communities,” he said. “This will also benefit New Jersey’s vibrant business community, especially those on Main Street, by growing their customer base and helping more residents afford their goods and services.”
Businesses concerned about legal mandate
But Michele Siekerka, president and chief executive of the New Jersey Business & Industry Association, aired concerns about the new legal mandate on companies that must pay the higher wages. A survey of NJBIA members that was released last month suggested some could turn to staff cuts, working-hour reductions, automation and price increases in response to the mandated increases.
Siekerka also called for the minimum-wage legislation to require an analysis of the wage increases to assess their impact on the economy and jobs.
“Such a provision would give the state the ability to freeze a scheduled increase during a major economic downturn or in the wake of a natural disaster, like Superstorm Sandy,” she said.