N.J. Workers, Businesses Await Impact of a $1 Raise in Minimum Wage

An estimated 250,000 workers in New Jersey will get a raise Wednesday as the minimum wage is boosted by a dollar, to $8.25 an hour, due to voters who overwhelmingly approved the increase in November. New Jersey is among 13 states where the wage is rising for 2014.

In New Jersey, advocates of the higher wage say it will help the working poor and boost the state’s economy as low-income households get millions more to spend. But business groups say the raise will burden employers – and they’re especially upset that the November vote changed the state constitution to lock in annual cost-of-living increases for minimum-wage workers.

“The increase is on autopilot,” said Jack Mozloom, a spokesman for the New Jersey chapter of the National Federation of Independent Business, a small-business group. “You’re going to see real pressure on small businesses to find ways to avoid hiring people.”

About 49,000 people in New Jersey make the minimum wage, according to federal Bureau of Labor Statistics. But New Jersey Policy Perspective, a progressive group that supports the higher wage, says that a total of 254,000 make between $7.25 and $8.25 an hour. In addition, NJPP says, another 189,000 make between $8.25 and $9.25 and will probably get a pay bump as salary scales are adjusted.

Working full time, these workers make less than $20,000 a year, NJPP says – not enough to meet basic needs in a high-cost state like New Jersey. The increase in the minimum wage will mean an extra $922 a year for workers now making less than $8.25, NJPP says. These low-wage workers, NJPP writes in a new report, “are many of the people we rely on to pump our gas, bag our groceries or take care of our aging parents.”

For the working poor, raising the minimum wage “represents a long-overdue signal of some respect for what they do, who they are and what they’re trying to gain,” Gordon MacInnes, president of NJPP, said Monday. “We’re talking about adults who are trying to make it, and making it on $7.25 an hour is not possible.”

NJPP and other advocates of the higher wage say it will help the state’s economy by $173.2 million, because low-income workers will spend their extra dollars on necessities like food and gasoline. Opponents, however, say the cost of higher wages will more than wipe out any gains that businesses see from increased consumer spending.

The minimum wage has become a hot issue nationwide, with President Obama and congressional Democrats pushing for an increase in the $7.25 federal rate to $10.10 by 2015 – a stand they hope will win them votes in the fall. Polls have found strong support for increasing the wage. In New Jersey, the minimum-wage increase passed with 61 percent of the vote.

With 13 states raising their minimum wages on Wednesday, a total of 21 states will have higher rates than the federal rate.

The New Jersey increase in the minimum wage is the first since 2009. New Jersey raised its minimum to $7.15 an hour in 2006; it rose again in July 2009, when the federal minimum wage was raised to $7.25. States are not allowed to set rates lower than the federal minimum.

Business groups said Monday that amending the constitution to lock in annual increases was the wrong approach.

“We were not against raising the minimum wage; we were just against the vehicle that was used,” said Tom Bracken, head of the state Chamber of Commerce. “There’s no place in the state constitution for economic policy, and that’s what this is.”

“The biggest issue is not necessarily the $1 increase now, it’s that we’re going to see this every year going forward,” said John Holub, president of the New Jersey Retail Merchants Association.

MacInnes said that amending the constitution was not ideal, but it was better than the proposal put forward by Governor Christie when he vetoed a minimum wage bill earlier this year. Christie suggested a $1-an-hour increase over three years. But over that time, said MacInnes, inflation would continue to eat away at the value of the minimum wage, leaving low-income workers with little gain.

The state Department of Labor and Workforce Development will investigate and enforce the new minimum wage if it gets complaints.