New Jersey’s minimum wage will rise $1 to $12 an hour on Friday, amid a pandemic recession that’s seen more than 1.7 million workers here lose their jobs or work hours and a third of small businesses close their doors.
The scheduled wage increase, an annual step on a path to $15 an hour for most workers in 2024, comes at a time when workers desperately need more money in their pockets, labor advocates say — but also when businesses can least afford it, lobbyists argue.
Gov. Phil Murphy and the state Legislature in 2019 agreed on a five-year plan to raise the minimum wage to $15 an hour, capping Democrats’ years-long effort to improve wages for the state’s lowest-paid workers.
The first pay hike, on July 1, 2019, boosted the minimum wage from $8.85 an hour to $10. Each Jan. 1 brings another $1 increase before reaching $15 an hour for most workers in January 2024. Seasonal workers and workers at business that employ five or fewer employees won’t reach $15 an hour until 2026. Farm workers will hit $12.50 in 2024, after which it would be left up to state officials in the executive branch whether to keep going to $15 an hour by 2027.
The minimum wage for employees of small businesses and seasonal workers will increase on Jan. 1 from $10.30 an hour to $11.10 and the rate for farm workers bumps up slightly from $10.30 to $10.44 an hour.
New Jersey Policy Perspective, a liberal Trenton think tank, estimated at the time the bill was signed into law that more than 1 million workers would benefit from the wage hike. About 10 percent of those employees will be put on the slower path.
While the Legislature was debating the minimum wage increase, business lobbyists pleaded for an “off ramp” that would allow the state to suspend the annual pay hikes if it runs into an economic downturn or natural disaster.
Reality is so much worse, they said.
The economy is in turmoil, with business restricted to slow the spread of the coronavirus.
This is precisely why New Jersey should have allowed for a pause if the economy soured, said Tom Bracken, president of the New Jersey Chamber of Commerce.
“There’s been no more difficult time for the business community in the history of New Jersey,” he said. “I get there’s a lot of people who have a need for this ... But on the other side of this, the business community has been hit as hard if not a lot harder than a lot of these people.”
Nearly a third of small businesses operating in the Garden State in January are now closed, according to TrackTheRecovery.org, a Harvard University-based data project tracking the economic impact of the pandemic. Closures were higher, nearly 46%, among leisure and hospitality businesses.
Many of those that have managed to survive so far are hanging on by a thread, Bracken said
“And we still have, with the resurgence of COVID, four to six months of difficulty coming our way, maybe even worse than before,” he continued. “It’s just salt in the wound.”
In a survey of New Jersey businesses, 30% who would be hit with higher payroll costs would raise their prices, 18% said they would reduce staffing or hours, 15% would cut benefits and 10% would pursue automation, said Michele Siekerka, president of the New Jersey Business and Industry Association.
The majority of businesses aren’t generating any profits right now, and $1 an hour per employee will make it that much harder for them to keep their doors open, Siekerka said.
Murphy said he understands the concerns of businesses, but he minimum wage hikes should move forward.
“Some folks have said, ‘Hey, listen, given the circumstances that we’re under, should that be reconsidered?’ And the answer is it can’t be,” Murphy said Wednesday at his coronavirus press conference.
“We need more federal help to help us help our small businesses. And we need need to let the minimum wage go on its march toward $15. We have far too many people in our state living below the poverty line, and so that’s another big step.”
But Senate President Stephen Sweeney, D-Gloucester, said what businesses need is more customers, a higher minimum wage helps that.
When people have more money, they have have more money to spend, he said, noting how federal stimulus checks and unemployment assistance buoyed spending.
“I’m a believer that all businesses are going to be stronger when employees are making money. People have to be able to buy the product you’re selling,” Sweeney said. “The people that are making minimum wage aren’t running to the bank and saying I got another $40 this week, but if I get another $40, maybe instead of buying hotdogs and beans for my kids I’m going to buy them chicken.”
“Unfortunately, I think they’re using the pandemic to bring back the same argument they made going all the way back.”
The Garden State isn’t going to get out of this recession by shortchanging workers, added Brandon McKoy, president of New Jersey Policy Perspective.
“We don’t want to go back to the economy we had before this,” he said. “it was weak, unhealthy and it didn’t work for a whole lot of people.”
Workers trying to survive through the pandemic need that extra bit of help, as they’ve also seen a big increase in food and utility costs, said Dena Mottola Jaborska, associate director of New Jersey Citizen Action.
Someone working 40 hours a week at $12 an hour earns $480 a week, or $24,960 a year. They’re still living in poverty in New Jersey, Mottola Jaborska said.
“The increase that workers are going to be looking forward to barely begins to cover the added expenses they’ve experienced because of the pandemic,” she said. It’s also a small enough jump that businesses should be able to manage, she added.
“It’s such a nominal amount of money that it’s hard to imagine the small increase is really amounting to much for businesses,” she said. “It’s unconscionable to think small businesses in New Jersey wouldn’t pay their workers $12 an hour or more knowing it’s not a survivable level of pay.”
But Sierkerka argued that $1 adds up.
“Some people have this perception that it’s just a dollar. But when you employ 50, 100, or 1,000 employees ... it’s millions of dollars. The impact to their expense line is absolutely incredible,” she said.
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Samantha Marcus may be reached at smarcus@njadvancemedia.com.
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N.J. minimum wage is jumping another $1 an hour Friday. Ailing businesses say they can’t afford it. - nj.com
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