As NJ hits goal of $15 minimum wage, there’s talk of an even bigger hike

The minimum hourly wage is now over $15 for the first time in New Jersey, thanks to a $1 increase that took effect on Jan. 1, immediately lifting take-home pay for an estimated 350,000 hourly workers.

But as Gov. Phil Murphy and fellow Democrats who control both houses of the Legislature celebrate a policy achievement years in the making, many have begun asking whether more should be done for the state’s lowest-wage workers.

In 2019, Murphy and lawmakers adopted a ramp-up law that paved the way for New Jersey’s now record-high minimum wage. But soon after that, a period of high inflation arrived that has already eaten into the buying power of a $15 wage.

And labor advocates are also quick to note not all low-wage workers in New Jersey are benefiting from the $15.13 rate, due to several carve-outs included in the original law that remain in effect today.

Among those excluded are people employed by seasonal and small businesses, as well as many farmworkers. A different set of rules is also in place for service workers who earn a “tipped” wage, such as bartenders and waitresses.

Meanwhile, several states have already jumped ahead of New Jersey. They include Washington, with $16.28 as a minimum hourly wage; California, $16; and Connecticut, $15.69, according to the U.S. Department of Labor.

Governor ‘open’ to more
Against this backdrop, it was Murphy himself who suggested during a recent interview on WNYC public radio there could be more work to do on the minimum wage in New Jersey.

“Frankly, I wonder whether or not we shouldn’t be taking this higher,” Murphy said. “That’s something that I’d be very open to.”

For years, New Jersey’s minimum wage was reset every year under language written into the state Constitution that requires annual adjustments based on inflation.

But when Murphy, a second-term Democrat, took office in 2018, he made the establishment of a $15 minimum hourly wage a top policy goal as part of a “stronger and fairer” economic agenda. At the time, the minimum wage in New Jersey was $8.60.

Gov. Phil Murphy took some by surprise when he suggested during an interview last month with WNYC that ramping up to a minimum wage of $18 an hour, or even $20, may now be appropriate for New Jersey.

By early 2019, Murphy and the state’s majority-Democratic Legislature worked together to pass the ramp-up law, which called for a series of minimum-wage increases to take place automatically through 2024.

As a result, New Jersey’s minimum hourly wage increased from $8.85 to $10 on July 1, 2019, followed by annual increases of $1, taking effect each Jan. 1.

Today’s $15.13 rate is a result of the wage law, plus an inflationary adjustment that pushed the 2023 increase over $1. And the minimum wage in New Jersey will automatically adjust in the future since it remains indexed to annual inflation, a point Murphy drove home during last week’s State of the State address in Trenton.

What’s happening elsewhere
New Jersey was one of 22 states across the nation to see a minimum wage increase take effect on Jan. 1, according to Business for a Fair Minimum Wage, a national group that tracks and advocates for such increases.

Among the places that have gone well beyond the $15 threshold are Washington, D.C., where the minimum wage is $17, and New York City, which has a $16 minimum wage, according to the business group.

On the other end of the wage scale, more than a dozen states, including neighboring Pennsylvania, still use the federal minimum wage, a $7.25 hourly rate that hasn’t been increased since 2009.

Murphy took some by surprise when he suggested during last month’s interview with WNYC that ramping up to a minimum wage of $18 an hour, or even $20, may now be appropriate for New Jersey.

But according to the U.S. Bureau of Labor Statistics’ inflation calculator, a worker would need $18.28 today to buy what $15 got in 2019, when New Jersey’s wage goal was set in law.

Predictability
Tom Bracken, president and chief executive officer of the New Jersey Chamber of Commerce, said he’s not opposed to another wage increase on its face and noted pay has been rising in many sectors of the economy in the wake of the COVID-19 pandemic.

However, if another minimum-wage hike is enacted in New Jersey, Bracken said, it should once again occur in logical and reasonable increments to ensure businesses have adequate predictability and can absorb the cost.

‘There’s no reason why an honest day’s work as an agricultural worker should be lower paid than an honest day’s work as a retail sales employee.’ —  Peter Chen, New Jersey Policy Perspective
“For businesses, it adds to their expense load, their overhead,” Bracken said during a recent interview with NJ Spotlight News.

Allowing for a temporary pause in the event of a major recession should also be considered, Bracken said, highlighting a concern of the business community that was discussed prior to the adoption of the 2019 law, but ultimately left out of the final draft.

“I would still think that that makes sense,” he said.

Not all workers included
For their part, advocates for higher wages have been among those celebrating the $15 milestone. But they’ve also used the celebrations as an opportunity to highlight the groups of workers that have yet to get there.

Among them are tipped workers, whose hourly cash wage remains set at $5.26 in New Jersey. However, under current law, if the minimum cash wage plus an employee’s tips do not equal at least the state minimum wage, then the employer must pay the employee the difference.

Agricultural workers who work on a farm for an hourly or ‘piece-rate’ wage won’t reach the $15 benchmark until 2027.
Meanwhile, seasonal workers and those employed by small-business owners — with five or fewer workers — won’t reach the $15 benchmark until 2026 under the law. The minimum hourly wage for this group did increase to $13.93 on Jan. 1, up from $12.93.

And agricultural workers who work on a farm for an hourly or “piece-rate” wage won’t reach the $15 benchmark until 2027, although the minimum hourly wage for this group was increased to $12.81 on Jan. 1, up from $12.01.

Peter Chen, senior policy analyst at the Trenton-based New Jersey Policy Perspective think tank, is among those calling for additional wage reforms.

“There’s no reason why an honest day’s work as an agricultural worker should be lower paid than an honest day’s work as a retail sales employee,” Chen said during a recent interview with NJ Spotlight News.

Source: NJ Spotlight News

 

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