Legislation could cost New Jersey 70,000 jobs.
Minimum Wage Bill Advances
On
May 16, the Senate Labor Committee approved S15, the gradual $15 per hour
minimum wage increase bill backed by Senate President Stephen Sweeney and
Assembly Speaker Vincent Prieto. The bill was second referenced to Senate Budget and
Appropriations Committee and we expect a hearing to be scheduled soon.
This
is a major hit for New Jersey small business owners, who are already paying
higher minimum wage rates thanks to a 2013 voter-approved constitutional
amendment. Under that ballot measure, the base wage was raised from $7.25 to
$8.25 and will be adjusted annually based on the Consumer Price Index, which
meant the minimum wage rose another 13 cents in January 2015.
Now,
S15/A15 would raise the current minimum wage of $8.38 per hour to $10.10 per hour
on Jan. 1, 2017, and further increase it by $1 to $1.25 each year thereafter
until it reaches $15 in 2021. After 2021, annual adjustments would continue to
be tied to inflation.
The
Senate Labor Committee hearing and vote came just days after NFIB Research
Foundation released an economic impact study outlining the
devastating impact to New Jersey if the bill were passed. The numbers are
staggering: 70,000 jobs lost over the next 10 years.
“Raising
the cost of labor for employers of minimum wage workers by 79 percent over as
little as five years is a hit that no one can afford to take,” NFIB/New Jersey
State Director Laurie Ehlbeck said in a statement.
Worse
yet, the financial burden for small business owners doesn’t stop at just the
wage increase—they would also have to pay additional payroll taxes.
“Small
business owners pay payroll taxes on 7.65 percent of their employee’s wages,
which means that not only are lawmakers expecting them to compensate for a
dramatic increase in labor costs, they’re also hitting them with a tax
increase, which is what Trenton does best,” Ehlbeck said.
A
proposed minimum hike of this size not only misses the fact that the wage was
intended for new, unskilled workers—not to feed entire families—but it also
puts the Garden State’s financial future on very shaky ground.
Companion bill, A15 was passed by the Assembly Labor Committee and passed the Assembly by a 42-31-1 vote on Thursday, May 26. Since A15 and S15 are identical bills, once S15 passes the Senate the legislation will be sent to Gov.
Christie. It’s expected that he will almost certainly veto it. If this happens, backers of the proposal plan to pass the bill through the legislature again and will then put the issue on the ballot.
