NFIB Research Shows Minimum Wage Question Will Destroy Thousands of Jobs

Date: June 26, 2013

Trenton (June 26, 2013) – The National Federation of Independent Business (NFIB) and a group of other business organizations today unveiled research predicting that as many as 31,000 jobs will disappear from New Jersey in the next 10 years if voters approve a Constitutional Amendment raising the minimum wage every year based on inflation. 

“The difference between this initiative and previous increases is that it raises the cost of labor every year forever regardless of business conditions,” said NFIB State Director Laurie Ehlbeck.  “The bottom line is that New Jersey will have many fewer jobs and a smaller economy if this Constitutional Amendment passes.”

The research, performed by the NFIB Research Foundation, was underwritten by the National Federation of Independent Business (NFIB), the New Jersey Chamber of Commerce, the New Jersey Retail Merchants Association, the New Jersey Farm Bureau and the Common Sense Institute.  The study makes forecasts based on three scenarios determined by inflation:

·         Zero (0) percent inflation – 13,679 jobs lost by 2023; Economic output lower by $1.5 billion

·         Two (2) percent inflation – 22,695 jobs lost by 2023; Economic output lower by $2.8 billion

·         Four (4) percent inflation – 31,797 jobs lost by 2023; Economic output lower by $4.2 billion

 NJ job losses with proposed increases in minimum wage

“An annual increase based on the consumer price index is a bad idea for everyone.  It makes it difficult for businesses to plan year to year and it could lead to raises in years when the economy is suffering,” said Thomas Bracken, President and CEO of the New Jersey Chamber of Commerce.  Furthermore, making it a ballot question in the form of a constitutional amendment sets a bad precedent for resolving contentious issues that should be decided by our representatives in Trenton.”

James Blake, Vice President and CFO of the Morey Organization, which owns and operates three amusement piers, two water parks, hotels, restaurants and stores in Wildwood and Wildwood Crest, said the initiative will hamper businesses at the Jersey Shore that are especially reliant on part-time summer employees.

“We hire hundreds of young people to work at our attractions every year,” he said.  “The cascading effect of raising the minimum wage will increase our operational costs and hinder our ability to hire and to run one of the Jersey Shore’s economic engines at affordable prices for families.”

John Holub, President of the New Jersey Retail Merchants Association, said, “The retail industry will be hit harder than most other sectors and the inflationary effect will ripple through the economy, increasing prices for consumers.”

New Jersey Farm Bureau President Ryck Suydam said, “The question of whether to place this on the ballot should have been preceded by some serious analysis.  There was no attempt to measure the economic impact on small business people who rightly ask: how can we pay for these additional wage and payroll tax costs?  The likely answer is with lay-offs, reductions in work hours for existing employees and efforts to avoid hiring any new workers.”

Jerry Cantrell, President of the Common Sense Institute, said “while it’s being billed as a no-harm, feel-good effort by its supporters, it’s clearly another detrimental move for the business communities and a potential disaster for the state in trying to attract new businesses.  It flies in the face of common sense.”

In the past two years many states have raised, or are currently debating whether to raise, their minimum wage rates.  Only a handful of states have tied increases to inflation and New Jersey is the only state to be considering a Constitutional Amendment for that purpose.

“This will have very serious long-term consequences for the economy,” said Ehlbeck.  “If the question passes the cost of labor in New Jersey will be on a permanent escalator.  We’ll eventually have a higher minimum wage than any state in the region and future increases will be on automatic pilot.  That’s a very alarming signal to businesses of every size and it will make permanent our reputation as a difficult place start and grow a business.”

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