Management & Labor

New Jersey Voters to Consider Minimum Wage Hike

A November ballot measure would make New Jersey the 11th state to index its minimum wage to cost-of-living increases.
October 31, 2013
NJ considers whether to raise the state's minimum wage and link it to the Consumer Price Index. flikr user Denis Bocquet

Barring an election-day upset, New Jersey voters are poised to approve a constitutional amendment that would raise their state’s minimum wage. In the process, they would make New Jersey the 11th state to tie the minimum wage to a local Consumer Price Index. The immediate impact would be a wage hike from $7.25 to $8.25. In the long-term, the minimum wage would increase with inflation.

Under the proposal, New Jersey would join 18 states and the District of Columbia that currently have a minimum wage set above the federal minimum wage of $7.25 per hour. Even if the measure passes, several states would have a higher minimum wage, such as Oregon ($8.95), Vermont ($8.60) and Washington State ($9.19). “The wage level that New Jersey is proposing is actually quite modest,” says Paul Sonn, the legal co-director at the National Employment Law Project, a group that advocates for an increase in the federal minimum wage, as well as in states. California passed a law this year that sets the highest standard yet for a state minimum wage, with incremental increases scheduled to reach $10 by 2016.

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Some 241,000 New Jersey residents --- those who currently earn between $7.25 and $8.25 per hour -- would be directly affected by the ballot measure, according to New Jersey Policy Perspective, a liberal think tank. The largest daily newspaper in the state, The Star-Ledger, endorsed the proposal, noting that for an individual working full-time at minimum wage, that translates to only $15,080 per year. “Try to imagine living on that, or raising a child,” the editorial board wrote.

By tying the minimum wage to the Consumer Price Index, lawmakers intend for the lowest possible wage for New Jersey employees to maintain its purchasing power, regardless of inflationary changes. A September report about the federal minimum wage, published by the Congressional Research Service, shows that even though the national minimum wage has been raised by statute repeatedly from its original amount (25 cents in 1938), its real value -- relative to rising consumer prices -- has been steadily on the decline since 1968. That's because legislative raises haven't been high enough or haven't happened consistently enough to keep up with the rate of inflation. In New Jersey, as in the United States as a whole, lawmakers have passed increases to the minimum wage sporadically -- sometimes year after year, sometimes only after several years -- while prices have generally risen on an annual basis.

Two polls in September showed that a majority of registered voters in New Jersey supported the ballot measure -- 65 percent according to Monmouth University Polling Institute and 77 percent according to Rutgers University’s Eagleton Institute of Politics. A slight majority of conservatives (55 percent) supported the measure, according to the Rutgers poll.

“The biggest question is turnout and making sure that voters who support the ballot measure actually vote for it,” says Paul Penna, the campaign manager for Raise the Wage in New Jersey. Some proponents of the measure worry that the public support revealed in polling won’t actually translate into votes. Jersey City Mayor Steve Fulop, a proponent of the measure, said he continues to meet New Jersey residents who don’t know the minimum wage hike is on the ballot. This year’s gubernatorial race -- where Republican Gov. Chris Christie is expected to win in a landslide -- has left Democratic voters feeling deflated, he said. “I don’t think people are excited about voting, period.”

The New Jersey Chamber of Commerce and several other business groups oppose the measure, but the most prominent critic has been Christie, who twice vetoed a version of the minimum wage hike passed by both chambers of the state’s General Assembly in 2012 and 2013. (Lawmakers referred the bill to the November ballot after the second successive veto.) Christie objected to automatic increases baked into the state’s constitution. Business owners, he said in his veto, “will be confronted with three dire options: lay-off workers, raise prices, or leave New Jersey.” Instead, Christie recommended a $1 increase phased in incrementally over three years, which he argued would provide a more predictable economic climate for businesses.

Republican Sen. Joe Pennacchio offered amendments to the Democrats’ minimum wage bill, proposing to make the changes that Christie recommended. “I don’t mind looking at that issue and I don't mind looking at that issue every year,” he said, but "one thing that Republicans and the governor definitely agreed on is that we didn’t want this on automatic pilot.”

Democrats ultimately rejected Christie’s recommendation of a phased-in $1 increase, in part because it would largely devalue the wage hike, according analysis by the New Jersey Policy Perspective. Because of rising inflation costs, a wage of $8.25 in 2015 will be worth only $7.80 in 2013 dollars, the group said.

Historically, New Jersey has upped its minimum wage periodically through legislation. The last of these increases was in 2005, when the state scheduled a $2 increase over two years, from $5.15 to $7.15. It went up another 10 cents when the federal minimum wage became $7.25 in 2010.

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