On wage hike vote, N.J. business group issues warning

Posted: June 30, 2013

Tens of thousands of jobs would be lost in New Jersey if the state's minimum wage increases, according to a study by a small-business coalition.

The claim adds fuel to the debate over hiking the wage less than five months before voters determine the fate of a $1 increase and proposed indexing of the wage to inflation.

The study by the National Federation of Independent Business says New Jersey could lose 31,000 jobs during the next decade if the changes are approved.

The reason, according to the study, is that the wage hike and indexing would increase business costs.

Supporters of the wage hike, however, including another small-business group, say the study is misleading and does not account for the widespread positive impact increased wages would have on the economy.

The boost in income for low-wage workers would act as a stimulus, they argue, because workers earning the minimum or near the minimum would spend money they currently do not have, creating additional revenue for small businesses.

The wage increase will be on the Nov. 5 ballot as a constitutional amendment, along with the election of the governor and the entire state Legislature.

The Senate and Assembly approved an increase to $8.50 an hour with indexing in December, but Gov. Christie conditionally vetoed the bill. He offered a $1 increase phased in over three years without the cost-of-living indexing, but also agreed to restore the state earned-income tax credit, which is given to low-wage workers.

The credit was cut from 25 percent to 20 percent of the federal tax credit as part of the 2010 budget negotiations.

Rather than pursue an override, Democrats in the Legislature approved a constitutional amendment requiring affirmative votes of both houses in successive calendar years. The amendments passed both houses twice on party-line votes, with the final vote in February. Sen. Jeff Van Drew (D., Cape May) was the only legislator to cross party lines.

The state minimum wage was last increased in 2005, when it went from $5.15 an hour to $7.15 an hour over two years.

A 2009 federal minimum-wage increase pushed the New Jersey rate to $7.25 an hour, which is where both rates currently stand.

The 2005 legislation created an N.J. Minimum Wage Advisory Commission, which has consistently reported that the wage's spending power has lost ground to inflation.

The new policy brief was paid for by the National Federation of Independent Business, the state Chamber of Commerce, the New Jersey Retail Merchants Association, the New Jersey Farm Bureau, and the Common Sense Institute of New Jersey, a libertarian-leaning think tank.

The report comes a week after a coalition of labor unions and liberal advocacy groups officially launched its Raise the Wage campaign, unofficially setting the parameters of the debate that will lead up to the November vote.

According to the report, written by Michael Chow of the business federation, the wage hike would "constitute a direct increase in employer costs" that could rise to as much as 62 percent if the cost of living rises to 4 percent.

The study says the higher wage would have a ripple effect that would increase pay for those making more than but close to the minimum wage. The additional cost to businesses would result in job losses, the study concluded.

"Depending upon the rate of inflation in future years, passage of [the wage amendment] could result in over 31,000 lost jobs in New Jersey over a 10-year period. . . . More than 59 percent of the lost jobs would be jobs from the small-business sector of the economy," the study said.

James Blake, vice president and chief financial officer of the Morey Organization, said during Wednesday's news briefing on the issue the wage increase would also affect summer hiring.

The Morey Organization owns and operates three amusement piers, two water parks, and hotels, restaurants, and stores in Wildwood and Wildwood Crest.

"We hire hundreds of young people to work at our attractions every year," he said.

Polls have consistently shown voters support the minimum-wage ballot question by large margins, with the most recent survey - a Rutgers-Eagleton poll June 17 - putting support for the increase at 77 percent.

The polling was one of the reasons for issuing the policy brief, said Michael Egenton, senior vice president for government relations at the New Jersey Chamber of Commerce.

"We see the polls and we know there is public interest going into the voting booth," he said. "We want to educate and inform the voters that there are consequences and ramifications of their voting on this and the impact it will have on the business community."

Voters need to understand that businesses, when faced with increased costs, end up passing along the costs to consumers, not hiring, or cutting back on work hours, he said.

Not all business groups or businesses agree.

The New Jersey Main Street Alliance, a group of 1,400 small businesses organized by the liberal advocacy group NJ Citizen Action, supports the wage hike.

"We need to be 100 percent clear: The business groups lining up against a fair minimum-wage increase in New Jersey do not represent all of the state's businesses," Corinne Horowitz, business representative of the New Jersey Main Street Alliance, said in a statement.

Adam Woods, who owns Camden Printworks in Camden and is a member of the alliance, said businesses should not be paying wages that leave their workers in poverty.

An employee making the minimum wage, working 40 hours a week for 52 weeks, earns $15,080 for the year. Federal guidelines set the poverty line at $11,490 for an individual, $15,510 for a two-person household, $19,530 for a three-person household, and $23,550 for a four-person household.

"Poverty is traumatizing. If they are traumatized, they won't be very good employees," Woods said in February.

Many of the workers in Camden take the bus to Cherry Hill and other surrounding towns, because that is where the jobs are. That, he said, is an extra expense many have trouble affording.

"If you're having to take the bus to Cherry Hill, and you're spending money to get there and maybe you don't like the job and they are paying you $7.50 an hour, that is a pretty grim life," he said.

"It is a no-brainer to me that your minimum wage has to be enough to live on," he added.

For more analysis of New Jersey issues, go to www.njspotlight.com.

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