Fact Sheet: Who Benefits from a Minimum Wage Increase?

November 19th, 2012  |  by  |  Published in Economic Opportunity, NJPP Blog: As a Matter of Fact ..., Reports  |  5 Comments

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Increasing New Jersey’s minimum wage from $7.25 to $8.50 per hour would give 537,535 New Jersey workers an average raise of $816 per year, giving struggling low-wage workers a crucial leg up in high-cost New Jersey while stimulating the state’s economy through increased consumer spending.

If someone making $7.25 per hour works 40 hours a week, every week, they earn only $15,080 a year before taxes – not nearly enough to meet essential needs of food and shelter.

While opponents of raising the minimum wage suggest that most workers who would benefit from a minimum wage increase are teenagers working part-time to finance their nights out or upgrade their cell phones, the facts paints a very different picture.

The beneficiaries of the wage increase can be broken down into two categories: directly affected (those making between $7.25 and $8.50 per hour who would see an immediate raise) and indirectly affected (those making between $8.50 and $9.75 per hour who would see a raise as pay scales are adjusted upwards).

In both categories, the workers who will benefit from an increase are overwhelmingly adults:

About one of every four affected workers has children:

Few affected workers are working part-time (under 20 hours per week); about half are working full-time (35 or more hours per week) and many are working between 20 and 35 hours per week:

Many of the workers affected by a wage increase have either a college degree or have attended some college:

Data Source: Economic Policy Institute analysis of 2011 Current Population Survey, Outgoing Rotation Group.


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Responses

  1. skip3house says:

    November 20th, 2012at 10:43 AM(#)

    To also close the ‘wealth’ gap problem some, rather than increase cost of living for all, how much would the NJ Income Tax top rate need to be increased to get this ~$440,000,000 and distribute it through added income tax credit? The paycheck withholding can be decreased every payday, or credit added if not enough NJ Income tax is deducted. The credit would be offset by greater Tax collected at top rate, above.

  2. J.J. says:

    November 20th, 2012at 1:58 PM(#)

    The pathetic thing was Sen. Jennifer Beck using superstorm Sandy as a reason against increasing the minimum wage. Republicans seem to believe it is never a good time to increase the minimum wage.

  3. Ken Hansen says:

    December 7th, 2012at 6:07 PM(#)

    Workers currently earning less than the minimum wage would continue to earn less than the minimum wage, they are exempt from the current minimum wage, and it is safe to assume they would continue to be exempt after the proposed increase.

    Please explain ‘indirect’ worker increases. Are you speaking of workers who’s contracted wages are somehow based on the minimum wage (say, their wage is defined as the current minimum wage plus some certain amount)? If so, please name any such workers – I’m not aware of any.

    It is folly to think that increasing the cost of labor will not cause some employers to cut a certain number/percentage of minimum wage workers after an increase goes into effect – was that logical reaction factored into your estimates?

    The argument that a minimum wage job does not support a minimal standard of living is a silly argument . If we accept your premise that EVERY job should pay a wage sufficient to provide for all the living expenses for the worker, the job market will contract and entry-level, ‘foot in the door’ jobs would become nearly impossible to find.

  4. Charles Stenard says:

    December 7th, 2012at 11:04 PM(#)

    Dear Gov. Christie,

    We need your signature on the bill increasing minimum wage to $8.50 in New Jersey. The economy is recovering, but the momentum will have a much better chance of continuing with this measure, as you know.

    Best wishes,
    Charles

  5. Jon Whiten says:

    December 8th, 2012at 9:00 AM(#)

    Ken: The “directly affected” category doesn’t include folks who make under minimum wage currently (ie, waiters and others who work under the tipped minimum wage law) – it is those who make between $7.25 and $8.50 an hour, whose wages would rise to $8.50 if this bill becomes law. That could have been explained better in the fact sheet and we will update the language.

    Regarding the “indirectly affected” – they aren’t working on contracts tied to the minimum wage. Rather, these are folks whose wages will increase as employers make overall wage adjustments to the new minimum level.

    And of course *some* employers will cut low-wage jobs if a wage increase occurs. But decades of real-world research shows that, overall, the effect of a wage increase on total jobs and economic growth is neutral, if not positive. There is no net negative effect on the economy or on job growth.

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