Op-Ed: Raising the Minimum Wage: A Win-Win for New Jersey

March 5th, 2012  |  by  |  Published in Economic Opportunity, Editorials & Op-Eds, NJPP Blog: As a Matter of Fact ...  |  1 Comment

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This op-ed by NJPP president Deborah Howlett ran in the March 5, 2012 edition of NJ Biz.

Can you imagine trying to pay the bills and save for the future on $15,080 a year?

That’s all a minimum wage job in New Jersey brings in – a dollar amount that’s well below the federal poverty level for a family of three. Getting by on that much – to say nothing of getting ahead — is especially tough in New Jersey, where the cost of living is higher than all but a few other states.

But while making sure hard-working New Jerseyans earn enough to support their families is a worthy goal on its own, it’s not just families with low-wage breadwinners who benefit from an adequate minimum wage.

We all do.

Raising New Jersey’s minimum wage to $8.50 an hour from $7.25 could inject as much as $1.5 billion into the economy. It would boost the spending power of families struggling to pay utility bills or buy new school clothes for their children. That means greater demand for goods and services throughout the economy. The end result? Many businesses will make more money and hire more workers.

The economic sparks created by raising the minimum wage can be intense.

For every $1 increase in the hourly minimum wage, a family will spend $2,800 more a year, according to a 2011 study by the Federal Reserve Bank of Chicago. A boost in New Jersey’s minimum wage could benefit 460,000 workers who earn less than $10 an hour, a 2008 analysis by New Jersey Policy Perspective showed. That’s because when the minimum wage is increased, a lot of people making more than the minimum – but still not very much – get raises too.

We should also prevent future wage erosion by tying the minimum wage to inflation. For example, if New Jersey’s 1968 minimum wage of $1.40 had increased at the rate of inflation, it would be $9.35 today, not $7.25.

Despite what the critics say, raising the minimum wage will not make New Jersey less competitive. New York City Mayor Michael Bloomberg and New York State Assembly Speaker Sheldon Silver are pushing the same increase to $8.50 an hour across the Hudson River. Connecticut lawmakers have introduced legislation to raise that state’s minimum wage, already $8.50 an hour, to $9.75.

Nor will raising the minimum wage cost jobs.

New Jersey’s 1992 minimum wage increase didn’t result in job loss, even though neighboring Pennsylvania kept its rate stable. Surveying more than 400 fast-food restaurants, a 1994 study by economists at Princeton and UC-Berkeley found that employment actually grew at New Jersey fast-food restaurants. A follow-up study in 2000 yielded similar results.

The plain truth is that a minimum wage increase would benefit all of us, without harming business.

That win-win scenario is exactly the sort of policy the state should embrace.


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Responses

  1. Gary Kuhn says:

    March 12th, 2012at 8:38 PM(#)

    It’s good that NJPP has come out for raising the minimum wage and indexing it against inflation.

    Now what about raising the minimum interest rate paid on savings, and indexing that also against inflation? Please see [1].

    Best,

    Gary Kuhn, Ph.D.

    St Martin Systems Inc
    96 Leigh Ave
    Princeton NJ 08542
    http://www.stmartinsystems.com

    [1]
    Why did we Americans lose our savings habit?

    The U.S. dollar was taken off gold in 1973. Since then, Americans’ good personal savings habit has been eaten away by a combination of inflation plus our failure to index savings and wages against inflation. It appears that the federal structure of the U.S. has impeded indexing. Work in the U.S. economy helped expand the economy by a factor of two in real terms, but inequality of income and net worth reached record levels. To do better on indexing and on equality, should we in the U.S. change the way we govern ourselves?

    http://www.stmartinsystems.com/100814_Why_did_we_Americans_lose_our_savings_habit.htm
    http://www.stmartinsystems.com/100814_Why_did_we_Americans_lose_our_savings_habit.pdf

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