STATEMENT BY DEBORAH HOWLETT, PRESIDENT, NEW JERSEY POLICY PERSPECTIVE, IN SUPPORT OF A-2162 BEFORE THE ASSEMBLY LABOR COMMITTEE
THURSDAY, FEBRUARY 23, 2012; TRENTON NJ
Thank you Chairman Egan and members of the Assembly Labor Committee.
I am pleased to be here this morning with the opportunity to testify in favor of Assembly Bill 2162, legislation sponsored by Speaker Oliver and others, to increase New Jersey’s minimum wage to $8.50 an hour and to index that wage to the rate of inflation.
Raising the minimum wage is an important and positive action this committee and the Legislature can take to have an immediate impact in the lives of working families in this state and the economy of New Jersey.
In a state with one of the highest median incomes in the nation and one of the highest costs of living, those at the bottom of the wage scale often find it a struggle to raise their families here. The increase may be only $1.25 an hour, but it could mean the difference in families paying a utility bill in full or buying new school clothes for their children.
In addition to being a boon to working families, the increase in the minimum wage is strategic legislation that will help boost the economy, too.
An increase in the minimum wage will provide working families with greater purchasing power, which will immediately be reinvested in the economy as consumer spending because working families don’t have the luxury of tucking away any new income.
The impact can can be significant. According to the Federal Reserve Bank of Chicago, every $1 in wage increase for a minimum wage worker results in $3,500 in new consumer spending by his or her household over the following year.
About 10 percent of New Jersey’s more than 4.6 million workers would be affected by raising the minimum wage to $8.50 an hour. This includes roughly 240,000 workers who currently earn minimum wage and another 230,000 who earn between $8.51 and $9.50 per hour, according to our own recent analysis.
Working women, many of whom are single mothers, would be the main beneficiaries of a minimum wage increase. Because about 59 percent of minimum wage workers in New Jersey (and nationwide) are women, an increase in the minimum wage would also reduce the income gap between men and women.
Other important facts to keep in mind about minimum wage workers, according to the Economic Policy Institute:
• 57 percent work full-time
• 27 percent are parents
• 84 percent are 20 years of age or older.
New Jersey’s first minimum wage was set by statute at $1.40 per hour in 1968. Had that wage kept pace with inflation, minimum wage workers in New Jersey would be earning $9.35 per hour, instead of $7.25.
In 2005, the state established the Minimum Wage Advisory Commission, which was charged with reporting yearly to the Legislature on the adequacy of the minimum wage in New Jersey. Its first report, released in December 2007, recognized that a single-parent family of two was barely able to survive on the state’s then-$7.15-an-hour minimum wage and recommended the wage be raised to $8.25 an hour. The commission also recommended the minimum wage be adjusted annually to reflect increases in the cost of living.
The situation remains the same, although the need for action is greater as the value of the minimum wage continues to erode.
Since 2001, New Jersey’s minimum wage has been between 25 percent and 33 percent of the mean hourly wage for all workers in the state.
The large discrepancy between the minimum wage and the mean hourly wage for workers throughout New Jersey contributes to income inequality, the gap between the highest-income families and the lowest.
And that gap between rich and poor in New Jersey has continued to widen.
Research also shows that income inequality leads to poor health outcomes and widening disparity in affordable housing and educational opportunities.
Fifty years ago, the income from a minimum wage job would put a family of three, perhaps a single mother with two children, at 117 percent of the federal poverty level. Today — at $7.25 — a full-time minimum wage job puts families at 87 percent of the poverty level.
This legislation is one of the most important actions elected officials in Trenton can take to immediately improve the lives of tens of thousands of working families struggling to make ends meet in New Jersey and at the same time improve the state’s economy for every other resident.
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