If there is one thing we know now in hindsight it is that, in the 1990s, the market didn't get the job done. The much-celebrated boom wasn't even a blip for an awful lot of people. So it is good that we are here discussing measures that can improve the lot of hard working people in the State of New Jersey.

In The State of Working New Jersey, released by NJPP earlier this year, findings included the sobering fact that during the course of the '90s, median wages in this state actually declined. And generally those declines were not due to people changing from one type of work to another. No, people were doing the same thing as they had been doing, but getting paid less.

The income gap, a problem throughout the US over the past couple of decades, widened. New Jersey households at the bottom in the '90s took in less than those at the bottom in the '80s. And households at the top took in more in the '90s than they did in the '80s. The share of workers earning less than what would be considered a living wage rose in the '90s to 30% in New Jersey.

There are a number of steps we need to take to deal with this, and before I talk about the living wage and minimum wage let me just say a few words about another poverty-fighting tool. To its credit, New Jersey in 2000 established a state Earned Income Tax Credit. It is modeled after the federal EITC in that it is aimed at rewarding work and helping people get out of poverty. But to its shame, only New Jersey-among the 17 states with a state EITC-cuts off eligibility at an income level below that of the federal program. A family of four can earn more than $34,000 this year and still receive some federal EITC benefits. But in New Jersey they are cut off from the state program at $20,000.

NJPP issued a report a few weeks ago called Half a Leg Up that called attention to this problem and recommended ways to fix it. I'm making copies of the report available to the committee members today and I hope its findings will be part of a comprehensive package of actions this state takes to get the working poor out of the shadows of economic life in New Jersey.

Living Wage

More than 85 living wage laws are in effect around the United States, mostly at the municipal and county level. There are four in New Jersey: the City of Camden, Gloucester County, Hudson County and Jersey City. Basically they mandate that firms contracting with the government must pay their workers a stated wage that is higher in all cases than the state's $5.15 per hour minimum wage. The figures range from $7.50 an hour in Jersey City to $8.50 in Gloucester County if health benefits are included and $10.87 if they are not.

A living wage acknowledges that the amount of money it takes to support a family is more than the minimum wage pays. The self-sufficiency study released last summer by Legal Services of New Jersey found that the amount a family of four needs per year in New Jersey ranges from $37,516 in Union County to $56,670 in Hunterdon.

Working 40 hours a week for 52 weeks at the minimum wage brings in a grand total of $10,712. As we stated in our EITC report, someone working at that wage in Mercer County would have to be on the job 19 hours a day, seven days a week, to afford a 2-bedroom apartment.

Even $7.50 an hour doesn't get you to the federal poverty line, let alone to self-sufficiency. Indeed, in 2000 federal poverty guidelines said it takes $8.20 an hour to support a family of four. And that is a national figure, which doesn't take into account the high cost of living in New Jersey, where, for example, fair market apartment rent ranks second in the US at $980 a month.

The living wage concept recognizes the meaninglessness of the federal poverty standard. It was developed decades ago, when food made up a third of a family's budget. Nor does it take into account geographical differences, which especially hurts New Jersey as a state with a higher than average cost of living.

The first living wage ordinance was passed eight years ago in Baltimore. Studies of the Baltimore experience have shown no job loss as a result of the higher wages and no significant cost to taxpayers. In large measure the companies hiring the workers absorbed the costs.

Of course, living wage laws affect a relatively small number of workers - only those hired by private firms to do work for which they have contracted with the government. So, while governments absolutely should enact living wage legislation, there also is a need to deal with the current inadequacy of the minimum wage. The terms are not interchangeable. The minimum wage will never be mistaken for a living wage, especially by the people making it.

Minimum Wage

New Jersey's minimum wage is $5.15 an hour, same as the federal minimum wage. There are 11 states with a minimum wage higher than that, ranging from $5.65 in Alaska to $6.90 in the state of Washington. In five of those states another increase is scheduled to take effect in 2003. Many of the states with a higher minimum wage are New Jersey's neighbors: Connecticut, Delaware, Massachusetts and Rhode Island.

There are some important things to know about the minimum wage:

• If the minimum wage had kept pace with the increased cost of living, today it would be $8.30 an hour.
• The real value of the minimum wage today is 30% below what it was at its peak in 1968, and 24% below what it was in 1979.
• In 1968 making the minimum wage put a family at 120% of the federal poverty line. By 1997 it was 84%.
• About 80% of minimum wage workers are over 20 years old, so it isn't just a level earned by teenagers for part-time work.
• There are just over 181,000 people making minimum wage in New Jersey today.
• They are disproportionately women, African Americans and Latinos.

As is the case with the living wage, studies have shown that increasing the minimum wage produces no measurable job loss. This was true even during the 1990-91 recession and gives lie to the argument that we shouldn't raise the minimum wage today because it would harm an already fragile economy.

What it would do, besides increasing the purchasing power and economic security of thousands of families, is contribute to saving employers money because as workers get above the minimum wage, productivity increases and turnover decreases-reducing the costs of absenteeism, recruitment and training.

But whether we are talking about living wage or minimum wage, studies will never convince some people that these policies make sense. That shouldn't be surprising. After all, when the federal minimum wage was enacted in 1938, one congressman rose during the debate to warn of "the destruction of our whole constitutional system and the setting up of a red-labor communistic despotism upon the ruins of our Christian civilization." Of course nothing of the kind happened. Our country only got stronger.

So while statistics and studies go a long way toward making the case, ultimately matters rest also on just what we hold as our values and ideals.

If we believe that no one who gets up every morning and puts in a full day's work-quite often performing labor that you and I would not want to do-should have to live in poverty...

If we believe in taking the high road to prosperity, not the low road...

If we believe that we as a society-and our government as a reflection of that society-must do everything possible to commute the sentence of poverty inflicted on thousands of hard-working people in New Jersey...

Then we need to change our way of thinking. Rather than defining poverty out of existence with irrelevant standards of measurement or just pretending it isn't out there we need to face the fact that in today's economy a fulltime job simply doesn't guarantee that you can support your family.

So we need to reshape the nature of discussion and the terms of debate, and embrace ideas like a living wage-recognizing that the high road is the right road and the only way to get there is to make work pay.

TAX REFORM

WORK & WAGES

BUDGET & FISCAL POLICY

TRANSIT ISSUES

ECONOMIC DEVELOPMENT

VOTING & GOVT REFORM

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