Slow Pace of Progress on Minimum Wage Limits Benefits

Governor Murphy, state legislators, and Mayor Ras Baraka speak with low-paid workers at a roundtable event in Newark. (Photo by Louis Di Paolo, January 17, 2018)

Stagnating wages are no secret—not to New Jersey’s low-paid workforce nor to state legislators who have long considered raising the minimum wage to a more-livable $15 an hour. But with every year of inaction, the value of $15 takes a hit, as do New Jersey’s working families who struggle to make ends meet on minimum wage salaries.

In August 2016, Governor Chris Christie vetoed a bill that would have increased the minimum wage to $15 by 2021. That veto proved to be a significant setback to the Fight for $15 campaign, delaying much needed relief for low-paid workers across New Jersey by several years. Now, increasing the minimum wage to $15 is back in the spotlight, but the current proposal is a shell of the legislation passed two years ago and fails to recognize how much ground has been lost over that time.

Introduced earlier this month by Assembly Speaker Craig Coughlin, A15 would increase the minimum wage to $15 by 2024 for most workers, and not until 2029 for “carved out” sectors of New Jersey’s low-paid workforce. The purchasing power of $15 already takes a hit by pushing back the minimum wage’s implementation to 2024, but extending the phase-in to 2029 fails to meaningfully tackle poverty or address ever-growing income inequality in a serious manner. As legislators negotiate the future of New Jersey’s minimum wage it is important to tease out just how much low-paid workers will be losing due to the slow pace of progress on this issue.

For a full-time worker who doesn’t miss any time whatsoever — meaning they never have to take time off for being sick, to take care of a loved one, or even for a short vacation — a $15 an hour wage translates to a $31,200 annual salary, and that’s before taxes. Assuming three percent inflation per year, a $15 minimum wage erodes in value to $13.69 an hour, or $28,475 per year, in 2024, and just $11.76 an hour, or $24,453 per year, in 2029.

There is a real cost associated with the slow pace of progress in raising New Jersey’s minimum wage. For a full-time worker, this will cost them between $2,725 and $6,747 in annual wages. In a state where the current living wage is upwards of $18 an hour for a single worker, a $15 minimum wage in 2024—while a significant improvement—isn’t meeting the need that many lawmakers are hoping to address with this piece of legislation.

If the goal is to truly provide workers with a living wage, legislators must recognize the need to make up for the time lost after Governor Christie’s veto in 2016. In practice, this means either shortening the phase-in period so the minimum wage reaches $15 by 2021, or keeping the same phase-in schedule but ending at a figure higher than $15. Why? Because if the bill from 2016 had been signed into law and the minimum wage reached $15 in 2021, it would have risen with inflationary bumps to $16.39 an hour in 2024 and $19.00 per hour in 2029. Fully acknowledging these facts would mean proposing and passing legislation that increases the wage to $16.39 — not just $15 — by 2024.

Since 2016, income inequality has only grown more dire and poverty remains higher than pre-Recession levels. In proposing a much-needed increase in the minimum wage, the Legislature should introduce legislation that recognizes just how much ground has been lost. The level of need for low-paid workers in New Jersey has not waned; if anything, it has grown in size and scope. The minimum wage bill that the legislature votes on must address these economic realities and the serious needs that low-paid workers have today. Passing a comprehensive bill that values work—and New Jersey’s high cost of living— will ensure the full benefit of the policy can be realized across the state and its economy.