A $15 Minimum Wage is Good Policy for New Jersey’s Working People & its Economy

The fact that full-time work isn’t enough to lift a New Jerseyan out of poverty should be enough to convince everyone to raise the minimum wage.

Published on May 16, 2016 in Economic Justice

These are the prepared remarks delivered to the Senate Labor Committee today regarding S-15.

15minimumwageagev2-01Raising the minimum wage to $15 an hour by 2021 is incredibly important for New Jersey’s workers, families, businesses, and economy. You will hear today from many who rightly note that New Jersey’s cost of living is very high, and that the current minimum wage comes nowhere close to enough to make ends meet, even for a single adult working full time.

The fact that full-time work isn’t enough to lift a New Jerseyan out of poverty should be enough to convince everyone in this room to raise the minimum wage. This fact alone is shameful.

And we aren’t just talking about a few New Jerseyans, or suburban teens looking for extra spending cash. According to our analysis, about 1 in 4 New Jersey workers would get a raise under this proposal. These are workers currently being paid less than $13.16 an hour – the equivalent of $15 an hour in 2021. Contrary to stereotypes, 91% of the affected workers are adults – only 9% are teenagers. Most are working full time and many are parents. More than 1 in 5 New Jersey children have at least one parent who would benefit from raising the wage.

So we know that there is a real need for higher wages, and that many New Jersey workers would benefit. But we also know, after researching minimum wage increases over several decades, that there is no correlation between raising wages and job losses. On the contrary, increasing the minimum wage spurs economic activity as people working low-wage jobs have more money to spend on their daily needs. Comprehensive studies by the federal government, the National Employment Law Project, and prominent academics all come to the same conclusion.

Opponents of fair wages here in New Jersey brush aside this rich history, and instead note that $15 an hour is “unprecedented” or “uncharted territory,” and thus we really don’t know how it will affect jobs and the economy.

First, this proposal to go to $15 an hour by 2021 is not unprecedented. In April 2005, then-Gov. Codey raised New Jersey’s minimum wage by 39% in two steps by October 2006 – a larger initial increase than this proposal, which would raise wages by 35% over the same time frame.

And second, we are starting to learn from the experience of the movement to $15 around the country. Recently, the University of Washington produced a report after interviewing over 560 Seattle employers affected by that city’s minimum wage increase, which is designed similarly to this proposal, with a long phase in allowing businesses time to adjust. Prior to the law taking effect, business lobbyists predicted that in order to comply with the change they would have to raise prices, add a service charge, or both. The study found that these predictions never came to fruition, and showed that as the minimum wage has gone up in Seattle, prices have remained the same and unemployment has gone down compared to surrounding areas.

Despite these facts, every time increasing the minimum wage is discussed, opponents warn with over the top hyperbole that doing so will lead to economic disaster, and every time they are proven wrong. It is past time that we acknowledge the opposition’s claims for what they are – scare tactics meant to prevent hard working people from being paid what they deserve. Adjusting and increasing the minimum wage is nothing new, and we have decades of experience with raising the minimum wage at local, state and national levels – experience that shows no correlation between increasing wages and significant price hikes, or widespread job loss.

The simple fact of the matter is that having a strong economy requires balance between healthy supply and healthy demand. Over the years, the state has taken many steps to address the supply side of our economy, with big tax cuts for businesses and billions in tax breaks through the Economic Development Authority. Businesses have received plenty of help from Trenton. It is far past time for lawmakers to take modest steps that boost workers and ensure healthy demand.

The evidence makes it clear that increasing the minimum wage to $15 is a common-sense policy that will positively affect workers, families, businesses and our economy, and we urge this committee to support this bill.