Topic Category: Economic Justice

New Immigration Rule Will Have Chilling Effect on New Jersey’s Mixed-Status Families

Posted on by Erika J Nava

To read a PDF version of this report, click here. 

A drastic change in the “public charge” rule proposed by the Trump administration would restrict access to green cards and various types of visas for immigrants who are not already comparatively well-off. This “Trump Rule” fundamentally changes our approach to immigration, making family income and potential use of health care, nutrition or housing programs a central consideration in whether or not to offer people an opportunity to make their lives in this country. The Trump Rule takes an existing standard and proposes to make it vastly more restrictive.

The Chilling Effect

The direct effect of the Trump Rule would fall primarily on people applying for a green card through a family-based petition,where public charge is relevant. Similar standards would also apply to people seeking to extend or change their temporary non-immigrant status in the United States. The rule change would likely lead to the denial of green cards to hundreds of thousands of otherwise eligible applicants for family-based and employment visas.

Beyond that, if implemented the Trump Rule is also expected—and perhaps intended—to have a widespread chilling effect. Even people who already have a green card, or who are exempt from the rule, such as refugees or asylees, are expected to be frightened and confused about the potential consequences of applying for food, health, and housing supports they are eligible to receive.

We estimate that 24 million people in the United States would be affected by the chilling effect of the Trump Rule, including 700,000 New Jerseyans. Not all will face a public charge determination, but all are likely to be nervous about applying for benefits, and some portion will in fact disenroll from benefit programs.

Our estimate of the population who may experience a chilling effect includes anyone in a family that has received any food, health, or housing supports, and where at least one member of the family is a non-citizen. Based on past experience, there is good reason to believe that when there are changes around immigration and public benefits even people who are not directly targeted by this rule will be affected. Indeed, there is already evidence that significant numbers of immigrants are withdrawing from Women, Infants, Children, known as WIC, despite the fact that the program is not included in the Trump Rule and the rule has not yet been implemented.[1]

The Trump Rule Goes Too Far

The Trump Rule uses the public charge designation as a way to unilaterally change immigration policy, without input from Congress, fundamentally redefining how we think about who an “acceptable” immigrant is and undercutting the very idea of the American Dream.

The pre-existing public charge rule has required immigration officers to evaluate the overall circumstances of immigrants to determine whether they can support themselves in the United States or whether they are likely to rely primarily on the government for support. Under longstanding policy, this has meant showing an applicant will not become primarily dependent on the government—relying, for example, on cash aid from Temporary Assistance for Needy Families, Supplemental Security Income, or General Assistance for their monthly income, or on long-term institutional care.

The Trump Rule aggressively reinterprets this longstanding policy. While continuing to look at the overall circumstances of a family, the Trump Rule would deem immigrants potentially unacceptable if they have received, or are considered likely to receive, even a modest amount of support from any one of a number of non-cashsupports: Medicaid, food stamps (SNAP), housing supports, and subsidies for Medicare Part D to reduce the cost of prescription drugs. It would also—for the first time—make a specific income threshold a central issue in immigration decisions. Having an income of under $15,000 for a single person or $31,000 for a family of four would be weighed negatively and could lead to a denial. Indeed, the rule proposes to weigh a range of factors negatively. The only factor weighed as “heavily positive” is if an applicant has an income or resources of over $30,000 for a single person or $63,000 for a family of four. By way of comparison, the median household income in the United States is $60,000.[2]

As noted, only some non-citizens currently in the United States will face this Trump Rule; many will not. But what would it look like if we applied the Trump Rule to all non-citizens?

The effect is extreme: in New Jersey State, 22 percent of non-citizens have benefited from health care, food, housing, or cash supports. That should come as no surprise: so have 25 percent of US-born New Jerseyans. The fact is, a large number of Americans—whether or not they are immigrants—make use of federal food, health, and housing programs in any given year to get through hard times and to advance to a better life.

Most of these programs are structured in significant measure as work supports, helping people with relatively low-wage jobs keep healthy, stay in their homes, and put food on the table. Discouraging families from making use of these programs only makes it harder for them to move up the economic ladder and fully contribute to the economy.

Further Inhumane Treatment of Kids to Pressure Families

The nation was outraged to find out that the Trump Administration has been using the forced separation of children from their parents as an inhumane tactic of immigration enforcement.[3] The redefinition of public charge doubles down on this strategy by inflicting harm on children, whether intentionally or as a side effect of the Trump Rule.

Some children will themselves be subject to the Trump Rule.[4] A far greater number live in families that will likely experience a chilling effect. In New Jersey, 250,000 children under 18 years old live in families with at least one non-citizen family member and that have received one of the benefits specified by the Trump Rule. The large majority or 84 percent, 210,000 of the 250,000 are United States citizens.

It also pushes parents to make heart-wrenching decisions for their families. The stakes are unbearably high. As a parent, if you apply for SNAP or Medicaid, you may fear losing the chance to stay in this country with your kids. Yet, not applying may mean seeing your family go hungry or not being able to see a doctor when you are sick.

If the Trump Rule is put into effect, advocates and service providers will need to work strenuously to clarify which individuals may be directly impacted and which may be relatively safe. But confusion and fear will undoubtedly spread well beyond the directly targeted population.

Helping children in immigrant families do well is not only the right thing to do, it’s also a sound investment in our state and the nation’s future. One of the clearest and most striking findings in a major study of the National Academy of Sciences is that the children of immigrants, once grown, become among the strongest contributors to the country’s economy.[5]

An Economic Loss for New Jersey

To measure the economic impact on New Jersey, we modeled the impact of two of the biggest supports the Trump Rule would affect: SNAP and Medicaid. We provide estimates of the impacts if 15, 25, and 35 percent of people currently receiving benefits who experience the chilling effect feel compelled to disenroll from programs for which they qualify. This range of disenrollment is derived from studies of comparable policy changes that similarly created a chilling effect for immigrants, such as welfare reform in the 1990s.[6] The middle-level estimate shows a loss of $425 million in direct federal dollars coming into the state.

If money on this scale is withdrawn from the New Jersey economy, there would be predictable ripple effects to local businesses and workers. Withdrawal of SNAP funding means a reduction in spending in grocery stores and supermarkets. When families lose health insurance, hospitals and doctors lose income.[7] And some spending would be reduced in other areas as families struggle to pay food and health costs. Our mid-level estimate shows a potential loss of $709 million due to the ripple effects of this lost spending.[8]

Further, when businesses have less revenue, they lay off workers. Translating the job loss implied by an economic loss of this magnitude, based on the number of jobs implied per dollar of gross domestic product, New Jersey stands potentially to lose as many as 4,800 jobs under our middle estimate as a result of this reduction in federal funding coming to the state.[9] The economic impact would vary depending on where the country is in the business cycle. Because these programs serve as an important economic stabilizer, they create a bigger stimulus during an economic downturn and less in a period of high growth.

At the lower level, with just 15 percent of people receiving benefits disenrolling, the modeled loss of federal dollars to New Jersey State is $ 220 million, the potential economic ripple effects are $425 million, and the potential job loss is 2,900. At the higher estimate, with 35 percent disenrollment, the loss of federal funds in New Jersey is $514 million, the potential ripple effects are $992 million, and there could be as many as 6,800 jobs lost.

Conclusion

From the beginning, the United States has been a place where immigrants have come to make a new life. In this country, many immigrants and US-born workers alike have climbed from the lowest rungs of the economic ladder into the middle class and beyond. It was the opportunities America provided—and often enough the supports they needed to get started or make it through hard times—that allowed them to succeed. This is the story of the American Dream. And it is the story engraved in poetry on the Statue of Liberty.

The Trump Rule sees America’s story differently, as one governed by barriers and fear of newcomers. By suggesting that only immigrants who are already above a certain income threshold are welcome, the Trump Rule shows a disturbing lack of faith in our country and the opportunities it provides.

Methodology

  1. Estimating the Population That Would Experience a Chilling Effect

We define the population that would experience a chilling effect as those who might be nervous and confused by the new rule and might feel like they need to make a choice between applying for needed benefits and avoiding putting their family at risk. As noted in the body of this paper most of the people experiencing a chilling effect are people who will not have to go through a public charge determination.

In order to estimate the size of the population experiencing a chilling effect, the Fiscal Policy Institute uses estimates provided by the Center on Budget and Policy Priorities (CBPP) of the number of people living in families where at least one person is a non-citizen, and where someone in that family has received one of the public benefits named in the proposed public charge rule. The analysis uses the Current Population Survey and corrects for underreporting of SNAP, TANF and SSI receipt in the Census survey using data from the Department of Health and Human Services/Urban Institute Transfer Income Model (TRIM). These TRIM corrections take into account program eligibility rules by immigration status. Three years of data are combined in order to increase sample size and improve the reliability of the state-level estimates: 2013 to 2015, the most recent for which the TRIM-adjusted data are available. National level estimates are based on data just from 2015.

CBPP’s calculations of program participation include the newly considered programs —Medicaid, SNAP, and housing benefits—as well as those already considered—TANF, SSI, and General Assistance. The Census data for Medicaid used by CBPP also include the closely intertwined Children’s Health Insurance Program (CHIP). Most participants can be expected to have a very hard time distinguishing between a program funded by Medicaid and one funded by CHIP. The proposed rule does not presently include CHIP, but the notice announcing the proposal explains that the administration is considering including it. Medicare Part D low-income subsidies are included in the proposed rule but were not included in CBPP’s estimates due to a lack of a Census variable that identifies those participants. To model the current public charge benefit related test, CBPP looked at those people who get more than half of their income from TANF, SSI, and General Assistance.

  1. Estimating the Economic Loss to New Jersey

Among the people who experience a chilling effect, some portion would go so far as to disenroll from programs for which they are eligible.

The estimate of the direct loss to New Jerseyans from disenrollment from these programs begins with SNAP, Medicaid and CHIP federal funding data. The estimates use administrative and survey data to approximate the amount of benefits received by families that include a non-citizen. This is the population that due to fear or confusion could forgo benefits even though most of them are themselves not likely to be subject to a public-charge determination. In estimating the economic consequences of the Trump Rule, we assume that only a portion of this group will actually disenroll from these food, health, housing, or cash supports. While a lot is at stake for people in families with a non-citizen immigrant if they fear running afoul of the public charge rule, there is also a lot at stake in not applying and having your family go hungry or lack health insurance. Again, we include CHIP in our estimates.

In our estimates, we assume a range of 15 to 35 percent of the people experiencing a chilling effect will disenroll from SNAP and Medicaid. We provide estimates of the economic effects of the higher and lower disenrollment rates as well as the midpoint of 25 percent. In doing this, we follow the Kaiser Family Fund’s paper of February, 2018, “Proposed Changes to ‘Public Charge’ Policies for Immigrants: Implications for Health Coverage,” which provides a review of the literature leading to this estimate range.[10] We do not attempt to simulate the consequences of adverse selection—for instance, that healthier people may be more likely to withdraw from health care coverage than less healthy people. The 15, 25, and 35 percent disenrollment rates are already a broad range and not a precise prediction.

To estimate the economic ripple effects, the Fiscal Policy Institute uses an analysis provided to us by Josh Biven of the Economic Policy Institute. The analysis takes the direct benefit loss as calculated above and applies to it an output multiplier for SNAP of 1.6, in line with estimates Bivens summarizes in a 2011 paper.[11] The Medicaid multiplier is 2.0 and is drawn from an analysis of the effects of the American Recovery and Reinvestment Act.[12]

After calculating the effect of benefit reductions on output, the output was divided by $146,880 to obtain an estimate of the effect on employment, on a full-time equivalent (FTE) basis. This employment multiplier was obtained by dividing U.S. gross domestic product in 2017 by the number of FTEs in that year.[13]

 The economic impact can be expected to vary with the state of the economy. The economic and job loss of the Trump Rule will be greater in times of high unemployment, and lower in times of full employment. Since the Trump Rule is proposed to be permanent, the effect could be expected to vary.

Endnotes

[1] See Helena Bottemiller Evich, “Immigrants, Fearing Trump Crackdown, Drop Out of Nutrition Programs,” Politico, September 3, 2018.

[2] The rule gives a family income of below 125 percent of the federal poverty level as a negatively weighing factor, and above 250 percent of the poverty level as a positively weighing factor. We translate those into dollar figures for different family sizes using the 2018 poverty level. Household income is a Fiscal Policy Institute analysis of the 2017 American Community Survey 1-year data. Household income includes individuals of varying size including households of just one person.

[3] As Attorney General Jeff Sessions put it: “we will prosecute you, and that child will be separated from you as required by law. If you don’t like that, then don’t smuggle children over our border.”[iii]See Rafael Carranza and Daniel González, “AG Sessions Vows to Separate Kids from Parents, Prosecute All Illegal Border-Crossers,” The Republic, May 8, 2018.

[4] Disturbingly, for those children who do apply for status that requires a public charge designation, the Trump Rule penalizes children by weighing their age negatively. The theory, presumably, is that children do not adequately contribute to the economy.

[5] National Academies of Sciences, Engineering, and Medicine, The Economic and Fiscal Consequences of Immigration. Washington, DC: The National Academies Press, 2017. For a brief synopsis of major findings, see the press release at http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=23550.

[6] Our estimate of disenrollment follows the analysis of “Proposed Changes to ‘Public Charge’ Policies for Immigrants: Implications for Health Coverage,” Kaiser Family Foundation, September 24, 2018. That report cites: Neeraj Kaushal and Robert Kaestner, “Welfare Reform and Health Insurance of Immigrants,” Health Services Research,40(3), (June 2005), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361164/; Michael Fix and Jeffrey Passel, Trends in Noncitizens’ and Citizens’ Use of Public Benefits Following Welfare Reform 1994-97 (Washington, DC: The Urban Institute, March 1, 1999) https://www.urban.org/sites/default/files/publication/69781/408086-Trends-in-Noncitizens-and-Citizens-Use-of-Public-Benefits-Following-Welfare-Reform.pdf; Namratha R. Kandula, et. al, “The Unintended Impact of Welfare Reform on the Medicaid Enrollment of Eligible Immigrants, Health Services Research, 39(5), (October 2004), https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361081/; and Rachel Benson Gold, Immigrants and Medicaid After Welfare Reform, (Washington, DC: The Guttmacher Institute, May 1, 2003), https://www.guttmacher.org/gpr/2003/05/immigrants-and-medicaid-after-welfare-reform.

[7]  Uncompensated care funds must also be replenished to make up for losses in emergency care of people without health insurance, but this cost is not included in our analysis of the economic impacts.

[8]The extent of employment impact depends on the state of the overall economy, with a higher impact during times of high overall unemployment, when these programs serve as both a safety net and an automatic economic stabilizer. Since the Trump Rule would be a permanent measure, there would be periods in the economic cycle the predicted economic impact would be higher and when it would be lower.

[9] The analysis of direct loss to New Jersey was performed by Danilo Trisi of the Center on Budget and Policy Priorities, and the analysis of economic ripple effects was performed by Josh Bivens of the Economic Policy Institute. See Methology section for more details.

[10] That report cites as the underpinning for this range of estimates: Neeraj Kaushal and Robert Kaestner, “Welfare Reform and Health Insurance of Immigrants,” Health Services Research,40(3), June, 2005; Michael Fix and Jeffrey Passel, Trends in Noncitizens’ and Citizens’ Use of Public Benefits Following Welfare Reform 1994-97 (Washington, DC: The Urban Institute, March 1, 1999); Namratha R. Kandula, et. al, “The Unintended Impact of Welfare Reform on the Medicaid Enrollment of Eligible Immigrants, Health Services Research, 39(5), October 2004; and Rachel Benson Gold, Immigrants and Medicaid After Welfare Reform, (Washington, DC: The Guttmacher Institute, May 1, 2003).

[11] Josh Bivens, “Method Memo on Estimating the Jobs Impact of Various Policy Changes,” Economic Policy Institute, November 8, 2011.

[12] Any slowdown in the growth of aggregate demand caused by reductions in spending on these programs could in theory be neutralized by the Federal Reserve Bank lowering rates to spur growth. However, this does not change the size of the fiscal drag that benefit cuts would impose on the economy. These estimates are implicitly a measure of how much harder other macroeconomic policy tools would have to work to neutralize the demand drag stemming these cuts. Further, it is deeply uncertain whether other tools of macroeconomic policy have the ability to neutralize negative fiscal shocks. See Gabriel Chodorow-Reich, Laura Feiveson, Zachary Liscow, and William Gui Woolston, “Does State Fiscal Relief During Recessions Increase Employment?,” American Economic Journal: Economic Policy, August 2012, pp. 118-145.

[13] Data for the analysis come from tables 1.1.5 and 6.5 from the National Income and Product Accounts of the Bureau of Economic Analysis. The quotient was increased by the growth in its nominal value in 2017 to forecast what it would be in 2018.

Working with ICE: A Costly Choice for New Jersey

Posted on by Erika J Nava

To read a PDF version of this report, click here. 

New Jerseyans born outside of the United States – both documented and undocumented – make up more than a fifth of the state’s population and are an enormous benefit to New Jersey’s economy and culture. Now, almost two years into the Trump administration, undocumented immigrants who have been living productive lives in the Garden State are at increased risk of being detained and deported by Immigration and Customs Enforcement (ICE), sometimes with the help of local law enforcement.

When immigrants come in contact with local and state law enforcement agencies, it is standard practice for their information to be shared with federal authorities at the FBI and ICE. This practice is known as “Secure Communities.”[1] ICE can then request a “detainer hold,” which asks the local or state law enforcement agency to detain an immigrant for up to 48 hours beyond their release date. If local and state law enforcement choose to honor the request, ICE does not guarantee that it will pick up the detained individuals.

After peaking in 2009, ICE detainers in New Jersey steadily declined through 2015, but they are increasing under the Trump administration. From 2016 to 2017, ICE’s issuance of detainers has increased by 87.5 percent in New Jersey, compared to 40 percent nationally.[2] New Jersey has voluntarily honored these detainer requests, or “immigration holds,” at least 63 percent of the time,[3] compared to 54 percent nationwide.[4] By honoring detainers, New Jersey allows ICE to use local resources, without bearing any of the cost, to imprison people without due process. In many cases immigrants are held without any charges pending. These detainers come with a significant cost – both social and in real dollars – to New Jersey.

New Jersey’s local law enforcement has paid at least $12 million to voluntarily honor ICE detainer requests and hold immigrants in police facilities and jails.[5] This calculation assumes that immigrants were detained for the legally allowed 48 hours, when in reality most were held much longer. It is estimated that, on average, immigrants on detainer holds are incarcerated for twenty-four days past their release date, translating to a total cost of $139 million to local law enforcement over the last decade.

In the same time period, people who have been detained, and by extension their families and the broader economy, have forgone $5 million in lost wages.[6] This is part of the human cost associated with immigration holds; families with immigrants suffer from lost wages, businesses lose customers, employers have to bear the costs associated with employee turnover, and children of detainees are saddled with the emotional burden of losing a parent.

Further, over 34,000 immigrants who were issued a detainer were held in police custody for longer than the 48 hours legally permitted. This represents more than 9 in 10 of the 36,290 detainers issued between ICE’s formation in 2003 and April 2018 when the latest data are available. The ramping up of immigration enforcement is also reflected in immigration arrests,[7] which have increased in New Jersey by 43 percent, from 2,315 in 2016 to 3,311 in 2017. This is almost double the national increase of 23 percent.[8]

The AG Directive

Almost all of New Jersey’s counties – 19 of 21 – honor warrantless detainer requests from ICE.[9] Only two, Burlington and Union, do not. In Middlesex and Ocean Counties, warrantless detainer requests are honored, but only in limited situations. It is important to note, however, that all law enforcement agencies notify ICE of arrests for DUIs and indictable offenses per New Jersey Attorney General Law Enforcement Directive 2007-3 (AG Directive).[10]

The AG Directive was issued under Governor Corzine’s administration by then-New Jersey Attorney General Anne Milgram. The policy outlines how local, county, and state police should interact with individuals who they have reason to believe are undocumented immigrants. The directive is notoriously vague, leaving it up to police officers to interpret when, where, and how they question the status of individuals they suspect to be undocumented.

Since 2007, immigrant rights groups have expressed concern that this discretion results in law enforcement infringing on the rights of New Jersey residents. A 2009 study by the Center for Social Justice at Seton Hall University Law School found evidence of “improper police questioning and arrest of the state’s non-criminal Latino drivers, passengers, pedestrians, and commuters.”

A new directive that reigns in how and when local law enforcement interacts with ICE has the potential to make New Jersey safer for all by restoring trust and cooperation with law enforcement in immigrant communities. By entangling police with immigration enforcement, the current system disincentivizes immigrants from reporting crimes or calling 9-1-1 if they are in danger. For taxpayers, a new directive will provide transparency, accountability, and a more responsible use of public funds that promotes safety instead of sowing racial division.

Now, over a decade since the AG Directive was issued, New Jersey has a prime opportunity to adopt a new policy that better reflects the immigration realities under the Trump administration. New Jersey Attorney General Gurbir Grewal, appointed only nine months ago, can and should adopt a new directive that recognizes the humanity of all New Jersey residents, ensures due process, and ends the practice of needlessly separating families.

Endnotes

[1] According to United States Immigration and Customs Enforcement, Secure Communities program, launched as a pilot program towards the end of the Bush administration and was expanded under the Obama administration, the goal was to cover all 3,181 jurisdictions within the nation and it did in 2013.

[2] New Jersey Policy Perspective analysis of Transactional Records Access Clearinghouse (TRAC) at Syracuse University on the Latest Data: Immigration and Customs Enforcement Detainers. Data used FY 2016-FY 2017.

[3] Note from TRAC: ICE recorded that the law enforcement agency refused to comply with the ICE I-247 request. TRAC notes that the field ICE uses to track law enforcement agency refusals is not a required field in ICE’s database. Rather, entry of information is optional. The field is used to record a variety of different reasons why ICE “lifted”—that is withdrew—a custody transfer request. These recorded “lift” reasons often disagree with other information ICE records on whether the individual was actually booked into its custody. For example, ICE sometimes records that an agency refused its transfer request even though ICE records it assumed custody of the individual.

[4] New Jersey Policy Perspective analysis of Transactional Records Access Clearinghouse (TRAC) at Syracuse University on the Latest Data: Immigration and Customs Enforcement Detainers. Data usedFY 2003 to April 2018.

[5] The total number of detainers from FY 2007-2017 was 31,171; we then multiply the cost per day, per inmate in 2015 from the Vera Institute’s report The Price of Prisons(https://www.vera.org/publications/price-of-prisons-2015-state-spending-trends/price-of-prisons-2015-state-spending-trends/price-of-prisons-2015-state-spending-trends-prison-spending), which calculates that NJ spends an average of $61,603 per inmate or about $169 a day. Then we multiply that by two days held.

[6] The median individual wage for undocumented workers in the United States is $17,400 per year, according to an unpublished estimate from 2016 provided by Robert Warren, derived from his work published by the Center for Migration Studies. We estimate that it is 14% higher for undocumented immigrants in New Jersey, since the average family income for undocumented immigrants is 14 percent higher in New Jersey, according to an analysis by the Migration Policy Institute published by the Institute for Taxation and Economic Policy analysis in Undocumented Immigrants’ State and Local Tax Contributions. Thus, we calculate the estimate by multiplying 34,171 (total detainers from FY 2007 to 2017) by $77 (wages lost per day detained) by 2 (days detained).

[7] The data is limited to what ICE refers to as “interior arrests.” According to ICE, the data does not include arrests made by Customs and Border Protection (CBP) when the individual is transferred to ICE for detention and eventual removal.

[8] New Jersey Policy Perspective analysis of Transactional Records Access Clearinghouse (TRAC) at Syracuse University on the Latest Data: Immigration and Customs Enforcement Arrest.

[9] Ending Cooperation with Warrantless ICE Detainer Requests.ACLU sent letters to every New Jersey county jail and asked about their detainer policy. (https://www.aclu-nj.org/theissues/immigrantrights/detainer-map)

[10] New Jersey Attorney General Law Enforcement Directive No. 2007-3 (https://www.nj.gov/oag/dcj/directiv.htm)

 

New Jersey’s Minimum Wage Set to Increase by 25 Cents

Posted on by Brandon McKoy

New Jersey’s minimum wage will increase on January 1, 2019 from $8.60 from $8.85, according to an announcement by the NJ Department of Labor and Workforce Development. While this is a welcomed change, representing a possible increase of $520 in annual earnings for full-time workers making minimum wage, the bump isn’t nearly enough to help New Jersey’s low-wage workforce better afford their needs and provide for their families.

When New Jersey increased the minimum wage in 2013 to $8.25, it tied future increases to inflation, indexing the wage floor to the  Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This has resulted in minor raises in most years since: 13 cents in 2015, 0 cents in 2016, 6 cents in 2017, and 16 cents in 2018. The increase of 25 cents in January 2019 will be the largest since 2013.

It’s important to remember that both houses of the state legislature passed a $15 minimum wage bill in 2016 that  included all workers. Unfortunately, the bill was vetoed by then-Governor Christie. Had it been signed into law in 2016, the minimum wage would be increasing to $12.50 on January 1, 2019 – which equates to $26,000 annually for a full-time worker.

A minimum wage of $8.85 – $18,408 a year – is woefully insufficient for someone working full-time who never gets sick and doesn’t take any vacation time. This isn’t enough for workers to make ends meet and contributes to the sluggish nature of New Jersey’s economy. When so few workers are able to participate in the economy, businesses miss out on would-be customers.

This is why a $15 minimum wage is necessary for all workers in New Jersey, including tipped, youth, farm and seasonal workers. The change would inject $3.9 billion into the state’s economy  and help over 1 million workers better afford their needs. Today, there is no region of the state where a single worker with no children can afford basic necessities while making less than $15 per hour. The costs of transportation, food and rent are simply too high for a minimum wage worker to afford without suffering in poverty.

Higher Ed: A Decade of Cuts and Tuition Hikes

Posted on by Brandon McKoy

Over the past decade, New Jersey’s investment in its institutions of higher education has dropped while tuition has gone up, putting increasing pressure on students and families to pay the high costs necessary to get a college degree.

According to a new report released today by the Center on Budget and Policy Priorities, between 2008 and 2018 New Jersey’s funding for public four-year colleges and universities dropped 24 percent, representing a $2,387 cut per-student. Over that same period, average tuition costs at public four-year colleges and universities increased 18 percent, or $2,075, from $11,973 in 2008 to $13,868 in 2018.

In 2017, average tuition and fees at a public four-year institution accounted for 17 percent of a New Jersey family’s median income. For families of color – who often face additional barriers to employment and increased difficulty accessing jobs that pay better – college costs can be a particularly heavy burden. In 2017, the average tuition and fees at New Jersey’s public four-year institutions accounted for 15 percent of median household income for White families, 27 percent for Black families, 25 percent for Hispanic families, and 11 percent for Asian families.

As the state has pulled back on funding, families have been forced to pay more to secure a college education for their children. The shift in cost has happened over a period when many families have struggled financially due to stagnant or declining income. Nationally, the average cost of tuition increased more than 36 percent between 2008 and 2018. At the same time, real median income grew just over 2.1 percent.

Raising the Minimum Wage to $15 is Critical to Growing New Jersey's Economy

Posted on by Brandon McKoy

Increasing the minimum wage will boost the take home pay of over 1 million workers – but not if the Legislature stalls

To read a PDF version of this report, click here.

Increasing New Jersey’s minimum wage to $15 an hour by 2023 would boost the incomes of over 1 million workers and inject $3.9 billion into the state’s economy.[1] Raising the wage for all workers without significant delay is critically important to improving the economic conditions of families, businesses, and the state at large. While many believe that the state’s economy is stronger due to the reduced rate of unemployment – which has finally dropped below pre-recession levels – poverty still remains concerningly high, signaling a wage problem for low-income workers who aren’t paid enough to purchase their basic day-to-day needs.

Considering that lawmakers passed $15 minimum wage legislation that was inclusive of all workers in 2016, it is surprising and disappointing to see that – eight months into a new administration that supports raising the wage for all – a bill still hasn’t been introduced. There have been murmurs of extending the phase-in period beyond five years, leaving the tipped wage at its current paltry level of $2.13 per hour, and dividing the working class by excluding youth, seasonal, and farm workers from the increase. In an age where the federal government is actively attacking the economic security of the working class, it would be a terrible mistake for lawmakers to raise the wage but leave behind some of the state’s most vulnerable workers.

New Jersey’s recovery from the Great Recession has been one of the slowest and least robust in the nation. As we move further away from that economic crisis, it has become clear that even though the economy shows signs of increasing strength – unemployment levels lower than pre-recession levels, a booming stock market, and healthy GDP growth – the gains of the recovery have been funneled almost exclusively to the already wealthy and well-to-do. Wages have remained stagnant and low- and middle-income families continue to struggle to get by.

A recent survey by the Federal Reserve found that 40 percent of Americans cannot afford– or would have to sell possessions to cover the cost of – a surprise $400 expense. One in five adults say they can’t pay all of their current monthly bills. More than one in four adults report that they’ve forgone important medical care because they can’t afford it.[2] With such a significant share of the workforce still suffering from economic insecurity on a daily basis, it should be no surprise to anyone that inequality continues to grow as our economy lags behind the rest of the country. One can assume that the problem is broader and deeper in high-cost New Jersey.

Contrary to popular belief, the slow growth in wages and the consistent presence of higher poverty levels also has implications for the business community. Oftentimes, businesses don’t see low wages as a problem that hurts them, but the reality is that our economy is consumer-driven, meaning it relies on consumers (i.e. workers) being able to fulfill their demands and needs. When consumers don’t have the disposable income necessary to be full participants in the economy, that hurts businesses who are deprived of would-be customers.

Taking all of this into consideration, lawmakers should prioritize raising the minimum wage for all workers, and soon. When accounting for the cost of living, New Jersey’s $8.60 minimum wage falls $18.38 short of a living wage, ranking 5th worst in the country.[3] The longer this increase is delayed, the more the value of a $15 hourly wage erodes away and becomes insufficient to address the harmful issues it is meant to. Making sure that the most vulnerable workers in the Garden State are being paid a fair wage for their labor is critical to reducing poverty, reversing growing levels of income inequality, and strengthening our economy.

Opting to leave behind any portion of the workforce – as has been discussed recently by legislators in both houses – is unnecessary and cruel, and doing so fails to make our state stronger or fairer for those who suffer the most every single day. Coming to this conclusion isn’t difficult, all it requires is looking at the facts.

Poverty and Inequality Persist Amidst a Sluggish Recovery

While it is true that unemployment has dropped significantly in recent years – lowering to 5.3 percent in 2017 from 6 percent in 2016 and a high of 10.9 percent in 2011 – poverty rates are higher than they were before the recession. The official poverty rate in 2017 was 10 percent, up from 8.6 percent in 2007 and representing about 143,000 more people. However, considering the high cost of living in New Jersey, the 200 percent federal poverty level provides a more accurate picture of economic insecurity in our state.[4] Looking at this metric, the poverty rate in 2017 was a staggering 22.89 percent, up from 20.89 percent in 2007 and representing about 245,000 more people.

It is not surprising to see poverty remain higher as unemployment decreases considering the minimum wage is far below a livable wage. The Economic Policy Institute (EPI) has a useful tool called the “Family Budget Calculator” which helps measure the income a family needs “in order to attain a modest yet adequate standard of living.” The family budgets that the EPI calculator analyzes consists of seven areas: housing, food, transportation, child care, health care, taxes, and “other necessities” which includes things like clothes, basic household items, and school supplies.

According to EPI’s analysis there is no part of the state where a worker can reliably make ends meet on less than $15 per hour, not even a single adult with no children. For this type of worker, Camden county requires the lowest earnings at $17.84 per hour. Hunterdon County requires the highest earnings at $22.72 per hour. For families with two adults and one child, each parent would have to earn $17.32 per hour in Camden county and $22.26 per hour in Hunterdon County working full time.[5] Looking at the current minimum wage of $8.60, minimum wage workers in each county are earning less than half of what it takes to safely and reliably make ends meet.

As long as a significant portion of New Jersey’s workforce is unable to provide for themselves and their families, the state’s economy will continue to experience widening levels of inequality and sluggish economic growth. Fixing this problem is possible, but only if an increase in the minimum wage to $15 that is fully phased in by 2023 and includes all workers is enacted before the end of the year.

 

Raising the Wage Would Help a Diverse Array of Workers – Further Carve Outs Should Be Avoided and Youth, Farm and Tipped Workers Must Be Included

The number of workers who will benefit from increasing the minimum wage to $15 depends on how long the phase-in takes, but we reasonably assume that lawmakers would follow a phase-in schedule similar to the 2016 bill that was vetoed by Governor Christie. As such, we assume that the minimum wage would be increased to $10.10 an hour in the first step, on January 1, 2019, with four annual $1.25 increases to follow, bringing New Jersey’s minimum wage to $15.10 an hour by 2023.

Increasing the minimum wage to $15 by 2023 would result in a $3.9 billion raise for approximately 1,047,000 workers, representing 26.3 percent of the state’s total workforce. Of that group about 792,000 would be directly affected, meaning they currently make less than $14.53 (the current dollar equivalent of $15.10 in 2023). Another 256,000 would be indirectly affected, meaning they make slightly more than the new minimum and would likely see their pay also increase.

Of those who would benefit, 57.3 percent are women, 57.2 percent are people of color, 94 percent are adults, 29.2 percent have children, 49.7 percent have attended or graduated from college, and 64.3 percent are working full time.

Most of the New Jersey workers who would benefit from increasing the minimum wage to $15 are in the retail, health care, and food service industries.

 

Existing Exemptions in New Jersey’s Minimum Wage Law

Lawmakers are currently considering carving out youth, farm, and tipped workers from the minimum wage increase. Doing so would be misguided and actively harm these workers, preventing them from earning more for their work and becoming more economically secure. With regard to carve outs, there is a lot of misinformation and misunderstanding on what the current landscape is. There are already several carve outs that exist in New Jersey’s minimum wage law – for youth workers, employees at summer camps, college students, interns, school-to-work programs, tipped workers and farm workers:

  • Youth workers (under 18) are currently exempt from the state wage and hour law (see 12:56-3.2). However, the law provides a number of sectors where youth workers are explicitly included in the state minimum wage. Sectors where youth workers are explicitly included in the state minimum wage are: Mercantile occupations (12:57-3); Beauty culture occupations (12:57-4); Laundry, cleaning, and dyeing occupations (12:57-5); Light manufacturing and apparel occupations (12:57-6).
  • Employees of summer camps, which often includes many youth workers, are explicitly excluded from the state minimum wage. The minimum wage law is not applicable, “during the months of June, July, August or September of the year to summer camps, conferences and retreats operated by any nonprofit or religious corporation or association,” (34.11-56a4.1).
  • Concerning college students and interns, full time students employed by their university or college through a work study program may be paid 85% of the state’s minimum wage (12:56-3.2).
  • Interns or participants in “school-to-work” programs, regardless of age, may be excluded from the minimum wage. However, wage and hour regulations provide specific guidelines that must be followed to ensure that education is the primary objective of the position and that any productive labor is incidental to those educational goals (12:56-18).
  • Farm workers are currently required to be paid the state minimum wage, but they are not required to be paid overtime for any work over 40 hours per week, including piece work (34:11-5614).

Including as many workers as possible in the minimum wage increase is important to ensure that the most vulnerable workers in the state are better able to make ends meet. It would be wonderful to see lawmakers remove the carve outs that already exist but, at the very worst, they should not add to them.

Youth Workers

Carving out youth workers from a minimum wage increase is bad policy that unnecessarily puts teens at increased risk for poverty and other issues that come with economic insecurity.[6] Of all the workers that would benefit from increasing the minimum wage to $15 by 2023, six percent are under the age of 20, equaling 63,355 total teen workers.

There’s a common stereotype that young workers are simply using their earnings to pay for video games and movie tickets, but that couldn’t be further from the truth for many who are seriously contributing to their family’s income. For teen workers who come from families that earn less than $50,000 per year, they contribute over $9,300 on average, or 18.6 percent. For families of color, teen workers contribute over $9,600 on average, or 19.3 percent.[7] That’s a significant amount and it shouldn’t be discounted. Especially considering that many teen workers in low-income families are saving for the cost of college to help avoid student loans, it would be callous to carve them out from the increase to $15 per hour.

Proposing to carve out teen workers isn’t just a bad idea when you look at the facts, it would also be hypocritical for New Jersey to do so. Just this year, the state passed an equal pay amendment that required women and men to be paid the same amount of money for similar work. To say that pay discrimination against women isn’t ok but pay discrimination against teen workers is would be incredibly hypocritical. Either work is work that should be valued no matter who does it or it isn’t. Lawmakers have already stated that they want to stamp out pay discrimination and they should extend that value to all workers, including teens.

Farm Workers

Some of the most vulnerable workers in the state are farm workers. They are generally people of color and immigrants who perform demanding, physical labor in difficult conditions. Simply put, farm workers are some of the workers that inspired the Fight for $15 movement due to the low wages they earn. Historically, New Jersey has never carved out farm workers from a minimum wage increase before, and to do so now would be an incredible mistake.

An analysis by Professor Michael Reich – an economist and chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley – found that New Jersey’s farm workers would benefit to the tune of a 20 percent increase in annual income.

Many have argued that farm workers must be carved out so that New Jersey can remain competitive in agricultural industries, believing that otherwise the state’s farms would be put at risk of closure. The analysis produced by Professor Reich shows that this opinion is false, concluding that food and produce prices wouldn’t have to increase significantly in order for farms to afford the rise in the minimum wage for their workers. Including farm workers in the increase would result in the price of a package of blueberries increasing just three cents a year annually. That is an incredibly insignificant change that is absolutely worth it to make sure farm workers can be included in the wage increase so they can better meet their needs and provide for their families.

Tipped Workers

New Jersey currently has about 193,000 tipped workers, of whom about 78,000 are waiters or bar staff and all of whom would benefit from increasing the tipped wage which is currently set at the federal level of $2.13 per hour.[8] If a worker doesn’t make the $6.47 in tips necessary to bring them to the state’s $8.60 an hour minimum wage, their employer is required to make up the shortfall – what is known as a “tip credit.” If an employee doesn’t earn enough in tips to make up the difference, the onus is unfortunately on them to ask their employer to bridge the gap – something that many tipped workers are hesitant to do for fear they could risk their job. There is significant evidence to show that tipped workers suffer from higher rates of wage theft than other workers.[9]

The federal $2.13 tipped wage has remained constant since 1991. Over those 27 years, its value has eroded by 46 percent to a value of just $1.15 in 1991 inflation-adjusted dollars, meaning it would have to be $3.94 in 2018 inflation-adjusted dollars to keep up with 1991’s purchasing power.

The gap between New Jersey’s tipped wage of $2.13 and minimum wage of $8.60 is already one of the largest in the country. To increase the minimum wage to $15 without increasing or completely phasing out the tipped wage would only make that gap larger and invite an increase in instances of wage theft.

Phasing out the tipped minimum wage would be smart policy for New Jersey to pursue. First, it would simplify regulations that owners of tipped businesses have to implement by eliminating the need to calculate wages owed to make up the gap between the tipped wage and the minimum wage. Second, it would make a tip a tip again. Tips would no longer serve as the primary source of income for workers, but represent a slight bonus awarded by the consumer for exceptional service. Besides, seven states – including the entire west coast of the United States – no longer have a tipped wage.[10] Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington have all decided that workers in traditional tipped industries should make at least the minimum wage like every other worker and, despite opposition claims to the contrary, their restaurant and food cultures haven’t become a wasteland of nothing but chain restaurants like Chili’s and Applebee’s.

Getting rid of the tipped wage would have the added benefit of reducing incidents of sexual harassment that female workers face in particular.[11] Because tipped workers are forced to rely on tips to make up the majority of their pay, they end up having to answer whatever whims – fair or otherwise – that customers or their bosses may want. The power dynamics present in these situations put the worker at a disadvantage, and many customers and owners fully exploit it. Phasing out the tipped wage would do away with those power dynamics and let workers focus on their jobs.

 

The Importance of $15 by 2023 – Further Delay Erodes Purchasing Power

The idea of a $15 minimum wage was introduced four years ago in 2014. Since then, the value of a $15 minimum wage has eroded significantly – $15 in 2014 is worth just $14.08 in 2018. If the original bill had been signed into law when it passed, the state would have reached a $15 minimum wage by 2019. Unfortunately, that didn’t happen, leaving low-wage workers in a lurch. Following recent remarks from legislative leaders that this issue may bleed over into 2019, there is real concern that by the time the wage gets to $15, it won’t be nearly as valuable to low-wage workers as intended.

If the same bill that the legislature passed in 2016 were to be signed this year to take effect in 2019, we would be looking at a scenario where the minimum wage doesn’t reach $15 until 2023. Due to inflation, the delay of 5 years – reaching $15 in 2023 instead of 2019 – adds up to a loss of about 6.5 percent in purchasing power for low-wage workers. In other words, $15 in 2019 would only be worth about $14.02 in 2023, reducing the amount of real income low-wage workers would receive as a result of the policy change from $31,200 a year to $29,161. That’s a loss of over $2,000 in annual earnings for workers and families where every dollar is absolutely critical, and that hurts businesses that are losing out on profits from customers who would have spent that $2,000 locally and immediately. It’s worth noting that these projections don’t take into account changes in current national trade and economic policy that could lead to an increase in inflation, which would result in the value of $15 eroding even further.

If lawmakers hold off passing the $15 minimum wage legislation this year, the erosion from inflation will only significantly reduce what workers ultimately take home. To avoid that affect, it’s worth considering either reducing the phase-in period from 5 years to 4 years or less, or increasing the wage level beyond $15 to make up for lost time, or some combination of the two. The bottom line is that getting to $15 after 2023 dilutes the positive impact of the policy so significantly that simply tying wage increases to inflation after 2023 would be insufficient. Raising the wage to $15 by 2024 – eight years after the Christie veto– and claiming it will address issues of income inequality and poverty would be a dire mistake and a false promise.

 

While New Jersey Waits, States and Cities Across the Nation Make Progress

In recent years, several states and cities have passed $15 minimum wage legislation in response to the difficult and damaging economic realities that their residents are facing. Seattle voted to increase the wage to $15 in 2014, with the phase-in culminating in 2021 for all workers – employees at large companies started receiving $15 in 2017.[12] Los Angeles voted for its increase in 2015, with all workers receiving $15 by 2020.[13]

In 2016, California passed legislation that would see the state get to $15 by 2022.[14] In the same year, New York signed into law a bill that would increase the wage to $15 for all workers across all industries by approximately 2023 – large business in Manhattan had to get to $15 by 2018 and most workers will reach $15 by 2021.[15]

There are several more places that have voted to increase their wages, but the latest example is Massachusetts, which earlier this year became the third state to vote for a $15 minimum wage.[16] The Bay State opted to get to $15 by 2023, and in doing so included youth workers and increased the tipped wage from 30 percent of the state minimum to 45 percent. It is important to mention that while many view minimum wage increases as a campaign important only to Democrats, the Governor of Massachusetts is a Republican. For their legislation to get to $15 by 2023 and do so without carving out vulnerable workers goes to show that people of all political stripes can understand and support the need for all workers to benefit from this important policy change.

New Jersey is often compared to New York, Massachusetts, and California due to the characteristics we share of being a high-cost state but also having a highly educated workforce, median household income on the upper end of the spectrum, and a diverse population that benefits from vibrant immigrant communities. While New Jersey continues to drag its feet on raising the minimum wage, our contemporaries are moving forward with strength and taking the steps necessary to improve their economies for all of their workers, residents, and businesses.

Beyond economic considerations, there’s significant research to show that increasing the minimum wage helps lead to reductions in recidivism,[17] reductions in domestic violence and child abuse,[18] and reductions in teen pregnancy rates.[19] It is an important determinant of health outcomes and the American Public Health Association notes that income shapes one’s access to other important determinants of health like housing, education, and employment opportunities.[20]

Worries about job losses are belied not only by our own recorded history – when New Jersey last increased the minimum wage through the ballot in 2013 opponents said we’d lose 30,000 jobs[21] and instead we gained 90,000[22] – but also the experiences of business owners in states that have already increased their wage to $15.

Take for instance the story of Tom Douglas, a notable restaurateur in Seattle who owned 15 restaurants prior to the increase and strongly opposed the change, predicting that he would “lose maybe a quarter” of his restaurants in the city. Fast forward to post-increase, more restaurants were opening in the city than in previous years[23] and Douglas himself recanted his previous position as he not only didn’t have to close any restaurants but ended up opening a few new ones. There’s the California fast food CEO who, much like Douglas, thought the increase to $15 would destroy his business but now says it has provided an important boost.[24]

And rigorous research continues to show that increasing the minimum wage is good policy. A new report by the Center on Wage and Employment Dynamics at the University of California, Berkeley, examined the effect of minimum wage increases in six cities – Chicago, Washington, D.C., Oakland, San Francisco, San Jose, and Seattle – and found stronger private sector growth than comparable economies along with no significant negative effect on employment.[25] There’s also a recent report by the U.S. Census Bureau which, looking at 20 years of government- collected data, finds that raising the minimum wage increases worker earnings over the short and long-term without significant declines in employment.[26]

At the end of the day, there are simply too much data and recorded experiences showing that increasing the minimum wage works. For New Jersey to continue to delay action at this point would require ignoring what we know to be true and opting to believe rhetoric and myth over fact and rigorous research. We’ve already suffered significant setbacks, being one of the last states to emerge from the Great Recession, and our economy continues to struggle with poverty rates that are higher than they should be at this stage in our recovery. If we continue to talk about “next year” for increasing the minimum wage to $15, we’ll be left in the dust with no one to blame but ourselves yet again.

The opportunity in front of us is clear – raising the wage will benefit over a million workers, help businesses by providing them with more consumers who can purchase the services and products they offer, and improve the local economy in communities all across the state. There is no reason to hesitate any further, it is time to do what we know is both the right and smart thing to do. It’s time to pass and sign legislation that raises the minimum wage to $15 for all workers, and the time to do it is now.

 

Endnotes

[1] Economic Policy Institute analysis of Current Population Survey Outgoing Rotation Group microdata (2017) and CBO Economic Projections (January 2016)

[2] Report on the Economic Well-Being of U.S. Households in 2017, Board of Governors of the Federal Reserve System, May 2018. https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf

[3] NJPP Analysis of data from the Massachusetts Institute of Technology Living Wage Calculator

[4] The official poverty rate – 100% FPL – registers at an annual income of $24,600 for a family of four. In a high cost state like New Jersey, it makes no sense to limit real poverty to such a low level of income.200% FPL is more appropriate and registers at an annual income of $49,200 for a family of four.

[5] Economic Policy Institute, March 2018. Budgets are in 2017 dollars.

[6] National Employment Law Project, Excluding Young New Jersey Workers From A $15 Minimum Wage Is Bad Policy, September 2018. https://www.nelp.org/publication/excluding-young-new-jersey-workers-15-minimum-wage-bad-policy/

[7] National Employment Law Project analysis of U.S. Census Bureau, American Community Survey Public Use Microdata Sample, 2012-2016

[8] National Employment Law Project analysis of May 2017 Occupational Employment Statistics data.

[9] Economic Policy Institute, Twenty-Three Years and Still Waiting for Change, July 2014. https://www.epi.org/publication/waiting-for-change-tipped-minimum-wage/

[10] New Jersey Policy Perspective Raising the Tipped Minimum Wage Would Increase the Economic Security of Many Hard-Working New Jerseyans, July 2014. https://www.njpp.org/reports/raising-the-tipped-minimum-wage-would-increase-the-economic-security-of-many-hard-working-new-jerseyans

[11] Restaurant Opportunities Center United, Better Wages, Better Tips: Restaurants Flourish With One Fair Wage, February 2018. http://rocunited.org/2018/02/new-report-better-wages-better-tips-restaurants-flourish-one-fair-wage/

[12] Office of the Mayor, Seattle, Washington,$15 Minimum Wage. http://murray.seattle.gov/minimumwage/#sthash.wJiTvFbp.dpbs

[13] Los Angeles Times, Los Angeles’ minimum wage on track to go up to $15 by 2020, May 2015. http://www.latimes.com/local/lanow/la-me-ln-minimum-wage-hike-20150518-story.html

[14] The Sacramento Bee, Jerry Brown signs $15 minimum wage in California, April 2016. https://www.sacbee.com/news/politics-government/capitol-alert/article69842317.html

[15] New York State, Governor Cuomo Signs $15 Minimum Wage Plan and 12 Week Paid Family Leave Policy into Law, April 2016. https://www.governor.ny.gov/news/governor-cuomo-signs-15-minimum-wage-plan-and-12-week-paid-family-leave-policy-law

[16] National Employment Law Project, Massachusetts Joins New York and California in Adopting $15 Minimum Wage, June 2018. https://www.nelp.org/news-releases/massachusetts-joins-new-york-california-adopting-15-minimum-wage/

[17] Agan, A. Y. and Makowsky, M. D., The Minimum Wage, EITC, and Criminal Recidivism, January 2018. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3097203

[18] Raissian, K. M., Bullinger, L. R.,Money matters: Does the minimum wage affect child maltreatment rates?, January 2017. http://www.sciencedirect.com/science/article/pii/S0190740916303139?via%3Dihub#!

[19] Bullinger, L. R., The Effect of Minimum Wages on Adolescent Fertility: A Nationwide Analysis, March 2017. https://www.ncbi.nlm.nih.gov/pubmed/28103069

[20] American Public Health Association, Improving Health by Increasing the Minimum Wage, November 2016. https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2017/01/18/improving-health-by-increasing-minimum-wage

[21] Watchdog, New Jersey’s minimum-wage question poses maximum complexity, October 2013. https://www.watchdog.org/new_jersey/new-jersey-s-minimum-wage-question-poses-maximum-complexity/article_3e1f3a4a-a943-549c-8568-e5639189b72d.html

[22] NJPP analysis of data from the Bureau of Labor Statistics. State and Area Employment, Hours, and Earnings, New Jersey, Total Non-Farm, 2013-2015

[23] Puget Sound Business Journal, Apocalypse Not: $15 and the cuts that never came, October 2015. https://www.bizjournals.com/seattle/print-edition/2015/10/23/apocolypse-not-15-and-the-cuts-that-never-came.html

[24] KQED News, Fast Food CEO Says Higher Minimum Wage Boosts Business, January 2017. https://www.kqed.org/news/11245110/minimum-wage-goes-up-and-so-does-business-thats-what-this-fast-food-ceo-says-happened

[25] Allegretto, Godoey, Nadler and Reich, The New Wave of Local Minimum Wage Policies: Evidence from Six Cities, September 2018. http://irle.berkeley.edu/files/2018/09/The-New-Wave-of-Local-Minimum-Wage-Policies.pdf

[26] Rinz, K., Voorheis, J., The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data, March 2018. https://www.census.gov/library/working-papers/2018/adrm/carra-wp-2018-02.html

Raising the Minimum Wage to $15 is Critical to Growing New Jersey’s Economy

Posted on by Brandon McKoy

Increasing the minimum wage will boost the take home pay of over 1 million workers – but not if the Legislature stalls

To read a PDF version of this report, click here.

Increasing New Jersey’s minimum wage to $15 an hour by 2023 would boost the incomes of over 1 million workers and inject $3.9 billion into the state’s economy.[1] Raising the wage for all workers without significant delay is critically important to improving the economic conditions of families, businesses, and the state at large. While many believe that the state’s economy is stronger due to the reduced rate of unemployment – which has finally dropped below pre-recession levels – poverty still remains concerningly high, signaling a wage problem for low-income workers who aren’t paid enough to purchase their basic day-to-day needs.

Considering that lawmakers passed $15 minimum wage legislation that was inclusive of all workers in 2016, it is surprising and disappointing to see that – eight months into a new administration that supports raising the wage for all – a bill still hasn’t been introduced. There have been murmurs of extending the phase-in period beyond five years, leaving the tipped wage at its current paltry level of $2.13 per hour, and dividing the working class by excluding youth, seasonal, and farm workers from the increase. In an age where the federal government is actively attacking the economic security of the working class, it would be a terrible mistake for lawmakers to raise the wage but leave behind some of the state’s most vulnerable workers.

New Jersey’s recovery from the Great Recession has been one of the slowest and least robust in the nation. As we move further away from that economic crisis, it has become clear that even though the economy shows signs of increasing strength – unemployment levels lower than pre-recession levels, a booming stock market, and healthy GDP growth – the gains of the recovery have been funneled almost exclusively to the already wealthy and well-to-do. Wages have remained stagnant and low- and middle-income families continue to struggle to get by.

A recent survey by the Federal Reserve found that 40 percent of Americans cannot afford– or would have to sell possessions to cover the cost of – a surprise $400 expense. One in five adults say they can’t pay all of their current monthly bills. More than one in four adults report that they’ve forgone important medical care because they can’t afford it.[2] With such a significant share of the workforce still suffering from economic insecurity on a daily basis, it should be no surprise to anyone that inequality continues to grow as our economy lags behind the rest of the country. One can assume that the problem is broader and deeper in high-cost New Jersey.

Contrary to popular belief, the slow growth in wages and the consistent presence of higher poverty levels also has implications for the business community. Oftentimes, businesses don’t see low wages as a problem that hurts them, but the reality is that our economy is consumer-driven, meaning it relies on consumers (i.e. workers) being able to fulfill their demands and needs. When consumers don’t have the disposable income necessary to be full participants in the economy, that hurts businesses who are deprived of would-be customers.

Taking all of this into consideration, lawmakers should prioritize raising the minimum wage for all workers, and soon. When accounting for the cost of living, New Jersey’s $8.60 minimum wage falls $18.38 short of a living wage, ranking 5th worst in the country.[3] The longer this increase is delayed, the more the value of a $15 hourly wage erodes away and becomes insufficient to address the harmful issues it is meant to. Making sure that the most vulnerable workers in the Garden State are being paid a fair wage for their labor is critical to reducing poverty, reversing growing levels of income inequality, and strengthening our economy.

Opting to leave behind any portion of the workforce – as has been discussed recently by legislators in both houses – is unnecessary and cruel, and doing so fails to make our state stronger or fairer for those who suffer the most every single day. Coming to this conclusion isn’t difficult, all it requires is looking at the facts.

Poverty and Inequality Persist Amidst a Sluggish Recovery

While it is true that unemployment has dropped significantly in recent years – lowering to 5.3 percent in 2017 from 6 percent in 2016 and a high of 10.9 percent in 2011 – poverty rates are higher than they were before the recession. The official poverty rate in 2017 was 10 percent, up from 8.6 percent in 2007 and representing about 143,000 more people. However, considering the high cost of living in New Jersey, the 200 percent federal poverty level provides a more accurate picture of economic insecurity in our state.[4] Looking at this metric, the poverty rate in 2017 was a staggering 22.89 percent, up from 20.89 percent in 2007 and representing about 245,000 more people.

It is not surprising to see poverty remain higher as unemployment decreases considering the minimum wage is far below a livable wage. The Economic Policy Institute (EPI) has a useful tool called the “Family Budget Calculator” which helps measure the income a family needs “in order to attain a modest yet adequate standard of living.” The family budgets that the EPI calculator analyzes consists of seven areas: housing, food, transportation, child care, health care, taxes, and “other necessities” which includes things like clothes, basic household items, and school supplies.

According to EPI’s analysis there is no part of the state where a worker can reliably make ends meet on less than $15 per hour, not even a single adult with no children. For this type of worker, Camden county requires the lowest earnings at $17.84 per hour. Hunterdon County requires the highest earnings at $22.72 per hour. For families with two adults and one child, each parent would have to earn $17.32 per hour in Camden county and $22.26 per hour in Hunterdon County working full time.[5] Looking at the current minimum wage of $8.60, minimum wage workers in each county are earning less than half of what it takes to safely and reliably make ends meet.

As long as a significant portion of New Jersey’s workforce is unable to provide for themselves and their families, the state’s economy will continue to experience widening levels of inequality and sluggish economic growth. Fixing this problem is possible, but only if an increase in the minimum wage to $15 that is fully phased in by 2023 and includes all workers is enacted before the end of the year.

 

Raising the Wage Would Help a Diverse Array of Workers – Further Carve Outs Should Be Avoided and Youth, Farm and Tipped Workers Must Be Included

The number of workers who will benefit from increasing the minimum wage to $15 depends on how long the phase-in takes, but we reasonably assume that lawmakers would follow a phase-in schedule similar to the 2016 bill that was vetoed by Governor Christie. As such, we assume that the minimum wage would be increased to $10.10 an hour in the first step, on January 1, 2019, with four annual $1.25 increases to follow, bringing New Jersey’s minimum wage to $15.10 an hour by 2023.

Increasing the minimum wage to $15 by 2023 would result in a $3.9 billion raise for approximately 1,047,000 workers, representing 26.3 percent of the state’s total workforce. Of that group about 792,000 would be directly affected, meaning they currently make less than $14.53 (the current dollar equivalent of $15.10 in 2023). Another 256,000 would be indirectly affected, meaning they make slightly more than the new minimum and would likely see their pay also increase.

Of those who would benefit, 57.3 percent are women, 57.2 percent are people of color, 94 percent are adults, 29.2 percent have children, 49.7 percent have attended or graduated from college, and 64.3 percent are working full time.

Most of the New Jersey workers who would benefit from increasing the minimum wage to $15 are in the retail, health care, and food service industries.

 

Existing Exemptions in New Jersey’s Minimum Wage Law

Lawmakers are currently considering carving out youth, farm, and tipped workers from the minimum wage increase. Doing so would be misguided and actively harm these workers, preventing them from earning more for their work and becoming more economically secure. With regard to carve outs, there is a lot of misinformation and misunderstanding on what the current landscape is. There are already several carve outs that exist in New Jersey’s minimum wage law – for youth workers, employees at summer camps, college students, interns, school-to-work programs, tipped workers and farm workers:

  • Youth workers (under 18) are currently exempt from the state wage and hour law (see 12:56-3.2). However, the law provides a number of sectors where youth workers are explicitly included in the state minimum wage. Sectors where youth workers are explicitly included in the state minimum wage are: Mercantile occupations (12:57-3); Beauty culture occupations (12:57-4); Laundry, cleaning, and dyeing occupations (12:57-5); Light manufacturing and apparel occupations (12:57-6).
  • Employees of summer camps, which often includes many youth workers, are explicitly excluded from the state minimum wage. The minimum wage law is not applicable, “during the months of June, July, August or September of the year to summer camps, conferences and retreats operated by any nonprofit or religious corporation or association,” (34.11-56a4.1).
  • Concerning college students and interns, full time students employed by their university or college through a work study program may be paid 85% of the state’s minimum wage (12:56-3.2).
  • Interns or participants in “school-to-work” programs, regardless of age, may be excluded from the minimum wage. However, wage and hour regulations provide specific guidelines that must be followed to ensure that education is the primary objective of the position and that any productive labor is incidental to those educational goals (12:56-18).
  • Farm workers are currently required to be paid the state minimum wage, but they are not required to be paid overtime for any work over 40 hours per week, including piece work (34:11-5614).

Including as many workers as possible in the minimum wage increase is important to ensure that the most vulnerable workers in the state are better able to make ends meet. It would be wonderful to see lawmakers remove the carve outs that already exist but, at the very worst, they should not add to them.

Youth Workers

Carving out youth workers from a minimum wage increase is bad policy that unnecessarily puts teens at increased risk for poverty and other issues that come with economic insecurity.[6] Of all the workers that would benefit from increasing the minimum wage to $15 by 2023, six percent are under the age of 20, equaling 63,355 total teen workers.

There’s a common stereotype that young workers are simply using their earnings to pay for video games and movie tickets, but that couldn’t be further from the truth for many who are seriously contributing to their family’s income. For teen workers who come from families that earn less than $50,000 per year, they contribute over $9,300 on average, or 18.6 percent. For families of color, teen workers contribute over $9,600 on average, or 19.3 percent.[7] That’s a significant amount and it shouldn’t be discounted. Especially considering that many teen workers in low-income families are saving for the cost of college to help avoid student loans, it would be callous to carve them out from the increase to $15 per hour.

Proposing to carve out teen workers isn’t just a bad idea when you look at the facts, it would also be hypocritical for New Jersey to do so. Just this year, the state passed an equal pay amendment that required women and men to be paid the same amount of money for similar work. To say that pay discrimination against women isn’t ok but pay discrimination against teen workers is would be incredibly hypocritical. Either work is work that should be valued no matter who does it or it isn’t. Lawmakers have already stated that they want to stamp out pay discrimination and they should extend that value to all workers, including teens.

Farm Workers

Some of the most vulnerable workers in the state are farm workers. They are generally people of color and immigrants who perform demanding, physical labor in difficult conditions. Simply put, farm workers are some of the workers that inspired the Fight for $15 movement due to the low wages they earn. Historically, New Jersey has never carved out farm workers from a minimum wage increase before, and to do so now would be an incredible mistake.

An analysis by Professor Michael Reich – an economist and chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley – found that New Jersey’s farm workers would benefit to the tune of a 20 percent increase in annual income.

Many have argued that farm workers must be carved out so that New Jersey can remain competitive in agricultural industries, believing that otherwise the state’s farms would be put at risk of closure. The analysis produced by Professor Reich shows that this opinion is false, concluding that food and produce prices wouldn’t have to increase significantly in order for farms to afford the rise in the minimum wage for their workers. Including farm workers in the increase would result in the price of a package of blueberries increasing just three cents a year annually. That is an incredibly insignificant change that is absolutely worth it to make sure farm workers can be included in the wage increase so they can better meet their needs and provide for their families.

Tipped Workers

New Jersey currently has about 193,000 tipped workers, of whom about 78,000 are waiters or bar staff and all of whom would benefit from increasing the tipped wage which is currently set at the federal level of $2.13 per hour.[8] If a worker doesn’t make the $6.47 in tips necessary to bring them to the state’s $8.60 an hour minimum wage, their employer is required to make up the shortfall – what is known as a “tip credit.” If an employee doesn’t earn enough in tips to make up the difference, the onus is unfortunately on them to ask their employer to bridge the gap – something that many tipped workers are hesitant to do for fear they could risk their job. There is significant evidence to show that tipped workers suffer from higher rates of wage theft than other workers.[9]

The federal $2.13 tipped wage has remained constant since 1991. Over those 27 years, its value has eroded by 46 percent to a value of just $1.15 in 1991 inflation-adjusted dollars, meaning it would have to be $3.94 in 2018 inflation-adjusted dollars to keep up with 1991’s purchasing power.

The gap between New Jersey’s tipped wage of $2.13 and minimum wage of $8.60 is already one of the largest in the country. To increase the minimum wage to $15 without increasing or completely phasing out the tipped wage would only make that gap larger and invite an increase in instances of wage theft.

Phasing out the tipped minimum wage would be smart policy for New Jersey to pursue. First, it would simplify regulations that owners of tipped businesses have to implement by eliminating the need to calculate wages owed to make up the gap between the tipped wage and the minimum wage. Second, it would make a tip a tip again. Tips would no longer serve as the primary source of income for workers, but represent a slight bonus awarded by the consumer for exceptional service. Besides, seven states – including the entire west coast of the United States – no longer have a tipped wage.[10] Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington have all decided that workers in traditional tipped industries should make at least the minimum wage like every other worker and, despite opposition claims to the contrary, their restaurant and food cultures haven’t become a wasteland of nothing but chain restaurants like Chili’s and Applebee’s.

Getting rid of the tipped wage would have the added benefit of reducing incidents of sexual harassment that female workers face in particular.[11] Because tipped workers are forced to rely on tips to make up the majority of their pay, they end up having to answer whatever whims – fair or otherwise – that customers or their bosses may want. The power dynamics present in these situations put the worker at a disadvantage, and many customers and owners fully exploit it. Phasing out the tipped wage would do away with those power dynamics and let workers focus on their jobs.

 

The Importance of $15 by 2023 – Further Delay Erodes Purchasing Power

The idea of a $15 minimum wage was introduced four years ago in 2014. Since then, the value of a $15 minimum wage has eroded significantly – $15 in 2014 is worth just $14.08 in 2018. If the original bill had been signed into law when it passed, the state would have reached a $15 minimum wage by 2019. Unfortunately, that didn’t happen, leaving low-wage workers in a lurch. Following recent remarks from legislative leaders that this issue may bleed over into 2019, there is real concern that by the time the wage gets to $15, it won’t be nearly as valuable to low-wage workers as intended.

If the same bill that the legislature passed in 2016 were to be signed this year to take effect in 2019, we would be looking at a scenario where the minimum wage doesn’t reach $15 until 2023. Due to inflation, the delay of 5 years – reaching $15 in 2023 instead of 2019 – adds up to a loss of about 6.5 percent in purchasing power for low-wage workers. In other words, $15 in 2019 would only be worth about $14.02 in 2023, reducing the amount of real income low-wage workers would receive as a result of the policy change from $31,200 a year to $29,161. That’s a loss of over $2,000 in annual earnings for workers and families where every dollar is absolutely critical, and that hurts businesses that are losing out on profits from customers who would have spent that $2,000 locally and immediately. It’s worth noting that these projections don’t take into account changes in current national trade and economic policy that could lead to an increase in inflation, which would result in the value of $15 eroding even further.

If lawmakers hold off passing the $15 minimum wage legislation this year, the erosion from inflation will only significantly reduce what workers ultimately take home. To avoid that affect, it’s worth considering either reducing the phase-in period from 5 years to 4 years or less, or increasing the wage level beyond $15 to make up for lost time, or some combination of the two. The bottom line is that getting to $15 after 2023 dilutes the positive impact of the policy so significantly that simply tying wage increases to inflation after 2023 would be insufficient. Raising the wage to $15 by 2024 – eight years after the Christie veto– and claiming it will address issues of income inequality and poverty would be a dire mistake and a false promise.

 

While New Jersey Waits, States and Cities Across the Nation Make Progress

In recent years, several states and cities have passed $15 minimum wage legislation in response to the difficult and damaging economic realities that their residents are facing. Seattle voted to increase the wage to $15 in 2014, with the phase-in culminating in 2021 for all workers – employees at large companies started receiving $15 in 2017.[12] Los Angeles voted for its increase in 2015, with all workers receiving $15 by 2020.[13]

In 2016, California passed legislation that would see the state get to $15 by 2022.[14] In the same year, New York signed into law a bill that would increase the wage to $15 for all workers across all industries by approximately 2023 – large business in Manhattan had to get to $15 by 2018 and most workers will reach $15 by 2021.[15]

There are several more places that have voted to increase their wages, but the latest example is Massachusetts, which earlier this year became the third state to vote for a $15 minimum wage.[16] The Bay State opted to get to $15 by 2023, and in doing so included youth workers and increased the tipped wage from 30 percent of the state minimum to 45 percent. It is important to mention that while many view minimum wage increases as a campaign important only to Democrats, the Governor of Massachusetts is a Republican. For their legislation to get to $15 by 2023 and do so without carving out vulnerable workers goes to show that people of all political stripes can understand and support the need for all workers to benefit from this important policy change.

New Jersey is often compared to New York, Massachusetts, and California due to the characteristics we share of being a high-cost state but also having a highly educated workforce, median household income on the upper end of the spectrum, and a diverse population that benefits from vibrant immigrant communities. While New Jersey continues to drag its feet on raising the minimum wage, our contemporaries are moving forward with strength and taking the steps necessary to improve their economies for all of their workers, residents, and businesses.

Beyond economic considerations, there’s significant research to show that increasing the minimum wage helps lead to reductions in recidivism,[17] reductions in domestic violence and child abuse,[18] and reductions in teen pregnancy rates.[19] It is an important determinant of health outcomes and the American Public Health Association notes that income shapes one’s access to other important determinants of health like housing, education, and employment opportunities.[20]

Worries about job losses are belied not only by our own recorded history – when New Jersey last increased the minimum wage through the ballot in 2013 opponents said we’d lose 30,000 jobs[21] and instead we gained 90,000[22] – but also the experiences of business owners in states that have already increased their wage to $15.

Take for instance the story of Tom Douglas, a notable restaurateur in Seattle who owned 15 restaurants prior to the increase and strongly opposed the change, predicting that he would “lose maybe a quarter” of his restaurants in the city. Fast forward to post-increase, more restaurants were opening in the city than in previous years[23] and Douglas himself recanted his previous position as he not only didn’t have to close any restaurants but ended up opening a few new ones. There’s the California fast food CEO who, much like Douglas, thought the increase to $15 would destroy his business but now says it has provided an important boost.[24]

And rigorous research continues to show that increasing the minimum wage is good policy. A new report by the Center on Wage and Employment Dynamics at the University of California, Berkeley, examined the effect of minimum wage increases in six cities – Chicago, Washington, D.C., Oakland, San Francisco, San Jose, and Seattle – and found stronger private sector growth than comparable economies along with no significant negative effect on employment.[25] There’s also a recent report by the U.S. Census Bureau which, looking at 20 years of government- collected data, finds that raising the minimum wage increases worker earnings over the short and long-term without significant declines in employment.[26]

At the end of the day, there are simply too much data and recorded experiences showing that increasing the minimum wage works. For New Jersey to continue to delay action at this point would require ignoring what we know to be true and opting to believe rhetoric and myth over fact and rigorous research. We’ve already suffered significant setbacks, being one of the last states to emerge from the Great Recession, and our economy continues to struggle with poverty rates that are higher than they should be at this stage in our recovery. If we continue to talk about “next year” for increasing the minimum wage to $15, we’ll be left in the dust with no one to blame but ourselves yet again.

The opportunity in front of us is clear – raising the wage will benefit over a million workers, help businesses by providing them with more consumers who can purchase the services and products they offer, and improve the local economy in communities all across the state. There is no reason to hesitate any further, it is time to do what we know is both the right and smart thing to do. It’s time to pass and sign legislation that raises the minimum wage to $15 for all workers, and the time to do it is now.

 

Endnotes

[1] Economic Policy Institute analysis of Current Population Survey Outgoing Rotation Group microdata (2017) and CBO Economic Projections (January 2016)

[2] Report on the Economic Well-Being of U.S. Households in 2017, Board of Governors of the Federal Reserve System, May 2018. https://www.federalreserve.gov/publications/files/2017-report-economic-well-being-us-households-201805.pdf

[3] NJPP Analysis of data from the Massachusetts Institute of Technology Living Wage Calculator

[4] The official poverty rate – 100% FPL – registers at an annual income of $24,600 for a family of four. In a high cost state like New Jersey, it makes no sense to limit real poverty to such a low level of income.200% FPL is more appropriate and registers at an annual income of $49,200 for a family of four.

[5] Economic Policy Institute, March 2018. Budgets are in 2017 dollars.

[6] National Employment Law Project, Excluding Young New Jersey Workers From A $15 Minimum Wage Is Bad Policy, September 2018. https://www.nelp.org/publication/excluding-young-new-jersey-workers-15-minimum-wage-bad-policy/

[7] National Employment Law Project analysis of U.S. Census Bureau, American Community Survey Public Use Microdata Sample, 2012-2016

[8] National Employment Law Project analysis of May 2017 Occupational Employment Statistics data.

[9] Economic Policy Institute, Twenty-Three Years and Still Waiting for Change, July 2014. https://www.epi.org/publication/waiting-for-change-tipped-minimum-wage/

[10] New Jersey Policy Perspective Raising the Tipped Minimum Wage Would Increase the Economic Security of Many Hard-Working New Jerseyans, July 2014. https://www.njpp.org/reports/raising-the-tipped-minimum-wage-would-increase-the-economic-security-of-many-hard-working-new-jerseyans

[11] Restaurant Opportunities Center United, Better Wages, Better Tips: Restaurants Flourish With One Fair Wage, February 2018. http://rocunited.org/2018/02/new-report-better-wages-better-tips-restaurants-flourish-one-fair-wage/

[12] Office of the Mayor, Seattle, Washington,$15 Minimum Wage. http://murray.seattle.gov/minimumwage/#sthash.wJiTvFbp.dpbs

[13] Los Angeles Times, Los Angeles’ minimum wage on track to go up to $15 by 2020, May 2015. http://www.latimes.com/local/lanow/la-me-ln-minimum-wage-hike-20150518-story.html

[14] The Sacramento Bee, Jerry Brown signs $15 minimum wage in California, April 2016. https://www.sacbee.com/news/politics-government/capitol-alert/article69842317.html

[15] New York State, Governor Cuomo Signs $15 Minimum Wage Plan and 12 Week Paid Family Leave Policy into Law, April 2016. https://www.governor.ny.gov/news/governor-cuomo-signs-15-minimum-wage-plan-and-12-week-paid-family-leave-policy-law

[16] National Employment Law Project, Massachusetts Joins New York and California in Adopting $15 Minimum Wage, June 2018. https://www.nelp.org/news-releases/massachusetts-joins-new-york-california-adopting-15-minimum-wage/

[17] Agan, A. Y. and Makowsky, M. D., The Minimum Wage, EITC, and Criminal Recidivism, January 2018. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3097203

[18] Raissian, K. M., Bullinger, L. R.,Money matters: Does the minimum wage affect child maltreatment rates?, January 2017. http://www.sciencedirect.com/science/article/pii/S0190740916303139?via%3Dihub#!

[19] Bullinger, L. R., The Effect of Minimum Wages on Adolescent Fertility: A Nationwide Analysis, March 2017. https://www.ncbi.nlm.nih.gov/pubmed/28103069

[20] American Public Health Association, Improving Health by Increasing the Minimum Wage, November 2016. https://www.apha.org/policies-and-advocacy/public-health-policy-statements/policy-database/2017/01/18/improving-health-by-increasing-minimum-wage

[21] Watchdog, New Jersey’s minimum-wage question poses maximum complexity, October 2013. https://www.watchdog.org/new_jersey/new-jersey-s-minimum-wage-question-poses-maximum-complexity/article_3e1f3a4a-a943-549c-8568-e5639189b72d.html

[22] NJPP analysis of data from the Bureau of Labor Statistics. State and Area Employment, Hours, and Earnings, New Jersey, Total Non-Farm, 2013-2015

[23] Puget Sound Business Journal, Apocalypse Not: $15 and the cuts that never came, October 2015. https://www.bizjournals.com/seattle/print-edition/2015/10/23/apocolypse-not-15-and-the-cuts-that-never-came.html

[24] KQED News, Fast Food CEO Says Higher Minimum Wage Boosts Business, January 2017. https://www.kqed.org/news/11245110/minimum-wage-goes-up-and-so-does-business-thats-what-this-fast-food-ceo-says-happened

[25] Allegretto, Godoey, Nadler and Reich, The New Wave of Local Minimum Wage Policies: Evidence from Six Cities, September 2018. http://irle.berkeley.edu/files/2018/09/The-New-Wave-of-Local-Minimum-Wage-Policies.pdf

[26] Rinz, K., Voorheis, J., The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data, March 2018. https://www.census.gov/library/working-papers/2018/adrm/carra-wp-2018-02.html

FAQs: Universal Driver's Licenses

Posted on by Erika J Nava

New Jersey is poised to become the 13th state in the nation to allow all residents, regardless of immigration status, to apply for a driver’s license. Doing so would increase public safety, bolster the state’s economy, and increase the well-being of all families, particularly the hundreds of thousands of New Jersey residents who would gain the right to legally drive.


How many New Jersey residents would benefit from expanded access to driver’s licenses?

There are approximately 466,000 undocumented immigrants in New Jersey who are of driving age and would be eligible for a license. Based on the experience of other states, NJPP estimates that half these eligible New Jerseyans – 233,000 – would receive a license within the first three years of implementation, a 3.8 percent increase in the total number of licensed drivers in the state. A higher number would likely apply for a license, but not everyone who applies passes the written and road tests.


Would allowing undocumented immigrants access to obtaining a driver’s license and insurance under their name increase premiums?

No. There is no evidence that undocumented immigrants obtaining a driver’s license raises premiums for the average driver. In fact, having more insured drivers who have been tested, trained, and licensed on the road would make everyone safer. Since auto insurance is compulsory in New Jersey, universal driver’s licenses would allow for thousands of drivers to obtain auto insurance coverage, thereby reducing the number of uninsured drivers, a cost that is currently borne by all insured motorists.In Utah, which has allowed undocumented immigrants to drive legally since 1999, the uninsured motorist rate dropped by 20 percent.


Do undocumented immigrants qualify for the Special Automobile Insurance Policy (SAIP), also known as the dollar-a-day auto insurance policy?

 No. Undocumented immigrants do not qualify for the dollar-a-day (SAIP) auto insurance policy because they are not eligible for federal Medicaid benefits. Undocumented immigrants are barred from all social safety net programs (i.e. NJ Family Care, TANF, SNAP).


Do you need a social security number (SSN) to obtain auto insurance?

No. Insurance companies are not required by law to ask for a driver’s social security number (SSN). Insurers may ask for an SSN in their auto insurance application, but disclosing an SSN is not mandatory to obtain auto insurance.


Does auto insurance coverage or cost vary depending on the type of license you have? For example, some states have Real ID license; does it matter if you have a Real ID compliant license?

No. Having a certain kind of license does not bar individuals from certain types of insurance coverages. Also, under the current proposed expanded driver’s license legislation, insurance companies are barred from assigning anyone with the proposed provisional license to a rating plan.


Will drivers who obtain a license be vulnerable to violations of privacy if they get into an automobile accident?

Potentially. Ideally, restrictions to automobile accident reports would protect drivers from unsolicited legal notices that can mislead or scare people into thinking they need a lawyer simply because they were in an auto accident.  People with provisional driver’s licenses should be confident that an auto accident does not jeopardize their privacy or subject them to unnecessary medical treatment and fraudulent activity.

NJPP Statement: Restricting Low-Income Immigrants is Un-American

Posted on by Erika J Nava

Over the weekend, the Trump administration announced its proposal to amend a 100 plus year-old immigration rule that would change how the federal government categorizes immigrants as a “public charge.”

Statement from NJPP Policy Analyst Erika J. Nava:
“Prioritizing well-off immigrants while penalizing those struggling to provide for their families is state sponsored cruelty and runs counter to American values. No family should have to choose between having their basic needs met and being separated from their family. New Jersey has the third largest share of immigrants in the nation, including a large percentage of mixed-status families who will be impacted tremendously by this policy change. Lawmakers must fight back against this proposal to keep New Jersey families together.”

Existing Law:
Currently, immigrants who want to adjust their immigration status to Legal Permanent Residency or enter the country with a U.S. visa would be deemed ineligible and likely to become a “public charge” if they used the following:

  • Cash assistance – such as Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), and comparable state or local programs, or
  • Government-funded long-term institutional care
The Rule Change:
The proposed rule would include other programs such as: SNAP (food assistance), public housing, non-emergency Medicaid, and Medicare Part D. In addition, it would require those petitioning to earn at least 125% of the federal poverty level (FPL) and give preference to a households with incomes at 250% of the FPL. For example, a family of four would need to earn at least $63,000 annually to avoid scrutiny under the new public charge test.

As in the 1900s, the federal government proposes to stipulate an immigrants’ native region and immigration status to restrict access to the United States.

Once the proposed rule becomes official there will be a 60-day comment period. NJPP plans to release a fact sheet detailing how the proposed rule would impact New Jersey’s economy and immigrant communities.

Census 2017: A Tale of Two New Jerseys

Posted on by Brandon McKoy

It is no secret that the Garden State has been among the slowest states to recover from the Great Recession. Now, nearly a decade later, New Jersey remains a tale of two states as household incomes are on the rise while far too many families continue to live in poverty and struggle to make ends meet.

New data from the U.S. Census Bureau signals an improving economy with increases in employment and median household income to pre-recession levels. The poverty rate, meanwhile, remains stubbornly high, with one in ten New Jerseyans unable to afford basic necessities. Communities of color are more than twice as likely as Whites to struggle economically – living on less than $24,600 for a family of four – meaning that not all New Jersey families are sharing in the state’s economic gains.

In order to grow a stronger and more inclusive economy for us all, it’s imperative that lawmakers remove barriers to economic stability, such as raising the minimum wage for all workers and boosting public investments in affordable homes and transportation infrastructure. For New Jersey’s economy to truly rebound, all New Jerseyans must have access to the resources and investments that will enable them to participate in the state’s growth and prosperity.

Household Income

New Jersey’s median household income rose significantly in 2017, increasing by 3.0 percent to $80,088. This is a return to the state’s pre-recession median income level, which peaked at $80,125 in 2008. This rebound is a milestone for New Jersey, where median income bottomed out at $73,510 in 2011, but also serves as a stark reminder of how long it has taken New Jersey’s economy to recover.

While the increase in median household income is good news, the bad news is that these gains are not being equally shared among all residents. In 2017, median household income was $91,454 for White households, $50,395 for Black households, $54,482 for Hispanic or Latino households, $118,917 for asian households, and $51,027 for American Indian and Alaska Native households.

Poverty

New Jersey’s official poverty rate dropped from 10.4 percent in 2016 to 10.0 percent in 2017, but remains much higher than it did in 2007 when it was 8.6 percent. However, for a high-cost state like New Jersey, it is more appropriate to measure poverty here by looking at the 200% federal poverty level (FPL).

The official poverty rate – 100% FPL – registers at an annual income of $20,420 for a family of three and $24,600 for a family of four. In a high-cost state like New Jersey, that’s incredibly low and it makes no sense to limit real poverty to such a low level of income. Using the 200% FPL rate – which would be an annual income of nearly $50,000 for a family of four – is more appropriate. At that level, 22.9 percent of New Jerseyans were living in poverty in 2017. This is down from 23.8 percent last year but it also remains higher than the pre-recession rate of 20.9 percent in 2007.

Out of the nine million residents who call New Jersey home, 882,673 were living in poverty in 2017. Measuring poverty at  200% FPL, just over 2 million people were in poverty in 2017.

Communities of Color are Struggling the Most

In 2017, the poverty rate remains higher for every race and ethnic group in New Jersey than it was prior to the recession, and the rate is particularly high for New Jerseyans of color. While there has been a drop in the poverty rate for most between 2016 and 2017, two communities saw an increase. For Black New Jerseyans, the poverty rate increased from 17.4 percent to 18.1 percent, and for American Indians and Alaska Natives the poverty rate increased from 19.1 percent to 20.3 percent.

Child poverty dropped slightly, from 14.6 percent to 13.9 percent, but remains higher than in 2007 when it was 11.6 percent.

Poverty among women continues to remain higher than poverty among men. Poverty for women dropped to 10.9 percent in 2017 from 11.4 percent and poverty for men dropped to 9.0 percent in 2017 from 9.4 percent. Both rates are higher than they were prior to the Great Recession, where in 2007 women’s poverty was 9.7 percent and men’s poverty was 7.3 percent.

Employment

The unemployment rate continues to improve after hitting a peak of 10.9 percent in 2011. New Jersey’s unemployment rate is down to 5.3 percent in 2017. This is welcomed news as more New Jerseyans are participating in the labor force and finding work is incredibly important for the state’s economy. However, for the unemployment rate to drop while the poverty rate remains higher than pre-recession levels is indicative of a wage problem, especially for workers in low-wage jobs.

The 2017 Census shows that while the state has made important strides in a number of critical areas, economic security is out of reach for far too many New Jerseyans. Poverty remains higher than pre-recession levels, with rates for women and communities of color being particularly high. And despite an increase in household income across the board, households of color continue to earn less than their White neighbors.

To rectify these problems, lawmakers must prioritize policies that benefit low-income workers, communities of color, and impoverished New Jerseyans who struggle every day. Proven solutions include raising the minimum wage for $15 for all workers, expanding the Earned Income Tax Credit (EITC), implementing strong wage theft protections, and boosting investments in transportation, education, and affordable homes. Until we can ensure all New Jerseyans are able to safely and reliably make ends meet, our economy will continue to have trouble growing our economy in a healthy manner.

Policies that are proven to grow wages, improve benefits, and help more residents to afford their needs will provide the boost that our economy desperately needs and spread prosperity to every corner of the state.

 

Legal Representation in Immigration Courts Leads to Better Outcomes, Economic Stability

Posted on by Erika J Nava

To read a PDF version of this report, click here.

 

New Jersey should create a universal representation program that is publicly-funded to provide free, court-appointed counsel to low-income immigrants in New Jersey who are detained and facing deportation in immigration courts.

Studies have shown that offering legal representation in immigration court increases the likelihood of an individual winning their case, being released to their families, and consequently improving the lives of families.[1] In addition, legal representation has positive impacts in the communities where immigrants reside as deportations not only hurt the individuals, but also their families and local economies. Creating a universal representation program that expands access to counsel for detained immigrants will not only bolster New Jersey’s immigrant families, but the broader state economy.

Key Findings

  • In New Jersey, individuals detained for civil immigration violations are three times as likely to prevail in their cases when they have legal representation.[2] With legal representation, they are also twice as likely to be released prior to the end of their removal proceedings.[3]
  • New Jersey employers pay $5.9 million in turnover-related costs annually as they are forced to replace detained or deported employees.[4]
  • New Jersey’s economy would lose $18 million in wages and$1.6 million in total tax revenue annually from detained immigrants.[5]
  • Annually, detentions and deportations cost New Jersey approximately $732,000 in child health insurance and $203,000 in foster care for children of detained or deported parents.[6] This total annual cost of nearly $1 million does not include the long-term costs associated with child trauma, development, and health conditions from deporting their parents.

Legal Representation Keeps New Jersey Families Together
In New Jersey, immigration arrests have increased by 42 percentunder the Trump Administration, far outpacing the national average.[7] As ICE increases arrests at an alarming rate, thousands of people across New Jersey, including U.S. citizens, immigrants with legal permanent residence, visa holders, and undocumented immigrants have been detained and separated from their families and communities, and detached from local economies that depend on them to prosper.

When immigrants in New Jersey are detained and do not have access to legal representation, they are deported 86% of the time.[8] For many of these individuals, they will never be able to return to the United States and reunite with their families.

The journey through immigration court can be lengthy and complicated. In New Jersey, the average detainee spends 62 days in a detention facility.[9] Some immigrants spend their entire removal proceedings jailed in detention centers waiting for their case to be heard and decided by an immigration judge. Others are detained and later released on bond to await trial. Federal government mandates nearly 40,000 immigration beds to be filled by detainees at any given time.[10]

Immigration courts are not required to provide immigrants legal counsel like in the criminal justice system, as deportation is a civil rather than criminal matter. Whether immigrants have access to legal counsel or not, the government proceeds with the immigration case and immigrants are left to fend for themselves in court against a trained government attorney who seeks their removal.

In New Jersey, about 67 percent of people in immigration detention do not have access to legal counsel and must fight their deportation case without a lawyer by their side. Also, detained immigrants in the Garden State are particularly vulnerable: only 14% of immigrants detained throughout their proceedings are able to avoid deportation without legal representation.[11]

Moreover, immigrants and their families are facing greater threats from the federal government than they have in decades. The current administration has made it clear that immigrants without a criminal record are priority for deportation, including parents of U.S. citizen children. Over the past three years, federal immigration authorities have also wrongly detained more than one thousand U.S. citizens.

The Trump administration has also increased the number of immigrants vulnerable to deportation by ending the Temporary Protected Status (TPS) program for 6 of the 10 designated countries. In New Jersey, about 13,900 people from El Salvador, Honduras, and Haiti will lose their work permit and protection from deportation by 2020. Also, the uncertainty of Deferred Action for Childhood Arrivals (DACA) could threaten New Jersey’s 17,000 DACA recipients and 53,000 DACA eligible young peopleinto with imminent deportation.

Lack of Access to Legal Representation is a Drag on New Jersey’s Economy
New Jersey employers bear a large fiscal burden of turnover costs related to detention and deportation. Based on our projections, employers in New Jersey pay an estimated $5.9 millionin turnover-related costs annually as they are forced to replace detained or deported employees. Consequently, employers lose money and production due to a sudden reduction in the workforce.

The financial burden does not stop with employer turnover-related costs, but spills over to the broader state economy. Annually, New Jersey’s workforce loses $18 million in wages and the state foregoes $1.6 million in tax revenue as detained immigrants are unable to show up to work.

Families lose wages, purchasing power and the ability to pay bills on time when a loved one is detained. They are also less able to provide for their children. According to the Center for Migration Studies, deportations increase foreclosure among Latinos by removing income earners from households.

Losing a bread-winner of the household to deportation will likely put many families – including an estimated 168,000 U.S. citizen children of undocumented immigrants in New Jersey – in vulnerable situations and will likely increase their demand for public assistance.[12]

In New Jersey, about 168,000 children have an undocumented parent. Approximately 128,000 of these children, or 78%, are U.S. citizens.[13] In addition, New Jersey has about 8,700 U.S. citizen children with parents who are going to lose their TPS status by 2020 making even more children vulnerable to losing a parent to deportation.[14] Nationally, an estimated 5,000 children are placed in foster care because a parent was detained or deported. Children whose parents are detained or deported are at higher risk of mental health issues and suffer from developmental delays.

Annually, detentions and deportations cost New Jersey approximately $732,000 in child health insurance costs and $203,000 in foster care for children of detained or deported parents. This annual monetary cost of nearly $1 million does not include the long-term costs associated with child trauma, development, and health conditions from deporting their parents.

New Jersey Loses When Immigrants Lack Legal Representation
New Jersey benefits from its diverse immigrant population, with the third highest share (22%) of immigrants nationally and half a million undocumented immigrants that contribute to the state’s social and economic fabric.

The Garden State has 34,232 main street businesses, and immigrants own 48.1% of them.[15] This is the highest percentage share of immigrant owned main street businesses aside from California. In all, almost 270,500 workers in New Jersey are employed at an immigrant-owned business. And immigrants or their children have founded 39% of the nineteen Fortune 500 companies based in New Jersey. These companies generate more than $133 billion in annual revenue and employ almost 600,000 people globally.[16]

But New Jersey’s immigrants aren’t just contributing as entrepreneurs and job creators. They are also paying taxes: more than $13.1 billion in federal taxes and $6.5 billion in state and local taxes each year. And every year, New Jersey’s immigrants are also contributing to our entitlement programs: $2 billion to Medicare (of which $179.4 million is paid by undocumented New Jerseyans) and more than $7 billion to Social Security (of which $695 million is paid by undocumented residents).[17]

If all of the Garden State’s undocumented immigrants were deported, the loss to New Jersey’s Gross Domestic Product, 4.9%, is the largest loss of any of the 50 states, topping immigrant-heavy states like California (4.7% loss), Texas (3% loss) and New York (3% loss), according to a 50-state analysis by the Center for American Progress. [18]

The forced removal of these striving immigrants would cause New Jersey to lose $25.9 billion in annual economic activity. While this is not the largest dollar loss of any state (California tops the list at $103 billion), it is the largest when taken in context of the size of a state’s economy.[19]

New Jersey’s workforce has the third-highest share of undocumented workers in the nation at 7.4%, behind California (10.2%) and Texas (8.7%). But the loss of these workers’ contributions would be more keenly felt by New Jersey’s economy, in large part because New Jersey’s undocumented workers’ contributions to the economy are more diverse and felt in many higher-paid industries.[20]

While families are ripped apart from each other at the border, New Jersey should send a clear message to the nation that it will do its part in keeping families together and ensure that all its residents receive due process including a fair day in immigration court.

Let’s remember that immigrants do not live separately from the rest of New Jersey residents. They are vitally entwined throughout New Jersey’s communities, assets to our state, and contributors to our culture, our economy and our prosperity. If universal representation becomes a reality in New Jersey, our state would join New York and six cities across the country in providing universal legal representation for low-income, detained immigrants. Having a universal representation program is a pro-family, pro-economy policy that lawmakers should support in order to continue New Jersey’s history as the golden door for immigrants. Universal representation would also maintain New Jersey’s status as a welcoming, inclusive state. 

Acknowledgments:
NJPP appreciates the feedback received from the following organizations: Make the Road NJ, ACLU, American Friends Service Committee, Fiscal Institute Policy, and the Center for Popular Democracy.

Endnotes

[1] The Center for Popular Democracy. New York Immigrant Family Unity Project – The Report, October 2013. Access to Justice: Ensuring Counsel for Immigrants Facing Deportation in the D.C. Metropolitan Area, April 2017. Vera Institute.Evaluation of the New York Immigrant Family Unity Project: Assessing the Impact of Legal Representation on Family and Community Unity, November 2017.

[2] Seton Hall Law School. Deportation Without Representation the Access-to-Justice Crisis Facing New Jersey’s Immigrant Families, June 2016.

[3] NJPP analysis of the data in the report: Deportation Without Representation the Access-to-Justice Crisis Facing New Jersey’s Immigrant Families. The EOIR data set consists of 3,868 cases and includes all removal cases in which an Immigration Judge (IJ) made a final case-related decision in the New Jersey Immigration Courts (Elizabeth and Newark) between February 1, 2014 and January 31, 2015.54 This data set includes only cases resolved in New Jersey and not cases that were transferred to other jurisdictions.

[4] Used data from Seton Hall Report and duplicated methodology used in The Center for Popular Democracy report, Access to Justice: Ensuring Counsel for Immigrants Facing Deportation in the D.C. Metropolitan Area. Consists of multiplying those detained by those below and above the federal poverty level, multiplying those by adult immigrants in the workforce. Then multiplying the annual salary of those in the combined food serve and preparation workers by 16%, which is the typical turnover costs for positions earning less than $ 30,000 annually. Also, multiplying the annual pay for “other services” by 19.7% the typical turnover costs for positions earning less than $50,000 annually.

[5] To calculate the average wage lost  per day we used partof Colorado Fiscal Institute’s calculations in their reportThe High Cost of Immigration Enforcement in Colorado, we multiplied the work days missed by the individuals wage divided by works days missed.  The work days missed was calculated using the average days detained in NJ (62 days) and the assumption that a person works 5 days a week. Out of the 62 days is 8 weeks and 6 days. Thus, we subtracted 62-17 to obtain the number of worked days missed. The median individual wage for a noncitizen working full time is $31,200 according ACS (2016 1-year sample). We multiplied the number of works days missed by the average daily salary times the number of detained in immigrants in FY 2017 We multiplied the amount of wages lost by 9 percent – that’s the percent of income paid in taxes by everyone up to the 80th percentile in NJ, according to Institute on Taxation and Economic Policy Who Pays, 5t edition.

[6] Multiply estimated number of U.S. citizen Children of immigrants detained through their proceeding but deported by 57 percent of US-born and naturalized citizen children covered by employer or private coverage. Multiply that product by the annual average per-child cost to Children Health Insurance Program.

[7] The Star Ledger. ICE arrests surging in N.J. under Trump. Here’s why,February 2018.

[8] Ibid 2.

[9] Transactional Records Access Clearinghouse. Legal Noncitizens Receive Longest ICE Detention, June 2013.

[10] National Immigration Forum. The Math of Immigration Detention, 2018 Update: Costs Continue to Multiply, 2018.

[11] Ibid 2.

[12] Migration Policy Institute. A Profile of U.S. Children with Unauthorized Immigrant Parents, January 2016.

[13] Ibid 12.

[14] Center for American Progress. Temporary Protected Status: State-by-state Factsheets on TPS May 2018.

[15] Analysis of the Fiscal Policy Institute unreleased data on immigrant business owners. 2016.

[16] New Jersey Policy Perspective. New Jersey’s Immigrants are a Huge Economic Driver, February 2017.

[17] Ibid 16.

[18] Ibid 16

[19] Ibid 16.

[20] Ibid 16.

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