Why the NJ State Legislature’s Bill on $15 Minimum Wage Sucks

Let’s start with the details of the bill being introduced today as laid out in this article. Standard minimum wage goes go to $9.50 on 7/1/2019, $11 on 1/1/2020, then up to $15 by 2024, so I assume $1 per year. That’s a 6-year phase-in. Not ideal (should be 5 years), but the rest of it is even worse.

Youth, farm, seasonal, and workers at businesses with 10 or fewer employees do not get to $15 until 2029. Considering this bill takes effect in 2019, that is an “11-year” phase-in. This creates a permanent underclass of sub-minimum wage workers.

When these carved out groups get to $15 in 2029, the standard minimum wage — assuming 3% inflation per year — will be at $17.39. These carved out groups will be at just 86% share of the minimum wage, meaning their labor is discriminated against. Tipped wage workers will top out at $5.13 by 2024. That’s a $3 increase over the tipped wage, but it increases the gap between tipped and min wage from $6.72 in 2019 to $9.87 in 2024. That’s terrible policy and will exacerbate issues of wage theft & harassment tipped workers face.

I’m still running the numbers but when all is said and done, the number of workers being left behind numbers in the hundreds of thousands. These workers are among the most vulnerable in NJ and have the biggest need for a $15 minimum wage ASAP. This bill is WAY out of step with what other states have done. Massachusetts doesn’t differentiate between small and large employers. California doesn’t even have a tipped wage. And New York, our neighbor and direct competitor, gets to a $15 minimum wage in 2020. This bill puts NJ at a significant disadvantage.

In 2016 the state legislature passed a bill increasing the minimum wage to $15 over 5 years with no additional exemptions. Since then income inequality and poverty have gotten worse, but the state legislature’s commitment to tackling them hasn’t kept up. It’s incredibly disappointing.

After Brandon Crunched Some Numbers:

Here’s the breakdown of private establishments in NJ by the number of employees for the 2nd quarter for 2018, sourced from NJ State Data Center. A quick look shows that firms with nine or fewer employees make up 77% of private employment.

I don’t have the discrete data to dis-aggregate and figure out how many firms have 10 employees to fully round out the impact of the carve-out in this bill, but suffice to say we’re talking more than 3/4ths of the state’s private employers are not getting to $15 until 2029. Not good.

The data the NJ State Data Center does provide, though, shows that firms with 9 employees or fewer have a total of 208,407 workers. NJPP research shows a clean $15 minimum wage bill with no carve outs would help 1.2 million workers. This current bill takes a big chunk out of that. In addition to the 208,000 small business workers, there are about 193,000 tipped workers, 21,000 workers under 18, and up to 30,0000 farm workers. There’s going to be overlap in these groups, but the rough map pegs the sum at 452,000 workers. That’s ONE-THIRD of the total workforce that is being made 2nd class citizens in the state. That’s a far cry from legislative leadership’s stated goal “to take meaningful action to help the hundreds of thousands of New Jerseyans who are struggling”.

The understanding all along has been that the $15 minimum wage would phase-in over 5 years. Extending that phase-in to 6 years means, compared to a 5-year phase-in, minimum wage workers will take home $811.20 less on the year. Extending to 11 years means a loss of $4,481.18. That’s a big loss.

We live in an era of increasing income inequality, where the federal government is prioritizing the wealthy & well-connected, balancing tax breaks on the backs of low and middle-income workers. Understanding the dangers of economic security and the large number of New Jerseyans that suffer from it, this bill doesn’t meet the standard of tackling poverty and income inequality in the Garden State. It fails to prioritize the neediest and most vulnerable among us. The wonderful @UnitedWayALICE report released recently showed that 38.5% of NJ households are effectively working poor. They struggle to reliably afford their needs and have trouble getting ahead. That’s 4 out of 10 of our fellow New Jerseans who need better wage policy.

The case has been made repeatedly on the need for $15 minimum wage for all workers. The bill introduced today doesn’t address the needs of NJ’s working poor and leaves them behind to continue to struggle.

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