Minimum wage hike could hurt low income earners

The minimum wage in New Jersey is scheduled to increase to $15 an hour by 2024, but the boost might possibly hurt some of the lower income workers it is intended to help. While they were certainly benefit in many ways from higher wages, the increased income could make them ineligible for some of the government programs they currently receive, according to NJ Spotlight.

Eligibility standards for federal programs like Head Start are set at the federal level without taking into consideration the high cost of living in states like New Jersey meaning that the minimum wage increase could push people past the income threshold without providing enough money to allow families to supply the missing services themselves; about 15,000 children are currently participating in the Head Start program in New Jersey. The current federal standard for eligibility is $21,330 (assuming a single parent and two children) which comes out to around $10.25 an hour for a 40 work week.

The one dollar an hour increase on July 1st would still leave those people eligible (the minimum wage rises to $9.85 then) but, if federal standards remain the same, the next one dollar an hour increase will knock them out of eligibility; in that scenario, after accounting for higher childcare costs for the family after they lose Head Start, they might wind up with less money than they had before the minimum wage bump.

State lawmakers are aware of the potential problems and are holding hearings to try to avoid them. The NJ Spotlight article goes on to report there is legislation to form a “Task Forces on Wages and Benefits” to study the problem but it appears that a large part of the solution would have to come from the federal government.

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