Minimum Wage Hike Means Maximum Pain, NJ Biz Leaders Claim [AUDIO]
Garden State business leaders warn of very bad things to come if voters approve a ballot question this November that would amend the constitution to increase the state's minimum wage from $7.25 an hour to $8.25 and then adjust it annually based on the rate of inflation.
Citing a new study they say as many as 31,000 jobs could be lost in New Jersey in the next decade.
"The difference between this initiative and previous increases is that it raises the cost of labor every year forever regardless of business conditions," says National Federation of Independent Business (NFIB), New Jersey director Laurie Ehlbeck. "The bottom line is that New Jersey will have many fewer jobs and a smaller economy if this Constitutional Amendment passes."
The research was performed by the NFIB Research Foundation. The study makes forecasts based on three scenarios determined by inflation:
· Zero (0) percent inflation - 13,679 jobs lost by 2023; Economic output lower by $1.5 billion
· Two (2) percent inflation - 22,695 jobs lost by 2023; Economic output lower by $2.8 billion
· Four (4) percent inflation - 31,797 jobs lost by 2023; Economic output lower by $4.2 billion
"An annual increase based on the consumer price index is a bad idea for everyone. It makes it difficult for businesses to plan year to year and it could lead to raises in years when the economy is suffering," says Tom Bracken, president and CEO of the New Jersey State Chamber of Commerce. "Furthermore, making it a ballot question in the form of a constitutional amendment sets a bad precedent for resolving contentious issues that should be decided by our representatives in Trenton."
In the past two years many states have raised, or are currently debating whether to raise, their minimum wage rates. Only a handful of states have tied increases to inflation and New Jersey is the only state to be considering a Constitutional Amendment for that purpose.
"The retail industry will be hit harder than most other sectors and the inflationary effect will ripple through the economy, increasing prices for consumers," John Holub, president of the New Jersey Business and Industry Association.
Supporters of the wage increase say research over the past 15 years, including studies comparing job growth trends in neighboring counties across state lines with different minimum wages, have found that higher minimum wages do not result in job losses. They say the research shows that these trends are the same even for minimum wage increases implemented during weak economic periods, such as the 2009 federal minimum wage increase.
Eight states raised their minimum wage effective January 1, 2012, and seven of those states had a lower unemployment rate than they did prior to raising the minimum wage. This does not prove that raising the minimum wage directly leads to a decrease in unemployment, but it could be evidence that raising the minimum wage is not an instant job-killer.