On Jan. 1 roughly 176,000 minimum wage workers in New Jersey will see a modest hourly pay increase based on the rate of inflation. On Monday, New Jersey Policy Perspective (NJPP), a Trenton think tank, released a brief detailing the benefits of the wage hike while the New Jersey Business and Industry Association (NJBIA) countered with the downside.

Minimum wage
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"The increase itself is pretty modest. It's 13 cents which is 1.59 percent," said NJPP Deputy Director John Whiten, the author of the brief. "While it's a modest amount, it's pretty important to somebody making that little of a salary."

According to the NJPP brief, before voters approved the minimum wage increase with annual adjustments based on the rate of inflation, the true value of state's minimum wage fell every year as costs of living increased and the wage stayed the same.

The annual increase is what led the NJBIA to oppose the increase.

"That's a legitimate concern that businesses have. How will they budget for an unknown amount of inflation each and every year," asked NJBIA Assistant Vice President of Employment and Labor Policy Stefanie Riehl. "Where businesses can afford to pay workers more they will pay workers more. No business wants to lose a good worker."

The increase will result in an estimated $55.1 million in new wages paid in 2015 and most of that will go to workers in low- and moderate-income families and the bulk of that extra cash will be spent, Whiten said.

"We're talking about maybe a $35 million economic impact in 2015," Whiten estimated, although he insisted the wage increase is not enough to really help families trying to make ends meet in the Garden State.

"If we thought for a second that this would result in a positive economic climate there would be no reason to oppose it," Riehl explained.

The NJPP report recommended three policy changes to help the state's hundreds of thousands of low-wage workers:

  • Increasing the federal minimum wage;
  • Giving tipped workers in New Jersey the same wage floor as other low-wage workers;
  • Allowing local governments in the state to enact higher minimum wages than the states.

There is a bill (A-3912) that would give municipalities the authority to enact their own minimum wage increases, but the legislation has not yet had a committee hearing on the proposal.

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