NJ Wage Hike Proposal – Will Employers Feel the Burn?
Presidential candidate Bernie Sanders has been outspoken in his support of a $15/hour national minimum wage. However — at least for private employers – such a change can come only through joint action by both Congress and the president. Since the last increase to the federal minimum wage in July 2009 (to $7.25/hour), minimum wage issues have been decided at the state level. Given the continuing partisan gridlock in Washington, it seems like a good bet that regardless of the outcome of the presidential election, the minimum wage will continue to be a state-by-state issue. This means that New Jersey employers should keep an eye on events in Trenton as well as in Washington.
New Jersey’s Current Minimum Wage ($8.38 per hour)
New Jersey’s current minimum wage is the result of a 2013 constitutional amendment approved by the state’s voters that raised the minimum wage by one dollar in January 2014 and tied future increases to inflation. The amendment triggered increases for the first two years. However, there was no increase in 2016, prompting the legislators who sponsored the original measure to call for further action.
New Joint Bill Announced
Last Friday, Democratic legislators who control the State Assembly and Senate announced a combined proposal to raise the minimum wage to $15 an hour over the next five years. The proposal would raise the minimum wage to $10.10 in its first year, then increase the rate by one dollar plus the annual inflation rate each year, until the $15/hour rate is reached.
The new bill seems destined for Governor Christie’s veto pen. However, top Democrats in Trenton have already promised that if Christie exercises his veto, they will convert the proposal to a constitutional amendment and put the question before the voters in the November 2017 general election. Democrats currently hold the 60% majority in both houses that would be necessary to propose a constitutional amendment, and are expected to maintain that majority until 2017. Unfortunately for the governor, his veto cannot trump a constitutional amendment.
This sets the stage for a statewide vote on the issue of the minimum wage, requiring a simple majority. In 2017, New Jersey voters will select a new governor as well as legislators. A strong turnout at the polls could benefit a wage increase proposal. Notably, the 2013 ballot measure passed with over 60% of the popular vote (mirroring Governor Christie’s re-election margin of victory that same year).
Some commentators estimate that a $15 minimum wage would result in a raise for about one-third of New Jersey’s workforce. Employers and business groups are concerned about the impact of the proposal on small and mid-size business and nonprofits (which are not exempted from the new proposal). Labor costs could become a factor for New Jersey businesses considering relocation. The highest current minimum wage rates are $10.50/hour in Washington D.C. and $10/hour in California and Massachusetts, and an incremental minimum wage increase appears to be imminent in Oregon. However, closer to home, rates are lower: $9.00 (NY), $8.25 (DE) and $7.25 (PA).
New Jersey employers who are concerned about the impact of the state minimum wage on their businesses should keep a close eye on these developments, as they may need to make their case directly to the voters next year. HR Legalist will continue to track this proposal and other trending wage and hour issues, such as paid sick leave and overtime, through the 2016 election and beyond.