Mayoral Musings: Minimum Wage Increase

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New Jersey has an opportunity—important for our future—to gather data on impacts of the new law.

Very recently, I read an opinion piece in NJ Spotlight by Andrew Sidamon-Eristoff, a former New Jeersey state treasurer. The main point of his piece argues that New Jersey has a unique opportunity with the recent passage of the minimum wage law to gather some incredibly important data on the impacts of the law—whether those impacts are positive, negative, or a mix of both.

As it stands, the minimum wage is $8.85 an hour. Under the new law, the minimum wage will go up to $10 an hour on July 1 and then increase by a dollar an hour every January until it hits $15 an hour in 2024. Seasonal workers and employees at small businesses with five workers or less would reach that mark starting in 2026. For agricultural workers, wages would hit $12.50 by 2024 and the state labor commissioner and agriculture secretary will then have to decide whether to propose an increase to the $15 an hour mark by 2027.

In terms of the types of data to collect, Sidamon-Eristoff suggests several areas, including data on who actually earns the minimum wage (family size, level of education, demographic information, etc.) as well as information on the nature of the employment, the businesses and industries involved, purchasing power in relation to income, price increases, and other similar data.

Beyond that, he suggests that some of the data-gathering needs to focus on related factors, such as workforce participation, inflation, productivity, and whether industries and employers turn toward more automation. He also suggests that areas such as compliance with the law, wage theft, misclassification of employees and similar “work-arounds” be part of the data-gathering process.

In terms of this being an opportunity we need to seize, I have to agree. I say that because what we’ve had surrounding this bill are a lot of opinions, speculations, and projections—but no comprehensive data. There might be some good data from other states and cities out there, but I don’t believe this to be a one-size-fits-all proposition. Each state has its own characteristics and influences, as does New Jersey. Good data might suggest new or different strategies to accomplish what we hope to do through this law.

There are many legitimate concerns and fears from business owners about the impact of this law on their respective businesses. Part of that is a lack of comprehensive data on a range of near-term and long-term impacts. I don’t know what the data would reveal, but in the absence of it, that space gets filled with a lot of quick math that doesn’t seem to benefit the business sector.

On the other hand, you’ve got a segment of the workforce that will readily attest to the fact that $8.85 per hour ($18,000 per year) is nearly impossible to survive on and while they’re certainly glad for increases, they’re also wondering if they’ll be able to sustain enough traction beyond 2025 given the fact that everything from health care to groceries will go up in price.

Economies, local and otherwise, are complex entities with many interrelated parts. Put pressure in one place and we might well be surprised at how that pressure shows itself in other places. If I’ve learned nothing else in government, it’s that there are often unintended consequences, some good and many others not so good. And if we can’t anticipate all of them, at least we can try to measure them and learn from them.

Personally, I have mixed views about the law. Having spent the better part of my professional life working on anti-poverty programs intended to assist and empower individuals and families, I see the benefits of better wages. Yet as an elected official in public life advocating for a prosperous business sector at a time of big box stores, global competition, changing labor markets, and online platforms, I also see the impact of smaller margins and larger payrolls. 

This is about the future. The issue will come again at some point and when it does, it likely won’t be a matter of if, but of how much, to what degree, and how quickly. In order to answer those questions, we’ll need hard data that will allow lawmakers to craft more informed, responsive, and nuanced policy. We won’t have a better opportunity to gather granular data than we do at this current moment and we shouldn’t let it pass.

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