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NJBIA President Says There’s No Money For Minimum Wage Increase

10-23-13

Voters will decide this November if the minimum wage in New Jersey will increase. Supporters say the rate hike would help low-wage workers make ends meet, but opponents have their doubts. President of the New Jersey Business and Industry Association Philip Kirschner told NJ Today Managing Editor Mike Schneider that businesses will not be able to afford the increase.

Even though the economy has been slowly improving from the greatest recession in 80 years, the increase would do more harm than good, Kirschner said.

“This is automatically tied into the Constitution. It raises every year no matter what the underlying economy is. You have to take a pause from something like this. What you would have had five years ago if this had been in effect is people losing their jobs, people going to part-time, people not getting raises and yet minimum wage workers would just continue to get increases as no one else was. So it doesn’t make sense,” Kirschner said.

Minimum wage workers make up just 3 to 4 percent of New Jersey’s economy. Kirschner said the problem is that people who make between $8.50 and $10 are also going to demand raises, which causes a problem because businesses can’t afford that.

“I don’t know where people think the money is going to come from. There is no money tree out there so if you get $2,000 a year increase [per employee] and your sales and revenue are not up, what do people think is going to happen?” Kirschner asked.

Kirschner said that the only way that it will work is if shifts are cut, hours are reduced and prices are raised in order to pay for the $2,000 a year increase. He said 60 to 70 percent of business costs already go to wages and benefits and that percentage would have to increase.