BUSINESS & ECONOMY

$15 minimum wage law could have unintended consequences

BY Brenda Flanagan, Senior Correspondent |

Boisterous union members and advocates cheered as Gov. Phil Murphy signed the $15 minimum wage bill into law. More than a million people will see their pay rise over the next five years, from $8.85 to $15 an hour.

“Raising the minimum wage will give my family and millions of others more opportunities in New Jersey,” said Make The Road New Jersey youth leader Giovana Castaneda.

The irony? For workers who depend on government benefits, like Head Start which serves 15,000 kids in New Jersey, higher wages could be a double-edged sword that shreds their safety net. That’s because more than 70 percent of Head Start families work, and a minimum wage of just $10 an hour makes a single mom of one child earn too much to be qualify, according to New Jersey’s Head Start president.

“With the new minimum wage, as it increases more and more, families may not be eligible for Head Start anymore,” said Bonnie Eggenburg, president of the New Jersey Head Start Association. “It also may affect some of their eligibility for other resources that they are a part of, whether it’s SNAP, food stamps, WIC. Eventually some families may find that those are also impacted.”

Head Start, a federal program, won’t dump kids who are already enrolled, but it would bar new families from signing up. One solution: offering more state assistance.

“We could look at expanding the earned income tax credit to people who don’t currently get it. We could also look at child care credits, and up the income limits on those,” said Ann Vardeman with New Jersey Citizen Action.

It’s an issue advocates will push lawmakers to address in the next state budget.

“To ensure that families aren’t booted off unnecessarily, that they make increases where necessary. So this is something they’ll be able to start tackling as early as this March,” said New Jersey Working Families Alliance Executive Director Analilia Mejia.

Not one Republican backed the law. They’re also pushing for remedies — for example, an off-ramp to stop automatic minimum wage increases if the economy tanks, plus a fix for businesses that hire teens. Orchard stand owner and Warren County Clerk Holly Mackey shared her thoughts with State GOP Chairman Doug Steinhardt.

“There are limits and hiring 16-year-olds at $15 an hour, I don’t see how we’re going to be able to make it work. Honestly, and I’m not being dramatic or anything like that, I just don’t see it happening,” said Mackey.

“We’re doing a lot with this piece of legislation. If there’s any unintended consequences — which is not unusual when we do legislation — we’re going to have to make some corrections, whether they’re tax credits or whatever,” said Senate President Steve Sweeney.

The law create a task force on wage increases and state benefits. It will write an annual report examining whether the wage increases hurt the families that they’re intended to help.