BUSINESS & ECONOMY

NJ Groups Debate Over Effects of Raising the Minimum Wage

Nearly 1 million New Jersey workers earn a minimum wage of $8.38 an hour. That’s $17,000 a year. Hardly a living wage, according to Democrats who’ve proposed raising the minimum wage to $15. Businesses say it would force them to raise prices and cut payrolls and Gov. Chris Christie says he’ll veto it. NJTV News Anchor Mary Alice Williams recently invited New Jersey Working Families Executive Director Analilia Mejia and the New Jersey Business and Industry Association President and CEO Michele Siekerka to help hash out the issues.

Williams: Thank you ladies for being here. Analilia, let me start with you: $8.38 an hour, we just raised it to that. Raising it to $15 would be an onerous 79 percent hike. Why should we do it?

Mejia: So, we’re talking about raising workers to $15 over the course of about six years. It would give both employers and the local economy some time to adjust. The reality is that we’re talking about, like you said, close to a million workers, the majority of which are actually adults. Ninety percent are 20 years or older, 44 percent are over the age of 40. The impact that this would have on working families is enormous.

Williams: But what would be the impact on business?

Siekerka: Oh it’s a challenge. To absorb an 80 percent increase in the cost of doing business, whether it’s in one year or five, the pace is too fast for business to keep up. What we’re doing actually is artificially inflating the value of a job without taking into consideration the economic impact. The economy drives the value of a job, the skills that you bring to it, how much you can charge for a product and a service and all your other expenses.

Williams: But we have raised the minimum wage since 2013 a couple of times. Do you have any documentable evidence that it’s been harmful to business?

Siekerka: Well we’re just getting used to it now. Businesses are settling in. It was the past two years — and remember this year it didn’t increase. So businesses have leveled off on a very small increase. That was only about a 16 percent increase. We’re talking about almost an 80 percent increase.

Mejia: But if you look at a very comparable increase that has gone through — in Seattle for example, a year after the initial increase the local employers and opponents argued that it would result in an increase in prices or rent or retail cost. When in fact a year later we found that it doesn’t. A recent study has shown exactly that. I will also say that the reality is that productivity has gone up for American workers and compensation has consistently gone down. What we’re talking about is an equilibrium in a consumer driven economy in which consumers have a little bit more pocket money, means more money into our local economies.

Siekerka: Well the issue is they’re not going to have that extra pocket money because the cost of the product or service is going to rise along with it. The only way you absorb is you either cut your expenses or you increase your revenue. Now, you talk about Seattle. Seattle’s just at $11. Economists on both sides of the political platform, they all say concern about undesirable and unintentional consequences of getting to $15. No one, no one has studied the economic impact of $15. There is one study out there that suggests that when you increase the wage by 10 percent that represent a 0.3 to 0.5 increase in the loss of jobs. Times that by eight and you get to 4 or 5 percent.

Williams: There are three or four cities in New Jersey right now whose public workers are making $15 an hour. Have you seen that happen there?

Siekerka: We haven’t had a chance to see the impact of it yet. It’s brand new. That is brand new and now these are taxpayers paying so I’m still trying to figure out where the taxpayers are saying how are we absorbing that at the local level — given our lack of cost and affordability.

Mejia: So at the local level we actually laud the efforts of municipalities who have stated that they’re not going to publicly subsidize poverty level jobs. I think that other municipalities and counties should also follow suit. I will say again, that the studies that are out there — Seattle for example raised to $11; in New Jersey we’re talking about an initial raise of $10.50. We’re also talking about, again when you look at the number having one out of four New Jerseyans having received an increase in their minimum wage or in their wages, there is no way in an economy that’s 70 percent dependent on consumers on purchasing power that this isn’t positive for local economies…

(Indistinct Arguing)

Williams: I want to go back to what you said about taxpayers. Right now taxpayers are planting the income of people who are making the minimum wage through federal programs like SNAP and food stamps, those things. So, wouldn’t it be better if they were able to pay for themselves?

Siekerka: There is no evidence out there right now that $15 — or anything short of $15 — would get people off those programs. Actually, the concern is to the contrary — that they will become ineligible to those programs and still not be able to afford. So, Mary Alice what we’re missing in the equation is number one let’s look at affordability in New Jersey, let’s start talking about how do we address affordability so all New Jerseyans can be here. Number two, let’s put that money into workforce development. You know, an entry level position is meant to be entry level but let’s give them skills to advance.

Williams: But who pays for workforce development, the job training? Is that government?

Mejia: We all pay for —

Siekerka: But that’s what I’m saying, let’s making that investment for workforce development. You know what as someone growing up isn’t the American dream to get a starting job to increase your skills and to go up the corporate latter? Whether that means in retail or business?

Mejia: We are increasingly in an an economy… Here’s the reality. We no longer have a manufacturing driven economy. We have a retail service sector economy in which food service, retail establishment, local establishments are where people are employed.

Siekerka: Well that’s because we’ve driven out the manufacturing jobs because of lack of affordability in the state of New Jersey.

Mejia: Actually trade agreements have driven a lot of manufacturing jobs and that’s actually something that’s been studied and looked at. I will say that the reality is that if the fastest growing job sectors are those in which we have the lowest level jobs — or the lowest level compensation — increasing that compensation can only benefit our local economies. And there are studies…

Siekerka: But how do we afford the products and services in retail? How much are you going pay for the pizza when you’re paying $15 an hour for the counter person?

Mejia: How can we continue to afford to have an entire workforce? Again a million workers who are forced into publicly subsidized programs in order to make ends meet?

Siekerka: Let’s make it more affordable for them to live in the state of New Jersey, Analilia.

Williams: Thank you ladies, thank you.

Siekerka: Thank you.

Mejia: All right, thank you.