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www.eanj.org

N.J. Minimum Wage Constitutional Amendment

John J. Sarno, Esq.Employers Association of New Jersey

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Question #2 Public

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National Public Opinion76% of Americans would vote to raise minimum wage to $9/hr.

with automatic CPI Increases58% Republicans 43%76% Independents 71%91% Democrats 91%

Gallup (Nov. 2013)

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Campaign Spending (Approximate)

Proponents - $1.3 millionOpponents - $1 million

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Typical Statements“Increasing New Jersey’s minimum wage will give nearly half a million working New Jerseyans a crucial leg up while pumping hundreds of millions of dollars into the state’s economy.”

Gordon Mac InnesNew Jersey Policy Perspective

“If this is passed, the minimum wage working poor gets helped. But it would be detrimental to the business community and impede our state to come out of its fiscal problems”

Thomas BrackenNJ Chamber of Commerce

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The Vote61% - Yes39% - No

Voter turnout – 39.6%

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Where it Stands NowFederal Minimum Wage (current) - $7.25N.J. Minimum Wage (current) - $7.25N.J. Minimum Wage (Jan 1, 2014) - $8.25

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As of 201318 states and DC higher than federal standard23 states (including NJ) same4 states below federal standard5 states with no minimum wage

Washington has highest minimum wage $9.19/hr.

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Fair Labor Standards Act25 cents/hr. – 1938

United States v. DarbyU.S. Supreme Court (1941)

Federal minimum wage applicable to employers that engage in interstate commerce

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Cost of Living Increases Beginning Sept. 30, 2014 and on Sept. 30th of each year thereafter

Consumer Price Index (CPI-W) calculated by the federal government for Northeast Metropolitan Region

Effective each January 1st

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Consumer Price Index

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State Minimum Wage – Constitutional Amendment

FloridaColoradoNevadaOhioNew Jersey

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State Minimum Wage Increase - CPI

Arizona NevadaColorado OhioFlorida VermontMissouri WashingtonMontana New Jersey

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Setting Minimum Wage Through Legislation

Last raised in 2005 to meet federal standard of $7.25

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N.J. Minimum Wage Advisory Commission

“New Jersey should set the minimum wage at $8.25 per hour immediately and should subsequently provide an automatic cost-of-living increase of the minimum wage, indexed to the Consumer Price Index”

2007

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Minimum Wage and Inflation

If minimum wage had kept up with inflation it would be $17/hr in 2013 – N.Y. Times (Nov. 11, 2013)

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Commission Members David J. Socolow Chairman Ex-Officio Commissioner, NJ Department of Labor and Workforce Development

Charles N. Hall, Jr. State AFL-CIO Rep. 12/22/2009 President, Local 108, RWDSU/UFCW

Philip Kirschner Business Rep. 1/12/2010 President, NJ Business and Industry Association *

Eric E. Richard State AFL-CIO Rep. 12/22/2009 Legislative Director, State AFL-CIO Rep

JoAnn Trezza Business Rep. 1/12/2010 VP, Human Resources, Arrow Group Industries

* Dissenting

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Legislative Action and Governor’s Veto

2012 – Legislature passed bill consistent with Commission’s recommendation

2013 – Conditional veto Phase-in $1/hr increase over 3 years with no automatic cost of living increases

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Hourly Wages By County5 highest: Hunterdon, Somerset, Morris, Burlington, Bergen

5 lowest: Atlantic, Camden, Salem, Essex, Cape May

Highest percentage of “Yes” voters – Camden, Essex, Hudson

Highest percentage of “No” votes – Cumberland, Cape May, Monmouth

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Immediate Impact – January 1, 2014

Full-time worker, 40hr/week - $15,080/year

2014 - $17,160/year

Office of Legislative Services predicts 2.8% in 2015 - $480.50/year

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NJ Minimum Wage Workers (16-years and older) - 2013Office of Legislative Services:

41,000 Earn minimum wage58,000 earn between $7.25 - $8.00No informative available - $8.00 – $8.25

N.J. Policy Perspective:241,000 earning between $7.25 – $8.25188,000 earning between $8.25 - $9.25

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Amendment’s ApplicabilityEvery employer (including public employers)

If federal minimum wage is higher than state wage, state wage automatically increases

Does not amend N.J. Wage and Hour Law

57,000 paid less than minimum wage (not subject to minimum wage) – Learners apprecentices, students, trainees

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Industries with Most Minimum Wage Workers

Leisure and Hospitality (includes restaurants and food service)

Retail

Other Services

Fast – Food Industry

Median hours/week - 30Median wage/hr - $8.69

52% of families of front-line, fast-food workers rely on public assistance - $7 billion/year

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Minimum Wage and Other Wages

Wage Compression

John is hired in 2013 at $7.72/hr.Expected increases 2014 $7.95/hr. 2015 $8.19/hr.

Jane is hired in 2014 at $8.25/hr.

Do you raise John’s wage?

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Impact on State Average Weekly Wage (SAWW)

UI, STD and FLI Benefits

Eligibility is based on 20 base weeks (20-times the minimum wage)

2013 base week is $145/week2014 - $165/week

Higher benefits and employer taxes over time

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Overall Economic ImpactDavid Card and Alan Krueger from Princeton University measured impact of $4.25 - $5.05 increase in 1992 (18%)

Based on 410 fast-food restaurants in South Jersey

At the time, $5.05 was highest in the country

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High-wage stores (paying $5/hr or more)

Low-wage stores (paying the $4.25/hr minimum wage)

Employment “contracted” at high-wage stores due to worsening economy (0.5% per store)

No impact on free and reduced-price meals to employees

Some evidence of slight price increases

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No evidence that part-time workers replaced full-time workers

Employment “increased” at low-wage stores

Increased wage may have induced older, more skilled employees to take fast food jobs

Result may be specific to fast-food industry

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Don’t ForgetPlease take the time to fill out EANJ’s Wage Surveys

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Minimum Wage and Public Assistance

Supplemental Nutrition Assistance – eligibility at 30/ hrs/week at minimum wage (A parent with 2 children making minimum wage receives $276/month)

NJ FamilyCare – Parents with incomes up to $31,322 for family of four; Adults without children $15,282

Housing Assistance – Low-income individuals whose housing costs exceed 30% of household income

Collectively worth $18.62/hr if eligible for all maximum assistance – Cato Institute

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Thank You

Questions?