Deal Reached on Gradually Raising NJ Minimum Wage to $15
TRENTON — Gov. Phil Murphy and Democratic legislative leaders Thursday announced they’ve reached an agreement on the details of a plan to raise New Jersey’s minimum wage to $15 an hour by 2024 for most groups of workers. For other workers, it will take longer.
The minimum wage, which rose 25 cents to $8.85 an hour two weeks ago, would increase to $10 on July 1. It would then increase $1 every year on Jan. 1 – to $11 for 2020, $12 for 2021, $13 for 2022 and $14 for 2023 and $15 for 2024.
At that point, annual adjustments to account for inflation required by the state constitution would continue to increase the minimum wage going forward. (Those increases would have eventually pushed the minimum wage to $15 even without Thursday's agreement – but not until 2032, if inflation was a steady 3 percent a year.)
There are some exceptions.
For seasonal workers and employees at small businesses of five workers or less, the base minimum wage would reach $15 in 2026. By 2028, the minimum wage for those workers will catch up with the inflation-adjusted minimum for the larger group of workers.
For agricultural workers, the minimum wage would increase to $12.50 by 2024 and could increase to $15 by 2027 – unless, by the end of March 2024, the labor commissioner and agriculture secretary recommend against going to $15 and the Legislature agrees with their suggestion.
“Today, we are taking a historic step to provide more than 1 million New Jersey workers a stronger foothold in the middle class,” Murphy said. “No one working a full-time join should ever live in poverty. Putting the minimum wage on a clear and responsible path to $15/hour is good for workers, good for our businesses, and good for our economy.”
“This is a progressive plan to elevate New Jersey’s minimum wage to $15 so that workers have a fair wage that allows them to support themselves and their families,” said Senate President Steve Sweeney, D-Gloucester. “This plan will put New Jersey in the forefront of the national movement to build a high-wage economy.
“Since the day I was sworn in as Assembly Speaker, I have pledged to do all I can to make New Jersey more affordable. By increasing the minimum wage to $15 an hour by 2024 for the majority of workers we are achieving the goal of lifting people up to improve their quality of life,” said Assembly Speaker Craig Coughlin, D-Middlesex.
Sweeney said the $12.50 minimum wage for farm workers will be the highest in the Northeast.
Sweeney also said the plan includes tax credits for employers who hire people with disabilities and includes a ‘parity’ provision that will provide additional increases for small business and seasonal workers.
New Jersey Business and Industry Association president and chief executive officer Michele Siekerka said the agreement should include an economic analysis of the annual increases, so that the steps could be frozen during a major recession or after a natural disaster.
"Today's announcement is another hit to small businesses who are absorbing cumulative costs in the form of new mandates, more subsidies for energy delivery and increased taxes as a means to balance the state budget," Siekerka said. "Most small business owners pay what they can afford for their workers. Now that it's a mandate, it is inevitable that some of those with the smallest of profit margins will struggle, stagnate or simply fail."
Progressive activists welcomed the announcement though said the slower pace of increases for farm, seasonal and small-business owners was disappointing.
"Raising New Jersey’s minimum wage to $15 an hour is one of the most consequential, pro-worker policies enacted in the state’s history," said Brandon McKoy, director of government and public affairs for New Jersey Policy Perspective.
Fareeda Stokes, owner of Harkes Realty & Associates in Ewing, supports an increase in the minimum wage. In an interview conducted before the details of the agreement were announced, she was primarily concerned that the increase be gradual so that small businesses could adjust while remaining profitable.
Stokes said she and other property managers have seen increasing numbers of renters unable to afford rent and other necessities, leading to an increase in eviction notices, and that many would-be homebuyers have trouble qualifying for mortgages.
"One of things that we often say amongst ourselves is that everything is going up except for people's wages, and I do believe that it's time to change that," Stokes said.
Assemblyman Hal Wirths, R-Sussex, a former state labor commissioner, said New Jersey is already ranked as among the most expensive places to operate a business.
“The governor right now isn’t being a realist on what the small businesses can pay. I think on many of his plans, he wants to be one of the most progressive and liberal governors in the country. I would gladly give him that award myself right now,” Wirths said. “But I don’t think he realizes the damage he’s doing, and unfortunately … by the time we’re vindicated, it will be too late and New Jersey will be in a recession and you’ll have massive job losses.”
Wirths has proposed increasing the minimum wage to $13 an hour over five years, rather than $15, then providing low-income workers with an additional financial boost by doubling the earned income tax credit, from its current level of 40 percent of the federal credit to 80 percent.
He would also double a business tax deduction for minimum-wage employees at companies with 100 or fewer workers.
“The burden can’t just be passed on,” Wirths said. “It seems like right now the attitude among a lot of my colleagues in Trenton is to pass everything on to the businesses, that the businesses have an endless pit of money.
“This is what they can afford,” Wirths said of a $13 minimum wage. “They can’t give any more. The $15 minimum wage that people are talking about is really an absurd number that will continue to damage our economy and will actually, in my opinion, cause job losses.”