How you know minimum wage increase was a success

Editorial

By ROI-NJ Editorial Board
New Jersey | Oct 17, 2017 at 11:49 am

Come January, New Jersey’s minimum wage will be 19 percent higher since a 2013 constitutional amendment raised the wage by $1 an hour and tied automatic future increases to inflation.

The wage was $7.25 in 2013. The amendment raised it immediately to $8.25, and inflation-pegged increases raised the wage to $8.38 in 2015 (where it remained through 2016) and then to the current rate of $8.44 at the beginning of 2017. Now, thanks to increases in the federal Consumer Price Index over the last 12 months, the state’s minimum wage will increase another 16 cents in 2018, to $8.60.

So, is New Jersey’s approach a success?

Well, neither side in this debate is entirely happy — which just might mean that the state has reached a reasonable compromise on an issue marked by irreconcilable differences.

Critics of any government-mandated wage, let alone automatic increases, remain unhappy, of course. They note, not entirely incorrectly, that telling private businesses what they must pay workers is a drag on productivity and ultimately harms workers as companies move or cut jobs rather than absorb increased labor costs.

Proponents of a so-called “livable wage” note, not entirely incorrectly, that the actual increases in New Jersey’s minimum wage have been minuscule and that even the 2018 rate — which would amount to a yearly salary of less than $18,000 — is not nearly enough to live on in an expensive state such as New Jersey. Many of these folks, including Democratic gubernatorial candidate Phil Murphy, support a $15 minimum wage. A higher wage, some note, will grow the economy by giving workers more money to spend.

Both sides can point to studies “proving” their own points. And, as usual in American politics, each side avoids even asking, let alone trying to answer, the other side’s uncomfortable questions:

Is it really government’s job to set a wage floor?

Certainly, living in New Jersey while making only the minimum wage is a hard, unpleasant, soul-draining way to live. But doesn’t it make more sense to focus on increasing the state’s economy overall?

Or … with the top 1 percent making out like bandits these days, isn’t it unconscionable to stand by and do nothing while companies ask more and more of employees while paying them a wage that guarantees only continued poverty?

To be fair, these are questions that will never be answered in a way that satisfies everyone. So, maybe New Jersey’s approach — a compromise reached when Gov. Chris Christie refused to sign legislation mandating an immediate, significant increase — is the best way to handle this contentious issue.

Now, wages are rising, however incrementally, for the state’s lowest-paid workers. And sensible, moderate business leaders, such as Michele Siekerka of the New Jersey Business & Industry Association, support the approach. “When the CPI increases, it means the state is stable enough for a commensurate increase. That slow and steady rise is a big key to allowing businesses to be prepared for it and to absorb the increase,” Siekerka told NJSpotlight.

Yes, New Jersey may have actually gotten this one right.