Moving Forward in 2020 on Minimum Wage Fixes

Report to Members

By Michele N. Siekerka, Esq., President and CEO, New Jersey Business & Industry Association (NJBIA) On Dec 31, 2019

On Jan. 1, New Jersey’s minimum wage rose to $11 an hour – a 24% increase over what it was just one year ago. Moreover, despite the fact that most business owners expect the economy to slide into a recession within the next two years, by law, employers must continue increasing the minimum wage every year until it reaches $15 an hour in 2024.

In 2019, NJBIA secured key provisions in the $15 minimum wage law to lessen the impact on small business owners – a longer phase-in period for seasonal businesses and those with five or fewer workers, a separate scale for farm workers and tipped workers, and a training wage. In 2020, we’ll continue fighting for other provisions that we were unable to get incorporated into the original $15 minimum wage law, including an amendment to protect employers from mandated, automatic wage increases during recessions and natural disasters that could otherwise put them out of business.

Both New York and California’s $15 minimum wage laws make these incremental increases during the phase-in period contingent on economic conditions. New Jersey business owners need the same protection.

Consider this: NJBIA’s latest Business Outlook Survey showed New Jersey business owners in 2020 haven’t felt this pessimistic about where the economy is heading since 2009. In fact, the majority (55%) told us they anticipate a recession to occur sometime in the next two years. Yet during this same time period, they are facing significant state-mandated increases in their labor costs.

A common sense proposal (S-3607) by Senator Vin Gopal, D-11, would suspend automatic increases if total state tax revenue dips more than 2%, or when certain decreases occur in seasonally adjusted employment and sales tax revenue. NJBIA supports this legislation because it will protect small employers.

If the Legislature doesn’t act on this bill before the current legislative session expires, we will push for this and three other related bills to be reintroduced in the new session that begins Jan. 14.

S-3483 would provide tax credits to employers who hire workers under age 18 in order to make it financially possible for small businesses to continue to hire teenagers. NJBIA fought to have a provision exempting teens from the $15 minimum wage included in the original 2019 law, but the Legislature didn’t agree to that carve-out. A tax credit now to offset the cost of paying $15 an hour to workers under 18 will incentivize employers, especially those in the tourism industry, to continue to hire teens for seasonal jobs.

Another bill, S-3609, also would help small employers by providing tax credits for qualified costs associated with the minimum wage increase for newly launched businesses with 10 or fewer workers; an existing business with 10 or fewer workers who are offered employer-provided health insurance; or any qualified business with three or fewer workers.

The last bill, S-3608, would establish a task force to study the impact of the phased-in $15 minimum wage on New Jersey businesses. We need data to know if businesses maintain and increase employment levels after these state-mandated wage increases occur or whether employers end up reducing workers’ hours, automate their processing systems to avoid higher labor costs, or simply go out of business.

For now, we know only what New Jersey employers surveyed told us they anticipate doing to deal with higher labor costs – raise prices (32%), reduce staff (21%), reduce employee benefits (15%) and automate to reduce labor costs (13%). None of these scenarios bode well for a competitive business climate, which is why fixing the $15 minimum wage law must be a priority for 2020.

To access more business news, visit NJB News Now.

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