No evidence of negative fallout from N.J.'s higher minimum wage

Even as New Jersey prepares to raise its minimum wage by 13 cents, economists and business groups are still sorting out the impact of the $1 hike in 2014.

Groups that opposed last year's increase to $8.25 argue that the extent of its harm cannot yet be determined - in part because the wage will keep rising. A boost to $8.38 takes effect on New Year's Day, thanks to a now-automatic annual cost-of-living adjustment that voters approved in 2013.

Those in favor of the higher wage say it appears to have done little damage to the state's economy - and has possibly benefited it, with low-income workers believed to be spending the extra money in their paychecks.

"It's too early, probably, to say that there has been no effect on employment levels," said Gordon MacInnes, director of the New Jersey Policy Perspective think tank. "But there certainly have not been fast-food franchises closing or significant layoffs in low-wage positions."

James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said it would be hard to distinguish the impact of the higher wage from other factors bearing on New Jersey's economy, including the thousands of job losses last year in Atlantic City.

"To try and untangle those kind of special effects and distinguish their impact from the minimum-wage impact, I think is beyond most of us," Hughes said.

New Jersey was on track to add 34,250 private-sector jobs in 2014, Hughes said - growth he called "anemic." If the state had matched the national job-growth rate, it would have added 84,000 jobs last year, he said.

But the decline in the state's unemployment rate in 2014 - a change that nearly matched the fall in the national rate - suggests that some alarms opponents of the higher wage sounded were unfounded, said Steven Pressman, a professor of economics and finance at Monmouth University.

"The fear this is going to lead to large job losses doesn't seem to have been true," Pressman said.

New Jersey's job growth last year had tracked the national rate, he said, using data from the federal Bureau of Labor Statistics that comes from surveys of households, not business payrolls.

He also cited New Jersey's labor participation rate, which increased 0.1 percent in 2014 using seasonally adjusted data.

A higher minimum wage is "an inducement for people to go out and look for work," Pressman said.

New Jersey is one of 20 states that will raise the minimum wage Thursday, according to the Economic Policy Institute. A 21st, New York, raised its wage Wednesday.

The federal minimum wage is $7.25, which is also the minimum wage in Pennsylvania. President Obama, who has called on Congress to increase the wage, last year raised it to $10.10 an hour for workers under new federal contracts.

Opponents of New Jersey's increase say some businesses have been dissuaded from hiring workers - and would remain so. A ballot measure voters approved in 2013 not only wrote the increase into the state constitution, but also provided for automatic annual adjustments tied to the national Consumer Price Index.

On Thursday, 130,000 people will have their wages raised to $8.38 an hour, according to a report from the New Jersey Policy Perspective released this week. An additional 40,000 workers earning between $8.38 and $8.51 will likely see a bump from the increase, the group said.

Before last year, New Jersey's minimum wage was last increased in 2009 to match the federal minimum.

For businesses, "the thing they can't plan for every year going forward is what the [Consumer Price Index] increase could be," said Tom Bracken, president of the New Jersey Chamber of Commerce.

After one year, Bracken said, "it's impossible to say the impact of that. But it's going to happen year after year after year."

Bracken also argued that the state's rising minimum wage could deter businesses from moving to New Jersey.

"It's just one more thing that has been piled on the business community that's negative," he said.

For low-wage workers, the increases still aren't enough to survive in high-cost New Jersey, said MacInnes, of the New Jersey Policy Perspective. In a report released this week, the group said the wage needed to support a "survival budget" in New Jersey was $13.78 an hour, a calculation that accounts for housing costs.

The report says New Jersey should increase the tipped wage - $2.13 an hour, though employers are required to make up the difference between workers' tips and the minimum wage.

It also calls for the state to allow municipalities to raise their minimum wages - a route the state's top elected Democrat indicated he was unlikely to endorse.

"It was the right thing to do it the way we did," said Senate President Stephen Sweeney (D., Gloucester), who has championed the issue.

Of the wage, Sweeney said, "I would love for it to be more, but we had to start someplace. And I think this is a reasonable starting place."

Sweeney said the measure had benefited the economy "by giving people on the lower end of the spectrum more. . . . It gets right back into the economy."

He also said, "I'm just seeing more people being hired."

The wage increase has affected the hiring decisions of John O'Connor, who runs an auto repair shop in Morristown. O'Connor, who has a staff of five, now feels pressure to employ only workers who don't require supervision - unlike the high school students he previously hired at minimum wage while he trained them.

"If the economy's tight, everybody's got to produce," he said.