2016 Off To a Dreadful Start for Small Businesses in New Jersey

By Laurie Ehlbeck

We haven’t even made it out of the first quarter of 2016 but there is already plenty for small businesses in New Jersey to be concerned about on the upcoming legislative calendar. Senator Sweeney and Speaker Prieto seem determined to continue to challenge the economic stability of our state by introducing bills to nearly double minimum wage, mandate all employers provide sick leave and attempt to convince the voters that a pension payment must be constitutionally required. Sweeney and Prieto are creating what may ultimately amount to the most hostile session in state history in terms of damage caused to the small business community.

When it comes to minimum wage it is imperative that as a society we are honest about what it truly is. Minimum wage is not now, nor has it ever been, a vehicle in which to feed a family 4. It is an entry level wage that is earned almost exclusively by teens and young adults seeking work experience and a smooth transition into a career. Raising the minimum wage again, especially to the rate of $15 will have one direct effect. It will result in a loss of job opportunities for those seeking to expand their skill sets. It will not alleviate poverty. It will not empower the middle class. It will leave teenagers wondering what to do after school.

According to a recent study, 63 percent of workers who earn less than $9.50 per hour are the second or third earner in their family and 43 percent of these workers live in households that earn over $50,000 per year. In spite of what the proponents would have you believe, minimum wage earners are not an impoverished, disenfranchised group of struggling single mothers just trying to make ends meet. Most are teenagers from middle class families and many more are sharing the responsibility of providing for their families, not breaking under the burden of putting food on the table.

So why is it that in spite of repeated attempts by economists and researchers to demonstrate the devastating impact that an increase will have on employment are we being bombarded by calls to raise the rate at all levels of government? Because politicians like Sweeney and Prieto are betting that the general public won’t pay attention to the details. They are attempting to galvanize a group of constituents that don’t care for economic projections and hoping that none of us notice the increased cost of goods and services that small businesses will be forced to pass on to consumers.

The same applies to mandating paid leave. On its surface, it sounds innocuous enough. Supporters declare that everyone should be entitled to a few paid days off, that it will keep sick people at home and somehow help those being taken advantage of by their employer. Here’s the thing, most employers already provide their employees with paid time off and mandating a certain amount of time be designated “sick” is actually going to reduce that benefit. Small businesses can only afford benefits package that make sense for their place of business and if they had the ability to offer more days off, they would, without a bill running through state government.

The reality for New Jersey small businesses is that most owners compete for qualified employees by offering flexibility to balance family and work and every time Trenton gets a bright idea to intervene in the day to day operation of small businesses, employers and employees suffer because they lose the mutually beneficial arrangements and flexibility that only a small business can offer.

Small business is obviously concerned with both paid leave and minimum wage proposals because of the direct impact that it will have on their costs to remain operational in a state that is becoming more notorious for outward migration than economic innovation. We are in an incredibly precarious position at this point because of these impending bills but that position will pale in comparison to the consequences of a constitutional amendment requiring pension payments. Mandating the payment does absolutely nothing except tie the hands of future law makers. It puts pension payment spending over every other type of spending and does nothing to address the systemic failures of the pension system that continue to burden state tax payers.

Lawmakers must understand that their feel-good measure of raising the minimum wage under the false pretense of advocating for the poor is nothing more than a self-satisfying gimmick that will ultimately result in fewer jobs for the state with one of the highest minimum wages in the nation. Mandatory paid leave is the product of a partisan public relations campaign with little basis for necessity and absolutely no regard for the impact it will have on both employees and employers. It’s time to roll up our sleeves and propose legislation that will reduce regulation and lessen the financial burden to run a business. In doing so, small business owners will pass on the savings to their employees without being mandated by unnecessary laws.

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Laurie Ehlbeck is the New Jersey state director of the National Federation of Independent Business (NFIB)

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