How High Will NJ Minimum Wage Go?

By Matt Rooney | The Save Jersey Blog

Minimum Wage SweeneyThe only honest answer is “who knows,” Save Jerseyans, after our fellow voters adopted an insane ballot measure to constitutionally tether New Jersey’s minimum wage to the Consumer Price Index (CPI) on November 5th.

Nine other U.S. states — Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Vermont, and Washington — have done the same thing.

Consider the example of Arizona; that state’s voters approved a similar initiative to our own in 2006 by which the minimum wage rose to $6.75 per hour beginning in 2007.

For 2013 alone, the Arizona minimum wage will increase by 15 cents to $7.80, as did Montana. Ohio passed an increase in the same year as Arizona; that state’s minimum wage will tick up 10 cents in 2014 to $7.95. Oregon’s is set to rise next year by 15 cents.

All of this may seem like pennies on the dollar to the non-business owners in our audience, but for someone operating a successful business that employees a couple dozen low or unskilled employees, these CPI-indexed minimum wage arrangements are tantamount to unpredictable tax hikes on an annual basis. Unpredictability is a bad thing in the business world; businessmen and women naturally respond by hedging against risk.

Do the math for a restaurant where many minimum wage workers are employed.

If your local burger or pizza joint hires 18 young adults to work at the minimum wage in Ohio, a 10 cent per hour increase works out to $3,744.00 more per year. Food service industry margins are notoriously narrow, sometimes between 2 or 4 cents on the dollar, translating to layoffs and reduced shifts when labor costs spike. It happens every time!

And it’s not hard-working parents of five kids who are bearing the initial brunt of this failed social engineering experiment. As we’ve explained many times here at Save Jersey, the overwhelming majority of minimum wage workers are young adults, unskilled workers who move up quickly, or household members bringing in a secondary income. My prediction? The economy will always cycle up and down over time, but going forward, you can expect to see a much less robust summer employment picture for students in New Jersey. Expect to see less kids working very different shifts next summer at the boardwalk concession stands and eateries, folks.

There’s simply no limit to this damn thing thanks to voters who fell for it hook, line and sinker… here’s hoping their foolish move doesn’t sink all of us.

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