TRENTON, N.J. – One of the many unintended consequences of New Jersey’s recent minimum wage increase is already biting taxpayers in the rear end.
This week, the Murphy Administration announced a $54 million increase in subsidies for some qualifying families’ childcare expenses. There’s a direct correlation between (1) the new taxpayer-financed subsidies and (2) the higher labor costs (which the subsidies are intended to address) that were directly caused by the minimum wage hike.
Taxpayers are now stuck in an expensive cycle.
Some opponents of the new minimum wage law – which will gradually take New Jersey’s minimum wage to $15 in 2024 (it’s current $10 per hour) – are saying ‘I told you so.’
“I’ve said it before and I’ll say it again – raising the minimum wage sounds lovely in theory but stings in reality,” state Senator Declan O’Scanlon (R-Monmouth) said. “While this $54 million childcare subsidy may seem great for a few qualifying families that are struggling to afford childcare, there are many other low- and middle-income families that won’t get a penny of help as their cost of living rises as a direct result of Governor Murphy’s minimum wage increases. The simple fact is that most New Jersey families will be stuck shelling out more of their hard-earned money for a variety of services, including childcare, which have become less affordable as costs have been driven higher by expensive government mandates.”
The $54 million bump isn’t an isolated incident.
The FY 2020 budget included millions more in minimum wage-related increased spending including but not limited to $20 million for direct service providers now earning higher wages, $9 million for Work First NJ Child Care wage increases, $300,000 for state worker wage hikes, and $1.5 million for grants covering the wage increases.
“Increasing taxpayer-funded subsidies to cover higher costs associated with Murphy’s minimum wage hike is like putting a Band-Aid on a gushing wound.” O’Scanlon added. “We’ll pay tens of millions more across all levels of government this year. It’s not just the $54 million that State taxpayers will pay for the childcare subsidies that Murphy just announced. Property taxpayers, for example, will pay millions more to cover higher wages for everything from their local public works to their recreation departments. There’s no level of government or taxpayer that will be spared from paying for these higher wage costs in one way or another.”
The final toll? While the pension and benefits crisis gets most of the attention in policy wonk circles these days, taxpayers will soon put out hundreds of millions of dollars more on an annual basis by 2024 as the minimum wage continues to inch upward by $1 annually.
“This $54 million of childcare subsidies demonstrates how willing Governor Murphy will be to shovel our tax dollars into the gaping holes created by his minimum wage increase,” continued O’Scanlon. “Unfortunately, that’s just the tip of the iceberg. Each year as the minimum wage rises and costs escalate, you can be certain he’ll demand higher taxes and more government spending to compensate. It’s a textbook lesson of the ripple effects of minimum wage hikes on the economy.”