Another casualty of the N.J. minimum wage hike: the disabled

By Matt Rooney
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The unintended but totally predictable consequences of New Jersey’s recent minimum wage hike law continue to pile up, Save Jerseyans.

The latest casualty: the disabled.

As New Jersey’s minimum wage continues to rise (it hit $11 per hour on January 1st), the wages of so-called Direct Support Professionals (DSP) – people tasked with helping the disabled increase their own independence – is leading to a labor shortage of non-skilled workers who service New Jerseyans suffering from intellectual or developmental disabilities. According to state Senator Declan O’Scanlon (R-13), the turnover rate for DSP position is now 40%; approximately one third of DSP position are vacant.

The minimum wage hike is becoming a real problem in just about every industry with an unskilled labor force; many of these industries overlap with government employees; last fall, Governor Murphy had to come up with $54 million extra simply to address minimum wage-driven childcare cost increases.

Tuesday’s budget address put the problem in sharp focus. 

“If the budget presented tomorrow doesn’t preemptively include additional funds, to pay for the impact of the policy the Governor himself advocated for, it will be a shocking display of short-sightedness, and a devastating blow to these dedicated third party providers of basic, life altering/saving services to our most vulnerable,” state O’Scanlon, a member of the Senate budget committee, pointed out on Monday. “This has to be a priority and the funds must be found within the budget. The vital need to provide these funds can’t simply be used to justify a tax increase. We already have gross unfunded debt obligations with the public employee pension and health benefits systems.”

Medicaid reimbursements only help up to $7.25 per hour; after that threshold is reached, O’Scanlon explained, the rest is on the state.

“Each year as the minimum wage rises and costs escalate, you can be certain these providers of essential services will rightly claim we are strangling their ability to function,” O’Scanlon continued. “The Governor will try to demand higher taxes and more government spending to compensate for the very policy he advocated. Quite frankly, it’s a mess, for the providers, for those they care for and for taxpayers. It’s outrageous that this seems to be an afterthought.  The administration needs to step up, meet with those entities impacted, assess the added costs that are looming, be totally transparent and project these impacts across the board and throughout the next several years.”

History will no repeated itself. There’s pressure building to increase state subsides by $33 million over a two year period.

“Higher labor costs are an inevitability following the minimum wage increase, and if there’s no more money for labor in the budget, it will mean laying people off and cutting work hours,” O’Scanlon added. “This crisis must be handled within the context of the larger state budget.”

The problem is self-perpetuating. Under the recent law change, New Jersey’s minimum wage will automatically reach $12 in 2021 and continue to rise until it eventually reaches $15.