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NJ’s New Minimum Wage Law Is Latest Harsh Government Mandate

New Jersey minimum wage

Linda Doherty

by Linda Doherty, President, New Jersey Food Council

It only took 11 days for legislative leaders and Gov. Phil Murphy to negotiate what could be considered the most harmful $15 an hour minimum wage mandate in the country.

Eleven days!

There are no exemptions for minors, no safety valve if the economy tanks and when New Jersey hits $15 an hour in five years, there is an automatic increase based on the consumer price index (CPI) every year following.

So, New Jersey then will see an unpredictable minimum wage increase every year after 2025 automatically. This is not a $15 an hour bill—it is an infinity and beyond bill. What is incredibly frustrating is NJFC has spent a full year working with legislative officials and staff to soften the blow and provide meaningful input into the process. The original bill proposed in December by Assembly Speaker Coughlin was thoughtful and manageable. However, the governor’s progressive and inflexible approach on the components of the bill will keep New Jersey unaffordable and continue our economic race to the bottom.

Even when the three leaders met at a New Jersey diner to promote their agreement in late January, the diner owner openly admitted to the press that the compromise proposal will force him to go out of business. After he was quickly “educated” by legislative staffers, the diner owner said in a revised statement he may not close his doors but his prices would go up dramatically and it could cost jobs. You can’t make this stuff up!

Yes, we are aware many food companies do not pay minimum wage and some have moved to a $15 an hour wage, which is based on various business models. However, the compression in overall wages, a scheduled $2.15 increase in the next 11 months and then a $1 increase each year is difficult to tackle for some members.

Approved mostly by party line, the General Assembly passed the compromise 52-25 and the Senate voted in favor 23-16, with the Democratic caucus providing the majority of the votes for passage. Gov. Murphy signed the bill into law in a pep rally atmosphere cheered on by progressive and labor advocates.

There are several provisions in the new law to highlight. There is a longer phase in schedule for some seasonal employees and employees of small businesses with less than five employees and an alternate schedule for agricultural workers. Minor employees are not included in this alternate schedule. The law does not provide for a suspension of the scheduled wage increases in the event of an economic downturn, but the law provides a tax credit for employers who hire workers with disabilities. However, the calculation is confusing, and it may be difficult for industry to access this credit.

This law provides for a training wage of 90 percent of the minimum wage for the first 120 hours an employee works. The new law does not provide for state pre-emption, so a municipality could enact a higher rate.

Lastly, the new wage hike does apply to local and county government, so expect personal and commercial property taxes to rise as a consequence of the huge increase.

It now has been a full year of Gov. Murphy in office. Over the course of the past 12 months New Jersey has been slammed with increases in corporate business taxes, stifling combined reporting obligations and establishment of a new top-end income tax rate that applies to pass-through companies—all approved to plug state budget holes—along with a steep rise in the gas tax and costly expansion of paid family and sick leave laws. According to the Tax Foundation in D.C., these harsh business burdens continue to retain our state’s rank as dead last in the cost of doing business in the nation. This latest overreaching government mandate will continue to anchor New Jersey to the bottom.

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