If you have a working television set you've probably seen advertisements with all sorts of horror stories about what will happen if New Jersey voters approve a ballot measure to raise the minimum wage this November. The ads are the work of a business-backed outfit, the Employment Policy Institute, and they couldn't be more misleading.
The truth is that raising the minimum wage will create jobs and help hundreds of thousands of New Jerseyans work their way out of poverty.
As other states have raised their minimum wage to meet rising living costs, New Jersey's $7.25 minimum wage has lagged behind and is now the lowest the federal government will allow. It's far too low for a high-cost state like New Jersey. If you adjusted the minimum wage to account for the state' cost of living, the wage would be $9.41. But for 300,000 New Jersey workers - many of them full-time workers with children to support - scraping by on $7.25 is their grim reality.
Meanwhile, the gap between the state's wealthy and its poorest residents continues to widen, and more and more residents must look to forms of government assistance like food stamps to cover the distance between their wages and the need to survive. Incidentally, that leaves taxpayers picking up the tab and essentially subsidizing low-wage employers like Walmart and McDonalds.
It's an intolerable situation, but every time there's a movement for change, big corporations - and the nonprofits they fund - resurrect the sort of tired arguments that we've seen blanketing the airwaves. The problem is that their arguments about the minimum wage's effect on employment simply aren't supported by the evidence.
The first report to rigorously test the impact of minimum-wage increases on employment took place in New Jersey. In 1995, David Card and Alan Kreuger published a study examining hiring patterns in restaurants for the three years after New Jersey raised its minimum wage from $4.25 to $5.05. They found that raising the minimum wage actually increased employment, and subsequent research has confirmed their findings. Their findings have been confirmed by study after study.
Raising the minimum wage doesn't just lift people out of poverty, it gives the entire economy a lift. That's because low-wage workers are forced to spend their increased wages immediately on basic goods and services they couldn't purchase without the raise. Businesses hire more workers, who are able to make more purchases, and the result is a virtuous circle of rising employment and wages.
Far from the assertions of self-interested corporations, raising the wage will actually create jobs and give New Jersey's struggling economy a much-needed boost.
The think-tank New Jersey Policy Perspective worked out just how big a benefit raising the wage would give New Jersey's economy. If voters approve the ballot measure on Nov. 5, minimum-wage workers will see an average raise of $980 and other low-wage workers could see an average increase of $220. Increased spending by low-wage workers would boost New Jersey's GDP by $174.8 million and create 1,520 jobs.
And the best part about the measure is that it takes the power out of the hands of corporate interests for good by providing annual increases for inflation. Had legislators done the responsible thing and linked the minimum wage to inflation when it was first passed 50 years ago, it would be more than $10.50 today.
Their failure to do so has opened the door for corporate interests to hold up sensible wage increases and lower the purchasing power of the wage over time. What increases there are have been too little and too late. The ballot measure will empower New Jersey residents to do what Trenton should have done long ago: give New Jersey workers a fair wage and make sure it keeps pace with the times.
For the sake of New Jersey's working poor and its economy, voters should vote yes on Nov. 5.
Bill Holland is executive director of the New Jersey Working Families Alliance.