New Jersey lawmakers have hobbled the state economy with the worst business tax and regulatory climate in America. That costs residents a lot of prosperity and quality of life.
Rather than address the government actions that keep New Jersey lagging behind the national economy, they choose more spending, more debt and making a show of trying to help some. Raising the state’s minimum wage eventually to $15 is one of these attempts to provide symptomatic relief instead of working toward a cure.
This month marks the start of the complex multiyear process, with the minimum for nearly a quarter million workers rising to $10 an hour from $8.85. Even they won’t see $15 an hour until 2024. And the burdens of paying the higher wages will begin later for many, including taxpayers, as lawmakers try to avoid or delay harms to the state’s economy.
The tourism industry — which employs a lot of temporary, teenage and foreign workers — agriculture, and businesses with no more than five workers sought an exemption from the minimum, but they only got a short reprieve. They’ll start paying more as of Jan. 1, 2020, and won’t hit $15 an hour until 2026. Farm workers will top out at $12.50 unless higher wages are OK’d by the state commissioners of agriculture and labor.
Since the wage boost is expected to eliminate jobs for young and inexperienced workers, a bill in the state Senate would give employers of teenagers as much as $10 million in tax credits to offset their higher wages and payroll taxes. That would mean a loss of some corporate and gross business income taxes, which presumably would be made up by other taxpayers since state spending only increases.
Under the just-enacted state budget, taxpayers are already paying $65 million to cover the increased costs of some employers, including nursing homes, home health and personal care firms, providers of child care to Work First New Jersey recipients, and providers of services to the disabled.
Taxpayers actually will pay twice, since one of the ways businesses will adjust to state-mandated higher wages is by raising prices. Another will be to cut employees.
The N.J. Business & Industry Association, which supports the subsidy for employers of teens, also wants tax credits for businesses with 10 or fewer employees. It would also like to see the higher minimum wage suspended in a severe recession or after a natural disaster.
These efforts to mitigate the negative effects of government-mandated higher wages raise a couple of questions. Might it have been easier, more direct and more effective to provide a suitable earned-income tax credit (or increase for those already getting that) to heads of households in minimum wage jobs?
Better still, New Jersey could reduce its tax and regulatory burden, unleashing years of strong economic growth that would create more jobs and compel employers to pay more to fill them. That would put more low-wage workers on the path to the middle class.
Instead, starting-wage jobs will pay better but be scarcer, hurting some of the people lawmakers are trying to help. State officials should at least take another NJBIA suggestion and study the impact of their wage-mandate regime. In its complexity and conflicting effects, it may be more of a drag on New Jersey’s economy and residents than they realize.