PACKET EDITORIAL, Jan. 18
By: Packet Editorial
Where one stands on the subject of the minimum wage plainly depends on where one sits.
And where one sits plainly determines which of numerous competing studies on the subject one chooses to believe.
When acting Gov. Richard Codey proposed during last week’s State of the State address to raise New Jersey’s minimum wage from $5.15 to $7.15 an hour over the next two years, the reaction was predictable. Democratic lawmakers, labor unions, liberal lobbying groups and progressive policy wonks applauded the plan; Republican gubernatorial candidates, business and industry groups, corporate lobbyists and conservative think tanks panned it.
And each had a study or two or three to back up its position.
According to the New Jersey Business & Industry Association, raising the minimum wage will do two things reduce the number of entry-level jobs available in New Jersey and force other salaries to increase. Both of these outcomes, the business group warns, will hurt the Garden State’s ability to compete with other states for jobs and economic growth.
Supporting the BIA’s position is a study by the Employment Policies Institute, which concluded that raising the minimum wage increases the high-school dropout rate and teenage unemployment. And another by the Congressional Minimum Wage Study Commission, which found that every 10 percent rise in the minimum wage reduces teenage employment by up to 3 percent. And another by the Economic Policy Institute, which reported that minimum wage increases implemented by Oregon in 1998 and 1999 cost workers about $50 million in annual income while employers’ labor costs went up by $162 million a year all for an increase in family income for minimum-wage earners of less than 4 percent.
On the other side of the ideological fence, the Economic Opportunity Institute contends that all these studies cited by business groups are based on a misleading and dated assumption that a 10 percent rise in the minimum wage automatically results in a 2 percent decrease in employment. Once this debunked assumption is removed from the equation, the EOI argues, the resultant calculations are meaningless.
Meanwhile, the Fiscal Policy Institute reports that states with a higher minimum wage than the federal standard have economies that have performed as well as or better than states, like New Jersey, where the minimum wage is tied to the federal standard. From 1998 to 2004, the FPI study found, total employment in states with a higher minimum wage than the federal standard increased by 6.2 percent, compared to 4.1 percent for states using the federal wage. And retail employment was up 6.1 percent compared to just 1.9 percent.
The battle of the dueling institute studies may and probably will go on and on as the measure to raise New Jersey’s minimum wage works its way through the Legislature. But they are, in our view, largely beside the point. The primary issue here isn’t corporate profit. It’s simple fairness.
Is it fair that New Jersey, the nation’s second-wealthiest state (per-capita personal income: $40,427, more than 25 percent higher than the national average), ties its minimum wage to the federal standard? Is it fair that, in state where social-service subsidies are pegged at 200, 300 or even 350 percent of the federal poverty level to account for the high cost of living, our minimum wage is the same as Arkansas’ and Georgia’s? Is it fair that, at $5.15 an hour, a minimum-wage earner in New Jersey makes about $10,700 a year or less than 15 percent of the state’s median family income and nearly $1,800 below the federal poverty line for a family of two?
If the looming legislative debate over the minimum wage comes down to a contest of numbers, we hope these are the ones lawmakers will bear in mind.

