Businesses yawn at minimum-wage hike

Most companies say they already have to pay higher wages

By: Stephanie Brown
   The minimum wage increase bill signed last month by acting Gov. Richard Codey will raise the state’s minimum wage to $7.15 per hour over the next two years. While supporters of the bill consider it to be a step in the right direction, some business owners say it is detrimental to the state’s economy.
   "This is a raise for more than 200,000 of New Jersey workers," Gov. Codey said at an April 12 news conference in New Brunswick. "By raising the minimum wage, we are making a difference in the lives of those who need it most."
   But business owners in Central Jersey aren’t so sure. Some say raising the minimum wage will force already cash-strapped businesses to lay off employees. Others say the announcement was irrelevant, because the nature of the region’s marketplace already demands that employees be paid rates far above the minimum wage.
   The federal poverty threshold for a family of four is an income of $18,850 annually, according to the U.S. Department of Health and Human Services. At $5.15 per hour, a full-time minimum wage worker earns $10,700 a year, leaving a gap of more than $8,000 gap.
   "It is wrong that a person who works full-time to provide for their family should have to live below the poverty level," Gov. Codey said.
   Income at that level is far below the intent of minimum- wage legislation adopted years ago, which was enacted federally to maintain "a standard of living necessary for health, efficiency and general well-being of workers."
   Established in 1966, $1.25 per hour was sufficient to support a family of three with a single full-time, year round worker out of poverty.
   Originally, New Jersey’s minimum wage "bore a meaningful relationship to the ability of a family to earn a sufficient living," according to New Jersey’s Shrinking Minimum Wage, a report from the Poverty Research Institute of Legal Services of New Jersey.
   But at $5.15 per hour, minimum wage has "lost its meaning at this point, and the only way that it can get that back is to have a meaningful increase," said Kristin Mateo, an LSNJ spokeswoman.
   But ultimately, business owners argue, the burden falls on employers, who must give up part of their annual revenues to meet the new state mandate.
   "It’s just another burden the government is placing on the business community," said John Rogers, a spokesman for the New Jersey Business and Industry Association.
   Legislation requiring New Jersey employers to pay higher wages is particularly cumbersome in a state that makes health insurance and property taxes more expensive than others in the nation, Mr. Rogers said.
   Smaller businesses, he said, are especially expected to suffer the financial strains associated with the wage raise.
   "A 40-percent increase in two years time is too much of a cost for small business employers to bear, especially if they have to grapple with healthcare costs," Mr. Rogers said. "The money has to come from somewhere, and, frankly, the small employers are just not able to deal with the government mandated, artificial increase in their wages."
   So where will the money come from?
   "That’s the $64,000 question," Mr. Rogers said.
   "Depending on the employer, you may actually see the money come from several areas," he explained. "It may be through decreased employment opportunities for lower-skilled workers. It may be from lost hours, where people will work less time. It may be from a higher cost passed on through healthcare and other areas. And it could end up, ultimately, afforded by higher prices for consumers."
   But while it will have some impact on businesses, it may not be that dire, said Dorian Kershner, owner of the Red Bank-based Wolly Monmouth, a store that carries knitting, crocheting and yarn supplies.
   "I already pay my employees more than the state minimum wage," she said. "Frankly, I couldn’t find people to do what I needed them to do for $5.15 per hour."
   Ms. Kershner does not expect the legislation to have any impact on her cost-per-employee, nor on other employers like herself.
   "Some small business owners insisted that they would have to raise all employee salaries if this bill passed, even if they already were well above the minimum wage," she said. "That is just not my experience."
   Other businesses, such as Hoagie Haven in Princeton and Hopewell Valley Community Bank in Pennington, will not experience negative effects because employees are also paid more than minimum wage.
   "It isn’t going to have any effect on us at all," Hoagie Haven owner George Roussos said.
   Hopewell Valley Community Bank President and CEO James Hyman said he generally looks for a candidate who is looking to be paid above the minimum wage.
   "We attract an educated workforce who has an ability to work with numbers, the public, and has an awareness of the need to be highly responsible with people’s money," Mr. Hyman said.
   Supporters maintain that the raise is beneficial to New Jersey’s economic health.
   "Boosting the minimum wage increases promises to boost productivity and strengthen our overall economy," said state Assemblyman Robert Gorden (D-Bergen).
   Furthermore, supporters of the bill deem the raise necessary in regards to the state’s expensive living cost.
   "New Jersey’s cost of living is 32.6 percent higher than the national average," Mr. Gorden said. "It’s essential that the New Jersey workers have the resources to survive and prosper in this state."
   Without a relationship to the cost of living, "what you’re saying is you can work and work and work, and it doesn’t matter if it is insufficient to meet your basic needs," Ms. Mateo said. "It’s counter-intuitive and counter-productive."
   The bill also creates a permanent New Jersey Minimum Wage Advisory Commission to continually evaluate the adequacy of the minimum wage.
   "We went really from being a leader to a lagger," Gov. Codey said. "We cannot ever let this happen again."