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NJ Minimum Wage Hike to Affect 176,000 Workers in Garden State

"Modest" Wage Increase Could Become Annual Tradition, as Minimum Wage Now Tied to Inflation
The Edison Walmart at 2220 State Route 27 is pictured here. David Schatz

EDISON, NJ–New Jersey's minimum wage will increased by 1.59%, to $8.38 an hour, in order to keep on pace with inflation on January 1.

On January 1, approximately 176,000 minimum wage workers will see a 1.58% increase in hourly pay.  Minimum wage workers represent five percent of New Jersey's working population.

The rate, which affects all workers except those who are tipped, will be increased to $8.38 an hour, equating to about $5.20 more per 40-hour week.

In the 2013 elections, voters had the opportunity to decide on Ballot Question Number 2, which would increased the minimum wage from $7.25 to $8.25, and provide for annual increases to adjust for inflation. 

"To call this 13-cent wage increase 'modest' would be a huge understatement," reads an issue brief from the New Jersey Policy Perspective (NJPP), a progressive policy group focused on New Jersey issues.

"The lifting of the wage floor is an important illustration of smart policy design and the power of “indexing” minimum wages," reads the report.

The Garden State's minimum wage will increase to $8.38 per hour, resulting in an estimated $55.1 million in new wages paid in 2015, according to the report.  Most of this amount will go to workers in low- and moderate-income families, according to NJPP

But, officials at the New Jersey Business and Industry Assocation (NJBIA), a pro-business lobbying group, expressed concern with the increases.

"How will they budget for an unknown amount of inflation each and every year?” asked NJBIA Assistant Vice President of Employment and Labor Policy Stefanie Riehl told NJ101.5.

“Where businesses can afford to pay workers more they will pay workers more. No business wants to lose a good worker.”

A $7.25 minimum hourly rate for labor is established by federal statute.

Along with the requirement for overtime pay and restrictions on child labor, the minimum wage law is regarded as one of the most significant obligations more than 50 years ago by the Fair Labor Standards Act of 1938.

For the first time, however, the minimum wage rate is now tied to the cost of living, and will rise with inflation.

“Indexing the minimum wage to inflation is one of the simplest, most effective tools that policymakers have to keep low-wage workers from sliding further into poverty every year,” said NJPP deputy director and report author Jon Whiten.

“While a 13-cent hourly pay bump may not seem like a lot, any increase in the minimum wage carries an outsized significance for the hundreds of thousands of low-wage workers struggling to scrape by in high-cost New Jersey.”

The new wages will translate to an estimated $34.9 million in new economic activity in 2015.  Most people tend to spend much of their new wages quickly on things like clothing, food and other necessities, according to the report.

NJPP identified wage thresholds in each New Jersey county that it considered necessary to support a "survival budget," with Middlesex County's minimum rate being $13.78 an hour.

The minimum wage comes in at just 61% of that figure, meant to represent the total costs to support a single adult’s “survival” in New Jersey.

The nation's largest retailer, Walmart, will be one of the companies affected most by the wage hikes in Middlesex County.

Walmart will adjust base salaries at its 56 New Jersey stores, allegedly due to increases in the minimum wage across 21 different states where the rate is set to increase on or around January 1.

An internal memo sent to over 1,400 Walmart store managers in December shows plans for narrowing of the gap in the wages paid to those in higher-skilled positions, such as deli associates and department supervisors, and those in lower-level jobs, according to a Reuters report.

Walmart will combine its lowest three pay grades, which include cashiers, cart pushers, and maintenance, into one base rate, according to the report.

A Walmart manager who was applying the changes at his store told Reuters that the changes appear in part to be an effort to offset the anticipated upswing in labor costs.

"Essentially that wage compression at the upper level of the hourly associate is going to help absorb that cost of the wage increase at the lower level," the manager, who spoke on condition of anonymity, told Reuters.

Walmart spokeswoman Brooke Buchanan told Reuters that Walmart was making the changes to "ensure our stores in the 21 states comply with the law."

Many people say Walmart does not pay its hourly workers enough, forcing them to seek government assistance, providing the company with an indirect taxpayer subsidy.

Labor groups would like to see Walmart pay its workers at least $15 an hour, and give more workers full-time schedules.

Ronee Hinton, a cashier at a Walmart in Laurel, Maryland, protested at the Walmart in Washington, DC on Black Friday.

“It’s very hard on what I earn,” Hinton told the New York Times. “Right now I’m on food stamps and am applying for medical assistance. It would help a lot to get full-time.”

She noted that she typically earns about $220 a week, making just $8.40 an hour and working about 26 hours a week, according to the report.

Our Walmart, a union-backed group of Walmart employees, helped organize Black Friday protests for the third consecutive year at more than 1,500 Walmart stores on the day after Thanksgiving.

NBToday covered a Black Friday protest held at the Edison Walmart that brought a handful of demonstrators, but no Walmart employees.

At a protest held at the North Bergen Walmart, supported by Walmart Free NYC, and the Teamsters and Service International Employees Union drew several hundred union members and even a Walmart employee from Colorado.

The protest called for beter job benefits, the workers's right to join a union, and higher wages, but the company criticized the protests as "made-for-TV demonstrations."

“The crowds are mostly made up of paid union demonstrators and they are not representative of our 1.3 million associates across the country,” said a spokesperson for Walmart.

Randi Weingarten, president of the American Federation of Teachers, joined in the protest in North Bergen.  According to the New York Times, his placard read, “Walmart: Breaking the Promise of America.”

Walmart said that few employees went on strike, and that its employees (full time and part time) average nearly $12 an hour.

Recently, Walmart Chief Executive Doug McMillon suggested that the company would increase the pay rate for nearly 6,000 employees who make the federal minimum wage of $7.25 an hour.

"In the world, there is a debate over inequity, and sometimes we get caught up in that," McMillon told Charlie Rose in a television interview this month.

He added that he would take steps to ensure the company is "a meritocracy, an opportunity for people to do more."

Walmart did not immediately return an email requesting comment on this story.

Still, the debate continues about the best way to support an increasing group of people forced to get by on a combination of minimum wage work and government assistance.

“While the January 1 wage increase is certainly welcome news to those toiling in the worst-paid jobs in the state, it is quite simply not enough,” said MacInnes.

“It does not remotely support work or allow for a firmer foothold to climb into the middle class – particularly in New Jersey.”

The three policy fixes recommended by NJPP in the report are:

  • increasing the federal minimum wage
  • giving tipped workers in New Jersey the same wage floor as other low-wage workers
  • allowing local governments in the state to enact higher minimum wages in individual towns and cities