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Maximum resistance to minimum wage hike

Industry groups raise concerns about broader impact

John Holub, president of the New Jersey Retail Merchants Association

A proposal to raise New Jersey’s minimum wage by $1.25 per hour is raising concern from employer groups about how the measure would impact employment and investment in the state.

A proposal to raise New Jersey’s minimum wage by $1.25 per hour is raising concern from employer groups about how the measure would impact employment and investment in the state.

Assembly Speaker Sheila Y. Oliver proposed an increase in the rate from the current $7.25 to $8.50, which Gov. Chris Christie said he would consider, though he wants to be sure the state is adding jobs.

The retail sector is particularly concerned with the proposal, according to John Holub, president of the New Jersey Retail Merchants Association. “It’s safe to say from talking to my members that most, if not all, already pay above the minimum wage, but our greatest concern is the ripple effect that this has,” he said. “It has the potential to push all wages up.”

Holub said business owners would be constrained in their ability to offer lower-paid jobs as a “training wage,” with the expectation that raises will soon follow as the worker gains skills.

“The market and workplace should determine what the going rate is for a certain job, particularly an entry-level job,” Holub said.

Linda Doherty, president of the New Jersey Food Council, said it also would be a problem for food retailers.

“This type of increase would just add to the stress of an already-shrinking industry,” Doherty said, noting recent supermarket closures.

Laurie Ehlbeck, director of the New Jersey chapter of the National Federation of Independent Business, was an early opponent of the wage hike proposal.

“We would be immediately isolated in the region as the most expensive state in which to create new jobs, and the opportunities will flow to the other states,” Ehlbeck said. “It’s a bad idea, and we strongly urge the governor to resist raising labor costs in the middle of an unemployment crisis.”

The issue has been a source of steady debate through the years, according to Joseph Seneca, an economist at Rutgers University’s Bloustein School of Planning and Public Policy.

“The effect probably would be relatively small, since relatively few workers are earning the minimum wage — but it could affect hours worked, and could negatively affect earnings,” Seneca said.

He noted that the effect of a wage increase would spill beyond those making $7.25.

“It echoes up the wage scale, raising labor costs at a time when employers are cautious about new hiring,” Seneca said. “So the timing is also an issue — it’s not a robust recovery for employment.”

But Seneca cautioned against making a decisive case against an increase, noting that many empirical studies of the issue have reached mixed conclusions.

T.J. Barnes, vice president of marketing for Fairfield-based Manhattan Maintenance Co., questioned another aspect of Oliver’s proposal — a requirement of annual adjustments in the minimum wage, based on inflation.

“It doesn’t provide an accurate picture of where the economy is,” said Barnes, whose company provides a range of building services, from maintenance to property management. “I don’t think it’s a real reliable benchmark in order to do increases or decreases.”

But Barnes supports the minimum wage increase.

“Because we pay employees significantly higher than the rest of our industry, it would actually be beneficial to me,” Barnes said, noting that his industry has low barriers to entry. “There are some companies that are paying at minimum wage or sometimes even below, and that makes it challenging for us.”

Frank Wyckoff, president and CEO of Snelling Staffing — The Wyckoff Group, in Eatontown, also expressed support for the increase. He said paying employees more requires employers to manage more efficiently and ask more of their workers.

“It challenges people to be more than just a warm body. I think that’s a good thing,” Wyckoff said.

But Michael Saltsman, a research fellow at Washington, D.C.-based nonprofit Employment Policies Institute, said experience has shown minimum wage increases hurt entry-level employees.

For every employee who benefits from the increase, “there are other employees who may lose hours, or may lose their job outright. Those losers from the increase tend to outweigh the winners,” Saltsman said.

Saltsman said higher entry wages make it harder for employers to hire teenagers, who they will also need to train. These consequences grow over time, he said. “When people do miss out on the skills from the first job, it is difficult to get a job later in life,” he said.

E-mail to: akitchenman@njbiz.com
On Twitter: @kitchenman

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