New year brings minimum wage increase in New Jersey

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The ringing in of 2023 brings an increase to the minimum wage for most Garden State employees from $13 to $14.13 per hour.

The raise is part of legislation signed by Gov. Phil Murphy in 2019 that calls for the state’s minimum wage to gradually increase to $15 per hour by 2024.

The law calls for the rate to escalate by $1 per hour each year, or more depending on increases in the Consumer Price Index (CPI) — a component that came into play this year due to ongoing inflationary pressures in the economy.

New Jersey is among 23 states with minimum wage increases to start the new year, with four more states and Washington, D.C., slated for changes later in 2023.

Once the minimum wage reaches $15 in N.J. next year, the state constitution calls for annual increases tied to any CPI growth.

Seasonal and small employers have until 2026 to reach the $15 threshold, with the minimum wage rising this year from $11.90 to $12.93 per hour for those employees. Agricultural workers are guided by a separate timetable. Those jobs, which have until 2027 to reach the $15 per hour mark, will see an hourly minimum wage increase to $12.01 in 2023, up from $11.05. Long-term care facility direct care staff will receive a minimum wage bump of $1.13 per hour to $17.13.

Meanwhile, tipped workers’ cash wages will increase to $5.26 per hour with employers able to claim an $8.87 tip credit — a $1 increase. If an employee’s tips do not equal at least the state minimum wage, the employer would have to make up the difference.

A burden to business?

In a press release, Murphy said setting New Jersey on a clear path to a $15 per hour minimum wage remains one of his proudest moments.

“This increase will ensure that hundreds of thousands of hardworking people across our state are paid a wage that allows them to provide for their families and live with dignity,” said Murphy. “To solidify New Jersey as the State of Opportunity, we must continue our mission of building a stronger and fairer economy that works for every family, and that begins with growing our middle class.”

Department of Labor and Workforce Development Commissioner Robert Asaro-Angelo says the minimum wage hike will help low-wage workers better provide for themselves and their families.

“Every extra dollar in the paychecks of our lowest wage workers is helpful,” said Asaro-Angelo.

The increase does not come as a surprise to the business community, with the process statutorily set. However, when NJBIZ previewed the imminent increase in the fall, many Garden State leaders said it marked just another cost to endure in an ever-challenging business climate.

Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, said at the time that it was simply a pile on for businesses and yet another challenge.

“The minimum wage is just going to add salt to the wound that the businesses are facing,” said Bracken. “This will be one more pressure that will be put on them. It’s just an added cost on top of increasing added costs.”

Michele Siekerka, president and CEO of the New Jersey Business & Industry Association, concurred with Bracken.

“The reality is that most businesses have been paying beyond the current minimum wage due to the well-documented labor shortages and workforce demands that emerged from the pandemic,” Siekerka told NJBIZ. “However, for those still tied to the statutory hike, yes, the minimum wage increase tied to inflation will be an added challenge when you factor in all the increasing costs of running a business in New Jersey.”

Paying it forward

One group supporting the increase is Business for a Fair Minimum Wage, which says hikes across the country will boost consumer spending; strengthen local economies; and improve employee hiring, retention, productivity and customer service.

In a press release, Holly Sklar, CEO of Business for a Fair Minimum Wage, said that minimum wage increases are a great boost for the new year.

“These needed raises don’t stay in workers’ pockets. They energize communities, as workers and their families have more to spend at local businesses,” said Sklar. “Minimum wage raises also pay off in lower employee turnover, increased productivity and better customer service, which strengthens small business competitiveness.”

In that group’s December press release, two New Jersey business owners shared their support for the new increases.

“We’ve overcome economic headwinds since the pandemic hit to quadruple our locations. We couldn’t have done that without investing in our employees,” said John Schall, owner of El Jefe’s Tacqueria, with locations in New Jersey, Pennsylvania and Massachusetts. “With fair pay we see low employee turnover, which saves us time and money and fortifies our customer service. Minimum wage increases in Massachusetts and New Jersey will bring needed pay raises for workers and more spending at restaurants like ours.”

“At &pizza, paying fair wages is vital for our growth, success and reputation in a very competitive industry,” said Michael Lastoria, founder and CEO of &pizza, which has locations in New Jersey; New York; Pennsylvania; Washington, D.C.; Maryland; and Virginia. “All workers should make decent wages whether they work for us or anyone else, and that’s why raising the minimum wage is so important. When workers are valued, businesses are most productive, and communities and economies are stronger.”