Gov. Phil Murphy, a Democrat now entering his second term, campaigned in 2017 on increasing the state’s minimum wage to $15 an hour when it was just $8.60 an hour, as national momentum for the uptick picked up.
The current nationwide minimum wage has been $7.25 an hour since 2009.
Under the wage increase that Murphy signed in 2019, over a year before the onset of the pandemic, the increases are incrementally phased in, so as to allow employers more time to adapt to the added costs.
But in 2021, the increases come amid rising inflation, cost of living and costs for other goods, as businesses struggle to find workers, and as the nation enters the third year of the pandemic.
“The good news of the minimum wage bill is there’s no surprise – everyone knows when it was going to kick in – they can plan for it,” said Tom Bracken, president of the New Jersey Chamber of Commerce. “The bad news is it’s just one more thing that people have to deal with right now, on top of everything else.”
Hiring shortages, Bracken said, are a far bigger headache for businesses than the $1 wage increase, despite it still being an added cost.
A survey released last month by statewide trade group the New Jersey Business & Industry Association, found that many employers were already paying their workers above minimum wage, even though half said the increases were higher than they could afford.
Seventy-two percent of businesses said they increased their wages in 2021, compared to 54% in 2020, the NJBIA survey found. Meanwhile, 22% of employers said they expect to increase their wages more than 5%, compared to just 9% of employers a year ago.
“For some businesses with very small profit margins – or if they’re profiting at all – the extra dollar per hour could indeed prove to be an added challenge, especially if they’re now paying increased costs for supplies and shipping,” said Bob Considine, a spokesperson for the NJBIA.
Certain workers in the state are seeing their wages increase at a slower rate under the 2019 law.
Tipped workers, such as bartenders and restaurant staff, will see their base pay increase by $1 to $5.13 an hour starting on Jan. 1, with employers having the option to claim a $7.87 tip credit. Under state law, a restaurant needs to make up the difference if the tip and base pay do not add up to the statewide minimum wage.
Agriculture workers will see their pay increase from $10.44 to $11.05 an hour, and will reach $15 an hour by 2027. Long-term care facility staff will get a pay hike of $1 per hour that brings their minimum hourly rate to $16.
Those working at small businesses or for seasonal employers – like establishments open at the Jersey Shore only during the summer – will see their hourly pay increase from $11.10 to $11.90 on Jan. 1, ultimately reaching $15 an hour by 2026.
“[R]aising the minimum wage is the only tool we have to increase the take-home pay for most low-wage workers,” reads an email from Nicole Rodgriguez, research director at the left-leaning New Jersey Policy Perspective. “These raises help workers better afford basic needs, like putting food on the table or keeping the heat on during the winter.”
“A higher minimum wage also ensures that more families can cope with increased financial pressures from the pandemic,” she said.
A bill that state Sen. Vin Gopal, D-11th District, introduced in late 2019 would have paused the annual wage increases in the event of an economic downturn. But he shelved the bill after public backlash from labor rights groups.
Bracken said that such a measure could have very much made a difference for employers. Gopal could not be reached by phone for this story.
Editor’s note: A previous version of this story indicated that agriculture workers would see their pay increase by $1 an hour; that was incorrect, agriculture workers’ pay will increase from $10.44 to $11.05 per hour. The story was updated at 12:21 p.m. EST on Dec. 23, 2021, to reflect that change, and to include the amount of the increase that long-term care facility staff will see: $1 per hour, for a minimum hourly rate of $16.