New Jersey could be at risk of losing tens of thousands of jobs if the state raises its minimum wage to $15 an hour, according to a study Monday.
New Jersey Gov. Phil Murphy has made increasing the minimum wage a focus of his agenda. But the state legislature has been slow to reveal a proposal that they could send to his desk. The state currently has a minimum wage of $8.60 an hour. But some warn a proposal to boost the minimum wage to $15 could be devastating for employment in the state.
The Employment Policies Institute (EPI), a conservative research nonprofit, found in its report that the state is estimated to have nearly 32,000 fewer jobs by 2024 if the state does implements a $15 minimum wage. The decline also accounts for 10,000 teen jobs. The EPI has found similar results when looking at other regions across the country.
“New Jersey’s $15 minimum wage proposal is based on ideology, not proven economic research,” EPI managing director Michael Saltsman said in a statement provided to InsideSources. “The state should consider proposals such as expanding the [Earned Income Tax Credit] before mandating a disastrous minimum wage increase that will only worsen job prospects for teenagers and the less-experienced.”
Trinity University Prof. David Macpherson and Miami University Prof. William Even conducted the study which also found that the policy is not well-targeted to families in poverty. Additionally, it found that the least skilled workers would be the most hurt with 90 percent of job losses coming from those without a college degree.
The $15 minimum wage has become a prominent issue for progressives in recent years. Seattle was followed by dozens of cities and a couple states when it first enacted the policy in June 2014. Those in support of the policy argue that it will help alleviate poverty and address the growing wage gap between the wealthy and lower income earners.
The Fight for $15 movement has been at the forefront of the minimum wage debate since it started in 2012. The movement has utilized protests and media campaigns to advocate for the policy. The Service Employees International Union (SEIU) has been the primary financial backer of the movement over the years.
Critics warn that such a drastic increase could have negative repercussions that outweigh the benefits. They argue that the added cost of labor could force some businesses to cut back on workers, their hours, or raise prices. Some might be forced to close. Low profit margin industries like restaurants and retail are at particular risk.
California and New York became the first two states to enact the $15 minimum wage within hours of each other in April 2016. Both laws are designed to phase in the policy over a handful of years to mitigate economic problems. Lawmakers have typically included a phase-in period when pursuing the policy.
Economists and other experts have come to various conclusions on what the impact of the policy actually is. Some have suggested the potential downsides will be marginal compared to the benefits – while others have found the negative impact could be severe, especially for young and low-skilled workers.
The University of Washington reignited the minimum wage debate a year ago when it found the increase could hurt workers in Seattle. The study found workers are having their hours reduced at a rate that exceeds the increased wages. The University of California, Berkeley, released a report a week prior which found the citywide increase helped to increase wages while having little impact on employment.
The EPI study concludes that state lawmakers should look to address poverty by expanding the earned income tax credit instead for lower income earners instead.