On October 2nd, two business association got together at the boardwalk to denounce the upcoming New Jersey ballot issue of raising the minimum wage. The ballot initiative this election day in November is also a wedge issue for the two opposing campaign teams, with pro-wealthy-and-business-leaders Chris Christie, Republicans and Democratic Christiecrats on one side and pro-social-justice Barbara Buono and her Democratic allies who are trying to make New Jersey as inclusive and equitable as possible. The bias of this author is toward Buono and her support of smart economic policies, given that a study (by the conservative International Monetary Fund, no less) shows countries with greater equity in income distribution and less inequality also show higher duration of economic growth (click here and see bottom of page 12; income equality even had a greater influence on growth than trade openness). America has followed this same devastating trend.
"It's coming at a bad time," said Bob Stewart, owner of the Flashback Arcade on the NJ-seaside boardwalk. After being hit by Hurricane Sandy last year, his pier was scorched in a freak fire that started with an ice cream vendor last month. The fire spread and produced a wreckage which provided the ideal backdrop to the business associations gathered to sway public perceptions against a minimum wage increase. “I teach them and they come along and they get raises,” Stewart said. “I wouldn’t be able to employ those kids. I wouldn’t start bringing them up and bring them around at 14 years old if I had to pay them more. I wouldn’t be able to afford it.”
And why is this a bad time, exactly? Because of property-destroying accidents? I feel for him, because money is tight for his small business right now. He likely feels like he is leaving a positive mark on the world by carving out his good-character-developing meritocracy in a world plagued by cheating, privilege, and a instant-gratification mentality in our youth. But his same argument can be used against him.
Lack of a higher minimum wage, one tied to the rate of inflation, is "coming at a bad time" for workers, who were hit hard by the worst economic downturn since the Great Depression of the 1930s and finding that an overwhelming majority of jobs lost during the Recession were mid-and-high-wage jobs, and the majority of jobs gained since the Recession were low-wage. And so far this year, 3/4 of jobs created have been part-time. These are not teenagers looking for summer jobs we are talking about; over 3/4 of workers are 35-44 years old. They are more likely to have families they need to support, and more likely driven by necessity to have two or three part-time jobs.
Indeed, small-businesses do much of the hiring, but for them to focus on cutting workers and full-time jobs to save money rather than go for microloans from places like the Small Business Association (which for its part could promote more microloans rather than just focusing on big loans) shows a lack of understanding for how things work: there are far fewer small business owners than there are employees working at the small business, therefore the employees are the economic engine of the community, because they are the ones most likely to spend their money right away on necessary goods and services. An increased minimum wage puts more money in the wallets of community members, money for them to spend in local stores and thus give more employers more money to pay their employees.
More money in the hands of workers can also encourage employees to save, now that they might actually have some money left over from their paycheck that doesn't directly go to bills or necessities. They can use bank account savings to put a child through college or start a small business of their own, thus employing more people. The kind of small businesses that create the most jobs are Main St. businesses- "These are the dry cleaners, mechanics and medical clinics that form the fabric of our communities. Main Street businesses make up nearly 70 percent of the jobs in our country." These are not businesses looking to expand, because they find their niche providing essential services to the community, garnering a good reputation as the "go-to" business among locals.
On September 7th, the annual Legal Services study on poverty was released, showing that "As Recession Eased, Poverty Worsened" in New Jersey. Barbara Buono found this to be evidence for what she had been arguing all along.
"This report is a damning commentary on his failed conservative economic philosophy that protects millionaires from paying their fair share at the expense of everyone else," she said. "He does not care about the consequences of these decisions for working-class families in New Jersey."
Kevin Roberts, a spokesman for Christie’s campaign, hit back.
"Barbara Buono and her allies in the Legislature failed working families by walking away from Governor Christie’s compromise proposal to raise the minimum wage and increase the earned income tax credit," Roberts said. "No amount of distortions or revisionist history can paper over her hypocrisy and failure."
Let’s look at Chris Christie's “compromises”:
- He cut the earned income tax credit, a tax credit which Ronald Regan called the best welfare policy for working poor families.This policy is a tax cut for working families, and Christie hurt these families.
- He twice vetoed a tax on millionaires that was supposed to be a funding source for restoring the earned income tax credit and increases in tax cuts for homeowners and renters, as well as an increase to the minimum wage, and instead, Christie called for income tax cuts for everyone.
- He tied any earned income tax credit increase to his tax cut plan.
Democrats countered that we cannot be cutting taxes across the board like this, because Christie’s budget is already failing to meet cost projections, and this would defund government revenues further. It would be like how George Bush cut taxes for everyone but also increased funding for Medicare—it was nice to help people, but without a funding source for it, he ruined Bill Clinton’s budget surplus and, along with other fiscally irresponsible choices, put America into a deficit. Democrats in NJ are trying to avoid this.
"Now is not a good time" is not now or ever a good excuse to stall raising the minimum wage, which in NJ, at $7.25, is as low as is allowed by federal law. For businesses, to decide on when to lose the freedom to use their workers however they see fit (exploit them) is akin to letting someone without any balls decide when to break up with their girlfriend or boyfriend: "Well, they have a birthday coming up, so now is not a good time. Then there's Christmas soon after that..."
There is never going to be a good time. Democrats had tried to raise the minimum wage in 2011, but Chris Christie vetoed it, saying it was unfair to have it tied to the consumer-price-index so as to adjust for cost-of-living expenses due to inflation. According to business owners, that would make it too “unpredictable” for businesses (yet another excuse which is better suited as a claim for the minimum wage- to protect workers from the unpredictability of the market). Christie recently vetoed a minimum wage bill saying we needed a plan to phase it in over three years. From $7.25 to $8.50 in 2016. This is because business owners need “time.”
However, it has already been two years since business owners should have been expecting and preparing for this, because “the last attempt to adjust the state’s minimum wage in 2011 met strong pushback from the business community.” Now Christie is saying we cannot raise it all at once because of Hurricane Sandy, but back in 2011, the business community had a different excuse: inflation was not rising in February 2011, meaning things are not getting more expensive, so we don't need an increase in wages. But this chart shows that inflation skyrocketed in February 2011 after increasing steadily since November 2010.
So every year, the business owners will have some excuse. Even though a higher minimum wage would put money in the pocket of employees who would spent it on local businesses and thus stimulate the economy, including at the Jersey Shore. And $8.50 an hour is not much to ask for. “Today, two adults working full-time, minimum-wage jobs earn $30,000 a year. A new study, by the Economic Policy Institute, estimates the cost of “getting by” for a New Jersey family of four is around $80,000. That’s equal to two full-time jobs, each paying at least $19 an hour.” 19% of respondents in two-adult households stated, in a Gallup poll, that they struggled to buy food during the past year.
The time to raise the minimum wage is now, and higher than $8.50, though $8.50 is likely what we will see on the November 15th ballot initiative when we vote for governor.