State Officials Confirm Minimum Wage on Track to Reach $11 at Start of 2020

OCTOBER 16, 2019

New Jersey’s statewide hourly minimum wage is on course to increase to $11 at the beginning of next year for most low-wage workers, state labor officials said yesterday.

The announcement by the Department of Labor and Workforce Development was a formality since the increase for 2020 had already been scheduled under a law enacted by Gov. Phil Murphy earlier this year.

But labor officials are still required to conduct an annual analysis of year-over-year inflation to determine whether workers could get an even bigger increase than what the law calls for. While that won’t be the case for 2020, the officials suggested most minimum-wage workers will still do far better under the new law than under previous regulations since the new law calls for annual, $1 increases instead of simply tying annual increases to changes in inflation.

Instead of rising to $11 in 2020, the statewide minimum wage would be set at $10.15 if there was only a standard inflationary adjustment, they said. Meanwhile, other low-wage workers, including farm laborers, seasonal workers and employees of businesses with five employees or less, will also see larger increases in 2020 than would have been the case without the new wage law.

“Our progress on fair and equitable wages demonstrates our state’s commitment to fighting for economic justice and a stronger and fairer economy that works for every family,” Murphy said yesterday.

The same law established a schedule of annual adjustments to raise the statewide minimum wage to $15 by 2024.

Delivering on a big campaign promise
Murphy, a first-term Democrat, signed the wage law in February after it was easily passed by the Democratic-controlled Legislature. That delivered on a major campaign promise for the governor, who often characterized the need to increase the minimum wage as part of a broader effort to make the state economy more equitable.

The governor has also regularly cited ALICE research compiled by the United Way of Northern New Jersey that indicated close to 40 percent of all households in the state, or 1.2 million, were either living in poverty or working poor and unable to afford such basic needs as food, clothing and shelter. (ALICE is defined as Asset Limited, Income Constrained, Employed.)

But state business groups have warned that an aggressive increasing of the minimum wage could lead employers operating on a narrow margin to reduce staff or raise prices.

The first increase in the minimum hourly rate under the new law was on July 1, 2019, when the minimum wage rose from $8.85 for most workers to $10. The law also calls for a series of $1 annual increases through 2024 to bring the wage up to $15, which was a key goal established by progressive groups across the country.

The wage law put some groups of low-wage workers — farm laborers, seasonal workers and employees of businesses with five employees or less — on a different wage ramp-up schedule. But they also will see increases in 2020 as their minimum hourly rate will increase from $8.85 to $10.30 on January 1. The minimum wage for so-called tipped workers like waiters, waitresses and bartenders who rely on contributions from customers to bolster their pay will also increase on January 1, from $2.63 to $3.13, labor official said.

Will ‘vigorously investigate wage and hour complaints’
“We firmly believe all workers have the right to earn a fair, family sustaining wage,” said Labor Commissioner Robert Asaro-Angelo. “We applaud Gov. Murphy’s leadership in enacting a $15 minimum wage law, and will continue as a department to vigorously investigate wage and hour complaints.”

Before the new law was enacted, the statewide minimum wage was increased on an annual basis only if there was a rise in year-over-year inflation as measured by the federal Bureau of Labor Statistics. That process had been in place since 2013 under a constitutional amendment that state voters had approved by a wide margin. The last inflationary adjustment occurred at the start of 2019, when the minimum wage increased by 25 cents to $8.85.

In all, New Jersey’s hourly minimum wage rose by about 20% between 2013 and 2019, a pace of growth that was far too slow for Murphy and many other advocates for low-wage workers who pushed for $15.

Meanwhile, the state constitution still requires labor officials to perform an annual analysis of year-over-year inflation, and the law enacted by Murphy allows workers to get either the inflationary adjustment or the $1 increase called for in the law, whichever is larger.

An NJ Spotlight analysis of federal labor statistics indicates that the minimum wage in New Jersey today would need to be $10.53 to have the same purchasing power as in 1968, when it was $1.40.