Battle Heats Up in NJ on Amending Constitution and Increasing Minimum Wage

Small business owners say wage hike will cost jobs

October 31, 2013

A fight is heating up in New Jersey over an upcoming Election Day ballot question that asks voters to not only raise the minimum wage but also approve an amendment to the state constitution that would mandate yearly increases to that wage and tie it to the national Consumer Price Index (CPI).

The state’s business organizations are arrayed against unions and liberal and progressive groups. Both sides are ratcheting up their campaigning in the final days before next Tuesday’s vote.

Tom Bracken, president and CEO of the New Jersey Chamber of Commerce, said three issues are at stake with the ballot question. The first is to raise the minimum wage, the second is to tie future wage increases to the CPI, and the third is adding it into the New Jersey constitution.

The Chamber and the Coalition to Preserve Jobs and Our Constitution, of which Bracken is chairman, are not against raising the minimum wage. He said reports claiming these groups are against the rate increase are inaccurate.

Bracken said the chamber approved of an increase to the wage, over a three-year period. Both organizations are "against having this imbedded into our constitution and linked to the CPI."

He pointed out the state’s constitution was only changed once in its history. If this ballot question passes, the change would have an impact on "less than 3 percent of the residents." He said this is not something for the "public good" and is not worthy of changing the constitution.

Bracken also said if the ballot initiative is passed, the state’s minimum wage would be linked to the national CPI, "even if New Jersey isn’t doing well."

He said this could cause businesses to cut worker’s hours, cut the jobs of some workers, and pass the costs on to customers. Businesses raising prices would "hurt everyone in New Jersey" and "hurt the competitiveness of New Jersey in the long run."

The coalition is running an ad campaign featuring New Jersey business owners making the case of why voters should vote "No on No. 2."

A report by the National Federation of Independent Business (NFIB) showed the state could lose 31,000 jobs if the ballot question is approved, and 60 percent of those jobs will come from the small business sector.

"This is a conservative estimate which includes varying degrees of inflation," said Laurie Ehlbeck, the New Jersey state director of the NFIB, in an email to the Washington Free Beacon.

She said her group represents approximately 8,000 small businesses in New Jersey that employ fewer than 20 workers.

Half of the workers in New Jersey are employed by small businesses.

"When surveyed, 93 percent of our members opposed this proposal which would increase the wage and attach it to the CPI. By attaching the minimum wage to the CPI, the wage could go up every year, forever," Ehlbeck said.

She said the members do not "oppose this because they are greedy or do not care about their workers—they oppose it because they simply cannot afford it."

"Small businesses operate on a small profit margin," Ehlbeck said. "They do not pay more than the minimum wage because they cannot afford it. There is not a money tree in the backyard."

Higher labor costs will result in fewer jobs and reduced hours for existing employees, according to Ehlbeck. Additionally, new job creation will be stifled and employee benefits will be scaled back.

Ehlbeck acknowledged raising the minimum wage could provide a "near-term boost in consumer activity." However, she said, "the long-term effect on perpetually higher labor costs outweigh the short-term stimulus. The result is tens of thousands of job losses over the next decade."

Liberal groups, such as the union-backed Raise the Wage in NJ, in partnership with the progressive group Working Families United, favor the measure.

Paul Penna, the campaign manager for Raise the Wage, originally agreed to an interview with the Free Beacon. However, he failed to respond to questions submitted via email.

The group’s website shows numerous towns and counties have adopted resolutions urging residents to vote yes. Red Bank, Lambertville, Bayonne, Neptune, Jamesburg, and the counties of Essex and Passaic are just some of the local governments that are urging their residents to vote yes.

A review of the resolutions shows their language is similar in nature. They cite statistics put out by the progressive group the New Jersey Policy Perspective (NJPP), which claims 429,000 workers, or 11 percent, in the state earn at or near the minimum wage.

However, the number of workers in New Jersey who earn the minimum wage is 49,000, according to the Bureau of Labor Statistics. The number of workers who earn less is 54,000. This puts the total number at 103,000, far below the NJPP claim of 429,000.

The NJPP is a group has received funding from George Soros.

NJPP did not respond to a request for comment.

Update, Thursday Oct. 31, 3:13 PM: Following publication of this story, NJPP responded to the Free Beacon's request for comment. Wrote NJPP Deputy Director Jon Whiten:

We don't claim that the number of NJ workers at and below the minimum wage is 429,000. As our research clearly states, that figure refers to the number of NJ workers making between $7.25 and $9.25 an hour.

He also said that George Soros' Open Society Foundation no longer gives money to the organization.

Published under: Minimum Wage