Dispel minimum-wage myths

By Gordon MacInnes
October 21, 2013

While it's no surprise that the business lobby opposes anything that might increase costs, what is surprising about its campaign to defeat the minimum-wage increase on November's ballot is the inaccurate - and sometimes outright false - information being presented as gospel.

Let's separate those myths from reality.

Myth: Only a handful of adults would benefit from the wage going up.

Reality: The vast majority of the 241,000 New Jersey workers who would directly benefit from the modest $1 hourly wage boost - those making between $7.25 (the current minimum) and $8.25 (the proposed new minimum) per hour - are not teenagers. In fact, 77 percent are 20 or older, almost one in four are parents, and 38 percent have either gone to or graduated from college. An additional 188,000 workers who earn slightly more than the new minimum wage would be indirectly affected, seeing their hourly wages rise as employers adjust their overall pay scales.

Myth: Raising the minimum wage threatens to derail New Jersey's "robust" economic recovery and will result in the loss of existing jobs.

Reality: New Jersey's recovery has lagged far behind the nation's, and the jobs it has added are mostly lower-wage positions in the hospitality, retail, warehousing, and service industries.

Look at the experience of the eight states that raised their minimum wage in January 2012. After 19 months, they are doing no worse than the states that did not raise the wage. In fact, they are growing jobs at exactly the same rate. This confirms the scores of academic studies that have found no significant job loss from minimum-wage hikes.

Myth: Raising the minimum wage will harm New Jersey's ability to attract new jobs from other states.

Reality: The business lobby fears that employers might not want to bring their low-wage jobs to New Jersey. But this state did not become an economic powerhouse by growing low-skill jobs. Prosperity requires attracting well-paying jobs from companies drawn to a highly educated workforce; a location at the center of the world's largest market, with easy access to New York and Philadelphia; great communities with some of the nation's best public schools; and two globally recognized research universities.

Myth: Allowing the minimum wage to automatically increase in the future based on rising costs of living is bad for business.

Reality: Making sure the minimum wage rises along with the cost of food, housing, and other necessities is an important tool to ensure that New Jersey's low-wage workers don't fall ever further behind in this high-cost state. It means that they won't see a 17 percent decrease in purchasing power over just seven years, as they did between 2000 and 2007, the last time the wage went up.

Regular increases would also combat the lack of predictability that business leaders often complain about. Business owners like predictability; after all, it is much easier to plan for changes you know are coming than for ones that appear with little notice. Why, then, does the business lobby claim employers would prefer sporadic increases in the minimum wage - based on politics and a host of other unknowns - instead of consistent increases based on familiar and universally accepted inflation measures?

The business lobby's messages are, frankly, beginning to sound like a broken record. No matter the proposal - raising the minimum wage, reining in corporate business subsidies, ensuring all workers can take time off work to care for a new baby, allowing sick workers to stay home to get well without losing pay - the doomsday scenarios are the same: Workers will be laid off, others will be cut back to part-time, and New Jersey's allegedly robust recovery will come to a screeching halt.

But treating low-wage workers with minimal respect does not signal the end of the world for profitable businesses. We know this from history and experience.

Raising the minimum wage will give a better shot at success to hundreds of thousands of New Jersey's low-wage workers, who struggle to get by, and provide a modest bump in their spending power, which will help the entire economy. With facts like these on the side of raising the wage, it's no wonder the business lobby has to resort to half-truths and distortions to fight it.
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