NJ Minimum Wage Increases To $13 For Some Workers On New Year's

NEW JERSEY — New Jersey’s lowest-paid employees will see an increase in wages to start the New Year, as the state’s minimum wage is set to rise on Saturday.

For most minimum-wage workers, that will mean a $1 increase to $13 per hour under the state law signed by Gov. Phil Murphy in 2019. That legislation is set to bring the state's minimum wage to $15 per hour by 2024.

Small employers and seasonal employers have two additional years to reach the $15 per hour to lessen the impact on their businesses. As a result, employees of those businesses will see an 80-cent increase, from $11.10 to $11.90 per hour, according to the state Department of Labor.

Direct-care workers in long-term care facilities will see a $1 increase to $16 per hour.

Tipped workers, such as restaurant staff, will see their base rate rise to $5.13 per hour, and agricultural workers will see an increase to $11.05 per hour, under the law. For tipped workers, the law requires employers to make up the difference between the $5.13 per hour if the employee's tips don't bring them to $13, but also allows employers to take a $7.87 tip credit.

The state Labor Department sets the minimum wage for the coming year using either the rate specified in the law or through a calculation based on the Consumer Price Index, whichever is higher. Once the minimum wage reaches $15 per hour, the state Constitution specifies that it continues to increase annually based on any increase in the Consumer Price Index.

The minimum wage increase comes as a number of employers say they are still struggling to hire enough workers to fill positions amid a labor shortage that has persisted since the spring. Fast food and regular restaurants, convenience stores and other retail businesses still have “help wanted” signs up, even as they have offered signing bonuses, health benefits and other perks to draw employees.

Many employers say they have raised their wages already because of the labor shortage, and while ads posted by larger companies offered hourly pay of $15 or $16 for holiday workers, it’s unclear how many employers already are paying above the minimum.

The New Jersey Business and Industry Association says the increase in the minimum wage comes at a bad time for businesses that are still struggling because of the effects of the pandemic.

"For some businesses with very small profit margins — or no profits at all right now — the extra dollar per hour could indeed prove to be an added challenge," said Michele Siekerka, the association's president and CEO, "especially if they are now paying increased costs for supplies and shipping."

"The market law in every economy that can’t be changed by governments is the higher the price of something, the lower the quantity that will be purchased," William Dunkelberg, chief economist for the National Federation of Independent Business and a professor at Temple University, said in an April 2021 commentary in Forbes on the national minimum wage debate. "This applies to labor as well. To stay in business, owners will have to figure out how to pass on and reduce those labor costs by raising prices or reducing employment."

New Jersey is one of 29 states with minimum wages that exceed the federal minimum wage of $7.25 per hour, a rate that has not changed since 2009. Twenty-one states have minimum wage increases that take effect Saturday.

Studies cited by the Economic Policy Institute have found that increasing the minimum wage has not led to large-scale layoffs among small businesses. That report, from 2004, looked at the effects of increases in the federal minimum wage increases in 1990 and 1996, and cited a report by the Fiscal Policy Institute that looked specifically at businesses with fewer than 50 employees, and compared “outcomes between states with minimum wages above the federal level and those at the federal level.”

It found that between 1998 and 2001, the number of small businesses grew twice as quickly in states with higher minimum wages (3.1 percent vs. 1.6 percent), and employment grew 1.5 percent faster in states with minimum wages that exceeded the federal minimum.

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