Don’t fear a minimum wage hike in New Jersey

By Christopher Rightmire
Opinions Editor

If the governor of a state calls a proposed constitutional amendment “stupid” and “truly ridiculous,” it could be expected that his constituency would reflect that sentiment.

Governor Chris Christie’s disparaging remarks against the effort to insert a minimum wage into the state constitution, however, have been met with sturdy disagreement from the citizens of New Jersey.  According to polls, between 65 percent and 76 percent of New Jerseyans support the proposed constitutional amendment.

The amendment — which will be voted on this Tuesday — would raise the state’s minimum wage to $8.25 an hour — a dollar higher than the federal minimum wage —  to help low-income workers keep up with the cost of living.

One of the first things learned in basic economics is how adding a minimum wage can negatively affect the labor market.  The effects from a government-mandated increase in wages raises the demand for jobs while the supply of them drops. However, to paraphrase a Princeton economist, anything can be proven by a graph, and this basic logic misconstrues the big picture.

On a macro-level, raising the minimum wage has the potential to benefit the economy, and it isn’t likely to eliminate jobs.

According to Paul Krugman, who recently spoke at the College, “The great preponderance of the evidence … points to little if any negative effect of minimum wage increases on employment.”

Krugman explains that the complexity of the employer/employee relationship is one of the reasons why an increase in minimum wages won’t necessarily cause jobs to be instantly cut.

According to a 2011 Federal Reserve Bank of Chicago study, a $1 hike in the minimum wage will raise spending $2,800 in low-income households, which will help bolster our still recovering economy.

On a local level, raising New Jersey’s minimum wage above the federal government’s makes sense. The cost of living in New Jersey is exponentially higher than in many other areas of the United States.

According to a report from Legal Services of New Jersey, the standard cost of living for a single adult is $28,593 per year.  At the current minimum wage of $7.25, a worker would have to work over 70 hours a week in order to cover costs for the bare essentials. The situation gets worse when dependents are accounted for.  According to the above report, a family of four requires an absolute minimum of $64,000 to subsist.  Two minimum wage workers would have to work over 80 hours a week to reach this wage.

Using Krugman’s logic again, the only way for minimum wage earners to subsist — especially if they have a family to support —  would be through government aid.

Marginally raising the wages of low-income workers would maintain their motivation to work and ease their burden on government-funded social assistance.

This small increase, enough to help minimum-wage workers gain an additional sliver of financial independence, is all the New Jersey people are asking for with the current push to raise the minimum wage by one dollar an hour.