New Jersey Takes a Big Step to Address Economic Inequality!

January 29, 2019

Lía Fiol-Matta, Esq., Ty Hyderally, Esq.

New Jersey places itself on the list of the most progressive states in the country on the issue of elevating wages for working families. On January 17, 2019, Governor Phil Murphy and Democratic legislative leaders agreed on a bill raising the state’s minimum wage, currently $8.85, to $15.00 by 2024, joining California, New York and Massachusetts. New York City and the District of Columbia have raised the minimum wage to that level and leading national Democrats have made the issue central to their platforms, recently introducing a bill in the House of Representatives, known as the “Raise the Wage Act” of 2019, that would raise the national minimum wage to $15 by 2024, much higher than the federal hourly minimum rate of $7.25.

On January 28, 2019, a key New Jersey Senate committee endorsed the legislation sponsored by Stephen M. Sweeney, Senate President, to elevate the state’s minimum wage to $15 an hour. Under the legislation, S-15, the base minimum wage for New Jersey workers will increase to $10 an hour on July 1, 2019, to $11 an hour on January 1, 2020, and increasing thereafter by $1 an hour every January 1^st until it reaches $15 an hour on January 1, 2024. With Democrats in control of both houses of the legislature, there is no doubt the bill will pass.

In New Jersey, wages will continue to increase also by the rate of inflation, following New Jersey voters’ approval of an amendment to the state constitution in 2013 requiring that the minimum wage be increased every year by increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This is a variation of the consumer price index, as complied by the Bureau of Labor Statistics, that measures the consumer prices certain workers are required to pay for goods. According to the amendment, any increase in the CPI-W from the prior year must be applied to the state minimum wage rate in the following year. This amendment is an effort to keep wages in pace with inflation; therefore, after 2024, the $15 minimum wage will increase annually based upon the CPI-W.

The bill includes some exceptions, though. Seasonal workers and employees at businesses that employ five workers or less will reach the base minimum wage by 2026. For farm workers, the base minimum wage will increase to $12.50 an hour by January 1, 2024. At that point, a special committee will review whether to raise those workers’ minimum wage to $15 an hour following a study on the impact that raising the minimum wage for those workers would have on the agricultural industry. The plan also includes tax credits for employers who hire workers with disabilities.

In addition, the bill increases the hourly minimum wage of tipped employees from $2.13 to $5.13 over a period of five years beginning in January 2019, a welcome measure as there has been no increase for tipped workers in New Jersey in two and a half decades. The legislation also includes a training wage of 90 percent of the minimum wage for the first 120 hours of training of employees to promote new job skills.

With these much-needed wage increases on the horizon, New Jersey workers can feel proud of the initiatives the state is making to promote economic equality for employees and families in the state.

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