December 2012
At Issue, By Stephanie Riehl, Assistant Vice President

Like a Bad Penny, Proposed Minimum Wage Hike Turns up Again

\When lawmakers proposed increasing New Jersey’s minimum wage by 17 percent last spring, NJBIA led a coalition of businesses groups that successfully kept the proposal from passing. But like a bad penny, the minimum wage increase is back, and this time there is a twist to the issue that should have all businesses very concerned.

Having failed to enact a minimum-wage increase legislatively, Senate President Stephen Sweeney has proposed a constitutional amendment that would not only enshrine New Jersey’s minimum wage in the state constitution; it would automatically increase it every year.

NJBIA has argued that increasing the minimum wage beyond the federal minimum wage is bad economic policy, particularly when economic growth is weak. But putting a minimum wage increase in the constitution is even worse because it subverts the legislative process, is difficult to change, and would set a precedent that could open the constitution up to a wide range of issues that should rightfully be decided by the Legislature.

Sweeney’s proposal would amend the constitution to increase the state’s minimum wage by 14 percent from $7.25 to $8.25. Automatic yearly increases thereafter would be tied to the Consumer Price Index. If the amendment passes the Legislature two years in a row, it would go right to the ballot to be approved by voters in the next election. In other words, the Legislature would not need Governor Chris Christie’s approval.

Such a move could backfire in the long term. A constitutional amendment locks New Jersey into what is essentially a labor contract and does so in a document that is designed to establish our basic enduring principles. Should the Legislature want to change this policy in the future, it would have to go through the same lengthy and complicated process. Statutes, on the other hand, can be changed relatively easily, allowing lawmakers to better react to economic conditions. This is why even proponents of a minimum wage increase recognize that the constitution is not the way to do it.

By forcing a minimum wage increase on to the ballot, New Jersey runs the risk of becoming like other states that frequently open up their constitutions to legislative issues. Washington State’s Constitution has been amended 102 times, four of those times were in 2007 alone, and California’s Constitution has been amended over 500 times.

Raising the minimum wage through an amendment to the constitution would also put New Jersey out of step with the majority of other states in the nation and all of the states in our region. Only four other states include minimum wage provisions in their constitutions – Colorado, Florida, Nevada and Ohio.

Rather than artificially increasing wages through the constitution, legislators should work to create an environment where such workers are in demand by improving the business climate and helping low-wage workers improve their skills. The most effective way to improve employees’ economic opportunities is through basic skills and employment training. Such improvements make workers more productive and more valuable to employers, giving them greater marketability.

For these reasons, we’re urging our state senators to vote no on the constitutional amendment and instead work with the business community to strengthen our proven and effective workforce development initiatives. To weigh in with your Senator, visit our legislative action center at www.njbia.org/MembershipAlerts.

Vincent Schweikert, Vice President & Publisher
973-882-5004. ext. 110
v.schweikert@njbmagazine.com

Anthony Birritteri, Editor-in-Chief
973-882-5004. ext. 104
a.birritteri@njbmagazine.com

George Saliba, Managing Editor
973-882-5004. ext. 106
g.saliba@njbmagazine.com

Lisa Fragati-Criscuolo, Advertising Manager
973-882-5004. ext. 108
l.criscuolo@njbmagazine.com

Gloria Owens, Account Executive
973-882-5004. ext. 109
g.owens@njbmagazine.com

Doug Prefach, Account Executive
973-882-5004. ext. 102
d.prefach@njbmagazine.com