February 2013
Report to Members, By Philip Kirschner, President

Keep Minimum Wage Out of the Constitution

Lawmakers recently passed legislation to increase New Jersey’s minimum wage by 17 percent and automatically increase it every year after that according to the Consumer Price Index (CPI). (At press time, the bill was awaiting action by the Governor.) But despite this, legislative leaders are still pushing an idea that is even worse—enshrining automatic minimum wage increases in the state constitution.

NJBIA opposes increasing New Jersey’s minimum wage beyond the national rate. It doesn’t make sense economically. A minimum raise increase to $8.50 per hour would amount to a raise of $2,600 per employee (based on a 40- hour work week), and not many businesses can afford that in this economy. To accommodate the additional costs, employers will reduce employees’ hours, leave positions unfilled or even lay off workers.

Beyond this, Senate President Stephen Sweeney has moved his proposal to amend the constitution to increase the state’s minimum wage by 14 percent from $7.25 to $8.25 per hour, with automatic yearly increases thereafter tied to the CPI. Both houses passed it last year, and if the amendment passes the Legislature again this year, it would go right to the ballot to be voted on in the November election.

This is more than just a bad policy decision; it sets a bad precedent. The constitution is a foundational document, one that establishes our system of state government and secures basic rights. Amending the constitution is something that should be done only when there are foundational issues at stake— such as adding a Lieutenant Governor position as we did a couple years ago. An issue like minimum wage, which is nothing more than a contract for wages, has no business being treated like a constitutional amendment.

Furthermore, such a move could backfire in the long term. Amending the constitution is a long and complicated process. If automatic minimum wage increases are enshrined in our constitution, it would lock New Jersey into what is essentially a labor contract. And if economic conditions change, like the great recession we experienced, lawmakers would not be able to react swiftly to the new circumstances. Statutes, on the other hand, can be changed relatively easily.

Furthermore, a minimum wage constitutional amendment could open the constitution up to a host of other issues that should be settled between the Governor and the Legislature. This is what has happened in other states. 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.

And finally, a constitutional amendment is not necessary. Governor Chris Christie and Legislative leaders have proven time and again that they can work together to tackle tough issues. They have found common ground on tax reform, property tax reform, pension and benefits reform and a host of other issues. There is no reason to believe they cannot do so on the minimum wage as well.

If lawmakers really want to help the working poor, they should work to create an environment where low-wage workers are in demand by improving the business climate and helping workers improve their skills. But if lawmakers insist on making New Jersey businesses pay a vastly higher minimum wage than most other states, at least they should leave it out of the constitution. 

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 Criscuolo, Advertising Director
973-882-5004. ext. 108
l.criscuolo@njbmagazine.com

Gloria Owens, Account Executive
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g.owens@njbmagazine.com

Doug Prefach, Account Executive
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d.prefach@njbmagazine.com