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Battle to block N.J. bill tying minimum wage to inflation

Business groups have their work cut out if they want to defeat the measure to raise the minimum wage

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A decade ago, Vermont's first-term Republican governor was growing tired of waging war over wages.
“There were always these very large battles around whether or not the minimum wage should go up, and how much,” said Betsy Bishop, who served as chief of staff and economic development commissioner under Gov. Jim Douglas.
In 2005, Douglas signed a law creating automatic annual minimum wage adjustments based on changes in the consumer price index. Since taking effect in 2007, Vermont's minimum wage has increased from $7.25 to $8.60 per hour.

In New Jersey, business groups are uniting in a bid to block a similar measure from being enshrined in the state constitution, saying that a link between the minimum wage and inflation will stymie growth, cause job losses and be a wrecking ball to the economy.

Voters in November will decide on a constitutional amendment that would increase the minimum wage by $1, to $8.25 per hour, starting next year, followed by automatic annual cost-of-living adjustments.

It is these automatic increases in particular that have many New Jersey businesses worried, and is why they are starting early in their efforts to turn public opinion that is now overwhelmingly against them. Early polls have more than 70 percent of Jerseyans in favor of raising the rate.


Last week, opponents received help from the Washington, D.C.-based Employment Policies Institute, which began running television and radio ads against the measure.

The group has said it will run $500,000 of ads against the plan in the next two months, ahead of the traditional fall campaign season.

MAKING CUTBACKS

Laurie Ehlbeck, New Jersey state director for the National Federation of Independent Businesses, said she hopes New Jerseyans get the message. Ehlbeck said hiking the minimum wage could force employers to make cutbacks, hurting the people the measure is intended to help.

Small businesses "have a certain amount of money to work with," she said. "And if they have to pay more on payroll, something's got to give."

Ehlbeck has a personal understanding of low-wage work.

"I became a single mother when my children were young," she said. "Up until that point, I had only held minimum-wage jobs, and I hadn't worked in several years."

She sold newspapers by phone, worked in a stationery store and cleaned movie theatres before deciding to go back to school and eventually earning a law degree.

Ehlbeck said comparing the minimum wage to a living wage isn't realistic, since she said the minimum wage is designed for temporary or teen workers, or as a training wage for employers to test out new workers.

"I honestly don't believe that minimum-wage jobs are meant to support a family," she said.

Charles Hall Jr., who chairs Working Families United for New Jersey, a group advocating for the minimum wage amendment, said he applauds Ehlbeck for lifting herself out of minimum-wage work, but said he can match her story with countless examples of mothers and fathers trapped in low-wage jobs.

"I believe there's a moral obligation for us to take care of the people in our state and make sure they're able to live," he said.

Hall said the state's minimum wage has been flat since 2005, despite the fact that New Jersey is one of the most expensive states in which to live.

"We're talking about a minimum-wage increase that would be cash somewhere between $1,000 and $2,000 in their pocket, which is a big deal for low-wage workers," he said.

And that extra money would go straight into the economy, Hall said: "They're not going to put it into a 401(k)," he said.

THE ECONOMIC IMPACT

There's competing research on the impact of the amendment.

A report by the New Jersey Policy Perspective, which supports the measure, said the increased consumer spending tied to the wage increase would lift the state's gross domestic product by $175 million in 2014 alone.

An NFIB study found it could cost the state 31,000 jobs and $4.2 billion in lost economic output over the next decade if the state sees 4 percent inflation.

Hall's group, with that big lead in the polls, said his group's efforts will be grassroots, door-to-door. He said he doesn't expect to be able to keep up with the spending from business groups.

Still, Phil Kirschner, president of the New Jersey Business and Industry Association, said he knows the campaign won't be easy.

"Yes, it is an uphill battle, but it's one worth making to say, 'Look, there are two parts of the story,' " he said.

Ben Dworkin, director of the Rebovich Institute for New Jersey Politics at Rider University, said Gov. Chris Christie could be a deciding factor in the minimum wage race.

"If he ignores it and just lets the business groups and others rail against it, and he doesn't come out strongly and firmly and consistently in public with his opposition, then I think it's less likely that this (minimum wage) race will come close," Dworkin said.

However, he added, massive spending by business groups could potentially have the same effect.

'BUSINESS AS USUAL'

Dee Lentchner, owner of Accent on Engraving, in Elizabeth, said she doesn't pay her employees minimum wage because she spends time and money training them, and wants to pay enough to protect that investment. She said she has no problem with the minimum wage amendment, and said most of the colleagues don't either.

"I'm not hearing a lot of buzz, because most of my friends within the industry pay higher than minimum wage. To them, this is business as usual," she said. "It's really not going to affect anything but perhaps an entry-level position."

And while in Vermont the minimum wage increase has amounted to $1.35 per hour, that doesn't mean there haven't been problems along the way.

Bishop, who now heads Vermont's state chamber of commerce, said the law has meant the minimum wage hasn't always reflected the economic reality. For instance, she said, the wage continued to rise throughout the depths of the economic recession.

One solution, she said, might be using a variety of economic indicators, not just the consumer price index, to set the wage.

"It would have been better to build in some opportunities for taking a pause in that ever-escalating wage increase and having a mechanism or a process for that," she said.

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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