2013
This November New Jersey voters will be asked to consider raising the minimum wage $1.00 to $8.25 ($17,160 a year) AND putting future increases in the minimum wage on automatic based on inflation. I completed my absentee ballot and voted no. I voted this way not because I begrudge anyone a $2,000 raise, but because I believe any COLA is a bad idea.
A COLA removes all discretion tied to affordability and creates growing uncontrollable liabilities; Social Security, and most public employee pensions are good examples. In NJ they had to freeze pension COLA’s until the fund increased to prudent levels because it was so underfunded. In the case of the minimum wage, putting that on a COLA creates upward pressure on all other wages for the employer. During the last recession many employers froze wages or reduced them. What would happen if during such times or even financial trouble unique to a given employer, the minimum wage kept increasing? Workers losing their jobs or having hours cut are good possibilities. 😧
The right says raising the minimum wage is a job loser, the left says a job creator. Clearly one would have difficulty living on minimum wage, but most such workers are not the primary or sole family breadwinner. In addition, minimum wage jobs are low value, low skill positions that do not justify significant compensation. My first job in a town library was at $0.75 an hour, my first regular job with a major corporation in 1961 was at $1.49 an hour. At both times the minimum wage was $1.00, but I was delighted to have a job, especially the job during high school paying less than minimum wage.
Note: if you apply the BLS inflation calculator to $1.00 in 1961 it is $7.83 in 2013. Only slightly more than the current minimum wage.
Isn’t the real problem the lack of skills these workers have to get better jobs? Shouldn’t the primary goal be raising skills and thereby opportunities? Wouldn’t a shortage of unskilled workers force an increase in their wages or leave those jobs on a temporary basis to teenagers or those seeking only part-time work?
It seems to me tinkering with minimum wage and certainly putting increases on a COLA basis while other wages are not, is not well thought out policy. What is your opinion?
Some states have a higher minimum wage that under federal law.
For your reference, here is a history of the minimum wage.
QUINNSCOMMENTARY 
I underestimated the amount possible for Earned Income Tax Credit.
This is from the Wikipedia entry:
“For tax year 2012, the maximum EIC for a single person or couple filing without qualifying children is $475. The maximum EIC with one qualifying child is $3,169, with two children is $5,236, and with three or more qualifying children is $5,891.[2][3][4] These amounts are indexed annually for inflation.”
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Earned Income and adjusted gross income (AGI) must each be less than:
$45,060 ($50,270 married filing jointly) with three or more qualifying children
$41,952 ($47,162 married filing jointly) with two qualifying children
$36,920 ($42,130 married filing jointly) with one qualifying child
$13,980 ($19,190 married filing jointly) with no qualifying children
Tax Year 2012 maximum credit:
$5,891 with three or more qualifying children
$5,236 with two qualifying children
$3,169 with one qualifying child
$475 with no qualifying children
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One other comment: Few discussions of the minimum wage include mention of a crucial tax policy which directly affects low wage workers. That policy is the Earned Income Credit. In effect, a single low wage earner with two dependents may be eligible to receive back more than $3,000 from the IRS, which is in addition to receiving back all money withdrawn for taxes.
I did not realize the effects of this policy until after I retired from my real job several years ago and worked for two tax seasons at a nationwide tax preparation service.
The effect of this policy boosts the effective wage for a low wage earner with dependents between $1.50 to $2.00 an hour.
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concur completely…an important question to ask aside from the wrong headed economics of the issue, is “who benefits politically from such a policy”?
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So using Mr Ryans’ example, you don’t believe the minimum wage earners in the expensive N.E. state of New Jersey should make $1.00 per hour LESS THAN the inflation adjusted $9.29 per hour? I understand your point about COLA’S, but unfortunatly minimum wage is a law. As you said of voters, politicians will never write, vote-on or pass a updated law if they fear not getting re-elected to a job that should not be perminant anyway. I also would like to see a real survey,poll or study showing who and what jobs & employers are paying minimum wages. Opinions that the only ones are mostly high school or college KIDs receiving this may not be accurate. Maybe we should have a wage for inexperianced younger people & certain job titles, and a higher wage for older adults who have to support themselves or a family with other job titles that do not need a higher education or expertise, but need more knowledge or skill? Not sure?
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I would have voted to increase the wage if it had not be coupled with an automatic COLA. There is plenty of evidence that the vast majority of minimum wage earnings are not primary wage earners in a family and are younger people or seniors supplementing their income. Just look at who is working in the fast food chains, and similar retailers. Keep in mind that the minimum wage is virtually equal to the poverty level for a family of two.
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An artificially high minimum wage reduces employment, especially in the segment of the population which is most at risk. Having said that, I’ll mention two facts I find pertinent to the minimum wage discussion in New Jersey:
a. The minimum wage in Washington State where I now live is $9.19/hr.
b. My first job in 1965 was at the then minimum wage of $1.25/hr. If adjusted for inflation at the standard rate, $1.25 in 1965 dollars calculates to $9.29 in 2013 dollars.
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Good point about inflation.
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So, the people of New Jersey will vote on the minimum wage. Will they vote rationally, that a wage is the cost of labor which is controlled by market forces; or emotionally, that a wage is a right and is controlled by an arbitrary assignment of a value. I suspect that the blue state bias will be toward the emotional side. It will be an interesting outcome. Please keep us informed.
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There is no doubt at all it will pass. Voters are irrational and all emotion. They vote for new this or that in a town and then can’t understand why property taxes keep going up.
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As usual right on the money.
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