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New Jersey approves gradual minimum wage increase to $15/hour

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Recently, the New Jersey Legislature approved gradually increasing the minimum wage for most workers to $15.00 an hour over the next five years. New Jersey already increased its minimum wage slightly on January 1, 2019 to $8.85 an hour. Most workers can expect to see another raise on July 1, 2019, when the minimum wage will rise to $10.00 an hour. Thereafter, employees will see a tiered increase over time, as follows:

  • January 1, 2020: $11.00 an hour
  • January 1, 2021: $12.00 an hour
  • January 1, 2022: $13.00 an hour
  • January 1, 2023: $14.00 an hour
  • January 1, 2024: $15.00 an hour

However, the tiered increase to the minimum wage is slower for seasonal workers and those employed by companies with five or fewer employees. Such employees’ minimum wage will reach $15.00 an hour in 2026. Farm workers will see an increase to $12.50 an hour in 2024. Thereafter, officials could continue raising farm workers’ minimum wage to $15.00 an hour by 2027.

The new law also increased the tipped minimum wage from $2.13 an hour to $5.13 an hour. This minimum, combined with tips workers receive, is required to equal the overall minimum wage. In other words, if the state minimum wage were $10.00 an hour, the employer could offset $4.87 an hour in tips against the minimum wage. If the worker doesn’t make that much in tips, the employer is required to make up the difference.

The reason for the change is to promote a livable wage among lower earners. At the current minimum wage of $8.85 an hour, a full-time worker’s annual base pay is only $18,408. Supporters of the minimum wage increase argue that this amount is not enough to cover even basic needs.

Although New Jersey has among the highest median income rates in the nation, 10 percent of its residents still live under the federal poverty line, which is intended to measure extreme poverty.

Opponents of the bill argued that small businesses cannot afford to pay a higher minimum wage and will be forced to raise prices, automate, cut jobs, or cut benefits in response to the new law. Rising prices could hurt people on fixed incomes. Moreover, some workers making the new minimum wage could lose their eligibility for social safety net programs.

The increase to $15.00 an hour in New Jersey reflects a nationwide push that has taken hold in several states, including Massachusetts, which will raise its minimum wage to $15.00 an hour a year earlier than New Jersey, and New York, where most employers must pay at least $15.00 an hour by 2021. A $15.00 per hour minimum is already in place for most employers in New York City.

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