By Cindy (Myojung) Kim
Layout, Design & Production Editor
The Garden State’s minimum wage is set to rise to $15 by increasing $1 annually from 2019 to 2024. Governor Phil Murphy has made a public announcement on Jan. 31 stating, “No one working a full-time job should ever live in poverty.”
Murphy also mentioned that more than 1 million workers in New Jersey will be able to envision their place in the middle class once the bill is signed into law.
New Jersey locals pay about 13.4 percent more for their basic life necessities than the average US population, making it the 5th most expensive state to live in. Therefore, such legislative change seems imperative and coherent for this state. However, the topic of unemployment has been brought up due to this minimum wage increase.
The American Economic Review recently published a study that provides evidence that an increase in minimum wage reduces employment in the long run and has a negative effect on employment over a 10-year interval. Researchers found that 1 percent increase in wages leads to 0.3 percent to 1 percent decrease in the employment rate.
In addition, the state’s unemployment rate dropped to 4.4 percent in May, according to preliminary estimates produced by the U.S. Bureau of Labor Statistics. New Jersey’s unemployment rate reached a 10-year low, placing it well above the national average of 3.8 percent.
The threat of losing job opportunities in the Garden State has the attention of many low wage workers, whom will be most affected by the minimum wage increase. Small business owners will also be greatly impacted due to not being able to afford to employ ample number of employees. They may even have to lay off some of their current employees.
Even though such statics are alarming to many, it doesn’t necessarily mean minimum wage increase is a bad policy. However, the statistics do depict that higher minimum wage has a cost, especially regarding the amount of job opportunities for lower skill workers.