On January 1st of this year, 10 states raised their minimum wage. New Jersey, however, won’t be joining them. Chris Christie vetoed legislation that would have increased the state’s minimum wage to $8.50 per hour and also tie it to the consumer price index. Christie instead offered a smaller increase that would be phased in over three years with no automatic increases. Apart from being a bad economic decision, Christie’s veto goes against the will of the vast majority of New Jersey voters. A striking 86 percent of voters in New Jersey favor raising the minimum wage. Within those that support raising the minimum wage, 32 percent would like to see it increase to $8.45 while 45 percent would like to see it increased even more.
Christie falsely claims minimum wage increases hurt small businesses and the state’s economy. In fact, the opposite is true. Increasing the minimum wage increases the buying power of millions of workers -- as a coalition of small business owners in favor of increasing the minimum wage has pointed out. This ultimately generates more business and more hiring.
Moreover, tying minimum wage to the consumer price index just ensures that the wage keeps up with the rate of inflation. The minimum wage now is actually lower in value now than it was in 1968. If the Federal minimum wage had been adjusted for inflation over the last 40 years, it would be $10.58, much higher than the current value of $7.25. The declining value of wages is a big contributor to the growing levels of inequality.
Inaction on minimum wage is not just a story about increasing economic inequality. It's also a story about rising political inequality. Though large majorities of the voting public want a higher minimum wage, it is not a priority for the affluent "donor class" or for the corporate interests that heavily influence our political system. A recent survey of affluent Americans found that only 40 percent thought the minimum wage should be high enough to keep people out of poverty. In contrast, 78 percent of the general public believes so. In addition, groups that oppose the minimum wage, like the U.S. Chamber of Commerce, spend millions of dollars on campaign contributions and lobbying to ensure their issues are prioritized. As a result, the federal minimum wage remained stagnant for 10 years and is now, like New Jersey, just $7.25.
There are not many issues that garner public support levels in the high eighties. Increasing the minimum wage has broad, bi-partisan public support, yet to no avail. Like the laser focus on deficit reduction, instead of job creation, the fight over the minimum wage is another example of overwhelming public sentiment being ignored in favor of the priorities of monied interests. Until we limit the influence the affluent and corporations have on the political system, public priorities will continue to be ignored.
New Jersey has one of the highest unemployment rates in the country. A big reason is that its residents are too tapped out financially to purchase goods and services. The state needs stronger consumer demand, and putting more money in the pockets of lower income workers -- people who tend to spend extra cash immediately -- is one sure way to stoke such demand. Chris Christie needs to pay more attention to economists and less attention to donors.