Raising N.J. minimum wage would have unintended consequences

Original Article: http://www.nj.com/times-opinion/index.ssf/2012/10/opinion_raising_nj_minimum_wag.html

  • Author: Michael Saltsman

  • Publication Date: October 2012

  • Newspaper: Times of Trenton

  • Topics: Minimum Wage

New Jersey Senate President Steven Sweeney (D-West Deptford) recently proposed a measure that would ask New Jersey voters to raise the state’s minimum wage to $8.25 and then have it rise with inflation — a proposal he defended on these pages (op-ed, “A constitutional guarantee for workers’ minimum wage,” Oct. 3).

Sweeney’s political logic is clear: Polls show broad support for a wage hike, so a wage-related ballot measure is likely to pass.

Recently, the Employment Policies Institute commissioned market research firm ORC International to ask voters a similar question: Would they support legislation that gives everyone earning under $50,000 a year an annual 10 percent raise? Two-thirds of respondents said yes, they would support a bill like that — a bill that would force an untold number of New Jersey businesses to raise prices through the roof or close their doors.

The point isn’t that the voting public in New Jersey is unintelligent, but that public opinion on pleasant-sounding policies such as a higher minimum wage is easily swayed when not informed by the fine print on the law’s consequences.

Consider the results of another ORC International poll conducted earlier this year. It first asked respondents if they supported a higher minimum wage, and predictably found broad support. But then the pollster asked another question: Would respondents still support that higher minimum wage if they knew the average family income of a beneficiary is above $50,000? Support for the wage hike dropped by 17 percentage points once respondents were asked that question.

Here’s the most surprising result: When respondents were asked if they would support a wage hike if the policy would make it more difficult for low-skilled adults and teenagers to get hired, majority support for the policy flipped to majority opposition; only 46 percent were still willing to support a higher minimum wage.

This consequence isn’t a hypothetical: A team of economists from Cornell University, San Diego State University and the University of Oregon found that the last state-legislated increase in neighboring New York reduced employment for less-educated 16- to 29-year-olds by more than 20 percent. If the voting public in New Jersey isn’t made aware of key facts like this, then popular support for a minimum wage hike is meaningless.

Unfortunately, meaningless appeals to public opinion (and the misleading studies that complement them) are the lifeblood of campaigns for a higher minimum wage. For instance, a few weeks ago, Assembly Speaker Sheila Oliver (D-East Orange) went so far as to claim that a higher minimum wage could stimulate the state’s economy, pointing to overall unemployment rates that fell slightly after a handful of states raised their minimum wage last year.

Leave aside the lack of published economic research to support the speaker’s point. Just as with a briefly worded ballot initiative, what’s left unsaid is just as important (or even more important) than the talking point. The speaker omitted from her report the fact that unemployment rates for less-skilled groups such as teens — the people who actually earn the minimum wage — are among the highest in the nation in states such as Washington that link their wage to inflation.

She might also have noted that 85 percent of the most credible economic studies on the subject from the last two decades point to a loss of job opportunities for less-skilled employees following a minimum-wage increase.

Unfortunately, we haven’t seen the last of these unserious “studies” or of polls that omit the fine print.

Voters in the Garden State should take time to educate themselves about the unintended consequences of a higher minimum wage — and perhaps educate their representatives, too.