In many countries, discussions about the minimum salary have dominated the economic discourse. The labor markets have long been a source of contention for American employees, especially when it comes to jobs offering the low pay needed to maintain the country's minimum standards of living. Campaigns to raise the minimum wage in New Jersey are particularly important for achieving economic equality. Since New Zealand's introduction of the first minimum wage legislation in 1894, many nations, including America, have adopted the minimum wage policy. New Jersey's current minimum salary is $8.44 per hour. However, many workers claim that the current minimum wage is insufficient to sustain the standards of living and thus call for an increase to $15 per hour. Nevertheless, the firm opponents of minimum wage increase note that the increase will have a petite impact on reducing poverty levels together with income inequality. These opponents emphasize their point by asserting that raising the minimum wage will lead to many cases of unemployment, particularly to the low skilled personnel.
Keywords: Minimum wage, Income inequality, New Jersey State, Economic Growth, Employment
Minimum Wage should be raised in New Jersey State
Introduction
The dispute of New Jersey minimum wage has led to varied views emanating from the proponents and opponents. In 2013, voters in New Jersey State overwhelmingly approved a ballot question which proposed for a rise in the minimum wage from $7.25 to $8.25 per hour. Even though this suggestion faced stern opposition with opponents citing consequences of undesirable impacts on the consumer price index and inflation, the bill was passed in the state. In addition, opponents argue that the increase in the minimum wage in the state will culminate into major labor costs and cause job losses to many individuals. New Jersey workers demand minimum wage increase with underlying reason alluded to the rise in the cost of living. Proponents of New Jersey minimum wage increase contend that the wage should be increased to $15 per hour. According to the proponent's contention, a rise in the minimum wage to $15 in New Jersey State will prove to be satisfactory to the low-income earners and help to elevate their living standards of people. The challenge of poverty in New Jersey State will be partly eliminated if the stakeholders adopt the proposition for a minimum wage increase to $15 per hour. The current minimum wage in the state stands at $8.44. Indeed New Jersey State has become unaffordable to many individuals due to the rise in the cost of living and thus call for an increase in the minimum wage. New Jersey policymakers have to understand that raising the minimum wage will have a positive effect on the economy of the state and help in driving up the economic development.
Purpose of Study
Arguments that center on the means to improve and drive economic development and growth have highlighted that raising the minimum wage is fundamentally significant. This research paper will focus on examining the reasons why increasing the minimum is beneficial to New Jersey state. The paper will discuss the need for increasing the minimum wage and illustrate its implications on broad spheres including the standard of living, economy, crime and also poverty reduction.
Reasons Why the Minimum Wage Should be raised in New Jersey State
Increasing the minimum wage is fundamental in raising the economic activities which will spur the creation of jobs and realize the growth of the economy of New Jersey state. The Economic Policy Institute (2016) argues that increasing the minimum wage in New Jersey from the present value to $10.10 per hour will positively inject into the US economy with approximately $22.1 billion dollars. Furthermore, Kukathas notes that the move will lead to the creation of roughly 85,000 job opportunities. Definitely, an increase in the state’s minimum wage will greatly help the low-income workers and hence, improve the entire economy. A raise of the minimum wage from $8.44 to $15 per hour will enable the salaries of 975,000 workers also to be increased. The take home earning for a worker in New Jersey who receives an income of $8.38 per hour is approximate $17,430. According to Leigh (2013), he indicated that “New Jersey would need to earn $13.78 an hour to meet his or her basic needs, and $19.73 per hour for better food and shelter, plus modest savings.” According to the Economic Policy Institute, within the first phases of the wage raise, the economy of the nation will recognize a growth of about $22 billion. In the long-term, the wage raise will result in 85,000 job creation. In an explanation given by The Federal Review Bank economists, it is contended that a minimum wage rise by approximately $1.75 will intensify the aggregate spending of the households to almost $48 billion (Liu and Thomas, 201).Notably, this will boost the GDP levels culminating in the formation of employment opportunities.
Alleviating the nations’ minimum wage will result in a reduction of the poverty level and consequently increase standards of living of people. The present minimum wage of $8.44 per hour which is offered in the state does not provide an adequate salary that would sustain the workers and make them afford all the basic needs. An estimate of 975,000 individuals in New Jersey are in support of raising the minimum wage to $15 per hour to reduce poverty. The United States Department of Labor report indicates that “increasing the minimum wage to $9 would lift 300,000 people out of poverty, and an increase to $10.10 would lift 900,000 people out of poverty” (United States Department of Labor, 2017). Besides, Leigh (2013) reports that “increasing the minimum wage to $10.10 is projected to reduce the number of non-elderly living in poverty by around 4.6 million, or by 6.8 million when longer term effects are accounted for.” Furthermore, the current minimum wages is little to enable an individual manage in payment of the daily essentials including payment of rental house (United States Department of Labor, 2017). Leigh (2013) reports that 66% of the US people, who are paid less that $10 every hour do not have enough money for payment of the basic living needs.
The productivity of the worker is greatly related to the wage earned by an individual. A raise in New Jersey state minimum wage will culminate to growth in the productivity of the worker and cause reductions in the employment turnover. The worker’s salary is a fundamental aspect that motivates a person to work more and in an efficient manner. Therefore, this recognizes the goals of an organization. Besides, if a firm gives a worker unsatisfactory income, it could lead to high rates of employee turnover as people will seek for better-paying jobs. Numerous economists note that a major solution to cultivating the worker’s productivity and decreasing the employee turnover includes solving the challenge relating to the minimum wage. Leigh (2013) highlights that “As the minimum wage rises and work become more attractive, labor turnover rates and absenteeism tend to decline.” Similarly, Liu and Thomas (2014) found notable evidence indicating that the employment turnover rates of the restaurant personnel decrease if their wages are increased. Certainly, increasing the minimum wage is beneficial in enhancing the customer satisfaction and therefore having a direct effect on increasing the revenues of a company.
Indeed, minimum wage raise will see greater reductions in the welfare spending of the New Jersey state government. Many individuals will be eligible for funding for their expenses and reduce the huge dependence rate on the government funds. Kukathas states that “Raising the minimum wage to $10.10 will reduce the Supplemental Nutrition Assistance Program spending by 6% and thus save 4.6 billion” (Leigh, 2013). United States Department of Labor (2017) further notes that the increase will reduce $7.6 billion of the US government annual spending that is primarily directed to income-support programs. In addition, minimum wage increase will attempt to reduce the deficit. The reduce dependence will reduce the federal budget and the public assistance program will be greatly curtailed. Therefore, “the reduced budget deficit will make the nation divert its revenue into other important factors that will drive the growth and development of the nation” (The Economic Cooperation and Development, 2015). Certainly, the government expenditure on the programs that are directed to the low-income workers will reduce and hence become an important economic move. Many governments incur unnecessary expenditures on programs like hospital bills, nutrition and schools as the low-income earners are not able to be able to pay the expenses for themselves. Therefore, if the government aims at curtailing its expenditures, it has to embrace the policy of minimum wage increase.
Opponents of the minimum wage increase in the state note that an increase in the minimum wage results in negative impact on the economy. Claims hold that minimum wage increase will result in unemployment particularly to the low-income earners. Opponents argue that a minimum wage raises will culminate into approximately 500,000 employment opportunities. Many of these opponents ascertain that numerous companies will lay off their workers if the minimum wage is increased. Due to the reduces hiring levels and putting off of the workers, the aspect of raising the minimum wage will result in higher poverty levels according to the opponents. The increased wages will result in an increase in the cost of production, and thus employers will seek ways of reducing the cost of production through rendering some workers unemployed. Besides, individuals against the state increase argue that the minimum wage income will have negatively affects the economy as it will lead to an increase in the inflation rate due to the increase in the prices of consumer goods. Undisputedly, one through the minimum wage increase could result in some negative impacts to the economy it is no doubt that the positive impacts far outweigh the negative effects. Therefore, the minimum wage should be increased in the state of New Jersey.
The challenges of income inequalities evident in many nations have been among the major problems that economist aim at addressing for improving the economic performance. In New Jersey, the gap between the rich and the poor is enormous due to the inequality in income distribution. The gap that exists between the rich individuals and the poor is notably wide enough and raises the alarm. Leigh argues that the gap is contributed by the low minimum wage and this impacts massively to the per capita income of the country (Leigh, 2013). Liu and Thomas state that “The big gap paints false result on the nation's standard of living, as the people are likely to imagine that the country is in the better position, while the majority of the people live in poverty” (Liu and Thomas, 2014). The US is also faced with challenges arising from income inequalities (Economic Cooperation and Development, 2015). Thus, if the government increase the minimum wage, it will lead to reductions of the high and rampant problem of income inequality. The minimum wage raise will culminate into a ripple effect that will see an increased in the income level of persons who earn considerably above the minimum wage rate. Hence, this will not only be valuable to the 3.7 million individuals who get an income that is below $10.10 per hour but also benefits the 35 million employees who earn slightly above the minimum wage rate. This will magnificently decrease the income equalities. According to Economic Policy Institute (2016) increasing the minimum wage has a ripple effect that will work in boosting the economy. Owed to the ripple effect resulting from the wage rise, the income inequality will decrease and thus have a positive economic impact.
No one can dispute the fact that the crime rate in every nation is linked to the rate of minimum wage charged in a nation. United States Department of Labor notes a correlation between the minimum wage and the crime rate concluding that low wages fuel the crime rate of a nation. Notably, if individuals are paid wages that are too low to sustain them, many of these people will resolve into finding money through illegitimate means. The illegitimate activities include drug trafficking, burglary and any violence that will bring them an extra coin. According to Liu and Thomas, it is reported that “higher wages for low-income individuals reduce crime by providing viable and sustainable employment” (Liu and Thomas, 2014). Besides, it is asserted that when the minimum wage is raised to $12 by 2020, it will lead to reductions in the crime rate to approximately 3-5% (Leigh, 2013). An increase in the wage rate will thus cause crime rates to decrease.
Conclusion
Many scholars and workers from various economic spectrums are vehemently in support of increasing the minimum wage. In support of the argument, the minimum wage increase will result in the reduction of the income inequality gap, reduce the poverty rates, decrease the crime rate and also lower the rate of government expenditure. These factors are greatly responsible for the realization of the economic objectives that are stipulated in the millennium development goals. However, even though the rise in the minimum wage rate has a positive economic impact, opponents claim that the increase leads to unemployment and high rates of inflation hence noting that the minimum wage should not be increased. Nevertheless, it has to be pointed out that increase in minimum wage in New Jersey estate will foster a healthy economic growth.
References
Economic Policy Institute. (2016). Minimum wage. Washington, DC. Accessed on June 9, 2017 from http://www.epi.org/research/minimum-wage/
Leigh, Andrew. (2013). "Does Raising The Minimum Wage Help The Poor?" SSRN Electronic Journal, Elsevier BV, doi:10.2139/ssrn.848948.
Liu, Shanshan, and Thomas Hyclak. (2014). "Employment Effects of US Minimum Wage Policy". Zarządzanie Publiczne, no. 3(33)/2015, 2015, pp. 5-15. Uniwersytet Ekonomiczny w Krakowie - Krakow University of Economics, doi:10.15678/zp.2015.33.3.01.
The Economic Cooperation and Development.(2015). Minimum Wage after Crisis. Accessed on June 9, 2017 from http://www.oecd.org/social/Focus-on-Minimum-Wages-after-the-crisis-2015.pdf
United States Department of Labor. (2017). Minimum Wage. Accessed on June 9, 2017 from https://www.dol.gov/general/topic/wages/minimumwage
