Minimum Wage ... Another Indirect Tax On Consumers ... New Jersey's Overburdened, Overtaxed Small Businesses Fear Bankruptcy, Closure ... Larger Businesses Are Moving Out-Of-State ... End Result Is Loss Of Jobs ... Consumers Are Forced To Pay More In Rising Prices In An Already Over-Inflated Economy In Order To Cover Increased Business Operational Costs And Taxes In A Competitive Environment ...
Someone has to foot the new bill, and it is smaller employers who will feel it the most. "Any increase in operational costs affects them disproportionately," said Laurie Ehlbeck, the state director of the National Federation of Independent Businesses. "Our employers are really trying to be competitive in a competitive field."
Friday, September 29, 2006
Roselio Morillo Jr. worked a minimum-wage job at a Livingston toy factory for the past four years, filling out orders and loading goods onto pallets. When he boarded a jitney back to Passaic at the end of the week, he would take home about $160.
"I'm an individual. I'm an American citizen," said Morillo, 33, who was laid off in July. "You settle for whatever you can get. But you just want to spend a day without going hungry."
Morillo and thousands of New Jersey residents will get a little boost on Sunday when the minimum wage is increased by $1. The state's hourly rate will go from $6.15 to $7.15, $2 higher than the national minimum wage.
While unions and anti-poverty groups are celebrating, some small businesses and retailers are worried that this could break their already strained banks.
"It's definitely going to affect us," said Natalie Colledge, the third generation of family running the Styertowne Bakery in Clifton. "It's a huge increase."
Last year, the state Legislature agreed to raise the state's minimum wage by $2 over two years. New Jersey's rate will now be similar to that of surrounding states. Connecticut's minimum wage is $7.40 an hour, Vermont's is $7.25, and New York's will be $7.15 as of Jan. 1.
"Our region has a higher cost of living. We're just keeping pace," said David Socolow, commissioner of the New Jersey Department of Labor and Workforce Development, in a phone interview Thursday.
States have slowly enacted their own laws over the federal minimum wage, which has been stuck at $5.15 per hour since 1997. Employers must comply with the state amounts when they are more than the federal requirements, according to the U.S. Department of Labor.
The number of American workers receiving $5.15 has dropped substantially, falling from 570,000 in 2002 to 479,000 last year. This drop could represent an increase in the number of illegal workers who took over these minimum-wage jobs and whose employment is not reported to the government.
"Our department is very concerned about the underground economy," said Socolow, who said his office has collected $3 million in back wages kept from workers.
Approximately 264,400 workers in New Jersey now receive the minimum wage, according to the state Labor Department. A full-time worker would make around $12,300 at the current rate, and $14,300 at $7.15 an hour.
That increase would have made a big difference for Morillo. He was earning $5.45 at his old job, which was just above the state's previous minimum wage. While thankful to have benefits, he could barely live on his salary.
"With all the pressure and stress, I'm going to have a heart attack when I'm 35," said Morillo, half joking.
Three-quarters of minimum wage workers were in the service industry in 2005, according to the federal Labor Department. Many are food and beverage servers, or staff in the leisure and hospitality sector.
Minimum-wage employees tend to be young, entry-level staff who work part time. Half are under the age of 25, Department of Labor statistics show.
Andrei Romanovski, of Clifton, fits that mold. The high school student works part time at the Stop and Shop on Allwood Road, stacking fruits and vegetables for $7 an hour.
He was pleased to hear about his coming 15-cent increase. "Any bit helps," said Romanovski, smoking a cigarette before beginning his 2 p.m. shift.
But someone has to foot the new bill, and it is smaller employers who will feel it the most. "Any increase in operational costs affects them disproportionately," said Laurie Ehlbeck, the state director of the National Federation of Independent Businesses. "Our employers are really trying to be competitive in a competitive field."
Styertowne Bakery can attest to that struggle. After 47 years of business, they have plenty of devotees to their award-winning coffee cake and apricot rugelach. But with chains like Costco touting rock-bottom prices -- and basic ingredients like milk getting more costly -- continuing to turn a profit is tough.
"A lot of bakeries are going out of business," Colledge said.
Styertowne employs about 10 part-timers to staff their long 7 a.m. to 9 p.m. schedule. They range in age and are paid the minimum wage. Colledge worries about absorbing their pay increases.
"It's tough when you are selling things for 40 cents," she said, standing over trays of elaborate, but economical, cookies.
The wage change comes on the back of the state's 1 percent sales tax increase last month. New Jersey will also expand its sales tax Sunday to several items, including dry cleaning, landscaping, limousines and massages.
Some employers are worried that the minimum wage increase will force them to raise salaries for other staff. "The ripple effect is one of our biggest concerns," said John Holub, president of the New Jersey Retail Merchants Association.
Many local businesses said they already pay their employees more than the minimum wage, and the possible domino effect doesn't concern them. "If you hire someone you can trust to watch people, you should give them a better wage," said Rich Pocsi, Jr. of RNR Truck Repair in Paterson.
Some merchants feared they would have to raise prices to cover the new wage costs. Socolow, however, expected that shift to be minimal.
"Frankly, consumers won't see this," he said, citing a study that found a $1 wage increase resulted in merchants tacking an extra penny on to a $10 item.
Now eyeing a $10 an-hour job at the new Lowe's store in Paterson, Morillo will vouch for the importance of every additional dollar.
"With a little less money, I can't do anything," he said.
Copyright © 2006 North Jersey Media Group Inc.
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