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10 States Will Increase the Minimum Wage Tuesday

source press release

The minimum wage will increase in 10 states on January 1, 2013, providing a modest income boost to nearly 1 million low-wage workers in Arizona, Colorado, Florida, Missouri, Montana, Ohio, Oregon, Rhode Island, Vermont and Washington. Rhode Island’s minimum wage will rise as a result of a law signed by Gov. Lincoln Chafee in June; the remaining nine states will raise their minimum wages in accordance with state laws requiring automatic annual adjustments to keep pace with the rising cost of living.

New Jersey is not on the list due to legislative delays but it can follow closely behind if the governor signs A2162, which was sent to him for approval on December 3. If that bill is signed, 307,000 New Jersey workers would receive an immediate bump in wages on March 1; 230,000 other workers would see indirect wage increases; and all these hard-working New Jerseyans would be less likely to fall behind rising costs of living thanks to future wage increases tied to the Consumer Price Index. The increased earnings would also have an immediate stimulus effect, pumping $277.7 million into the state’s ailing economy in the first year alone, according to an analysis by the Economic Policy Institute.

“No serious person thinks that a full-time worker can survive on $15,000 in high-cost New Jersey,” says New Jersey Policy Perspective president Gordon MacInnes. “This is the governor's chance to demonstrate his concern for all New Jerseyans and to inject new energy in the state's flagging economy.”

As of January 1, 2013, 19 states and the District of Columbia will have minimum wage rates above New Jersey’s rate of $7.25 per hour – which translates to just over $15,000 per year for a full-time worker - despite New Jersey having one of the highest costs of living in the nation. Ten states also adjust their minimum wages annually to keep pace with the rising cost of living – a key policy reform known as “indexing” – to ensure that real wages for the lowest-paid workers do not fall even further behind: these states include Arizona, Colorado, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont, and Washington. Nevada has not scheduled a cost of living adjustment to take effect this year.

Last year, eight states raised the minimum wage on January 1. Despite doomsday predictions by the business lobby, those states have seen more robust job growth than the nation as a whole in 2012. Those states ­– Arizona, Colorado, Florida, Montana, Ohio, Oregon, Vermont and Washington – have seen 1.7 percent growth in total nonfarm payroll from December 2011 to November 2012, while the U.S. as a whole has seen growth of 1.3 percent. New Jersey has seen growth of just 0.5 percent during the same time period. 

This year’s employment data should come as no surprise, given that a large body of research shows that raising the minimum wage does not “kill jobs.”

A groundbreaking 1994 study by David Card and Alan Krueger, current chair of the White House Council of Economic Advisers, found that an increase in New Jersey’s minimum wage did not reduce employment among fast-food restaurants. These findings have been confirmed by 15 years of economic research, including a 2010 study published in the Review of Economics and Statistics that analyzed data from more than 500 counties and found that minimum wage increases did not cost jobs. Another recent study published in April 2011 in the journal Industrial Relations found that even during times of high unemployment, minimum wage increases did not lead to job loss.