Senate Labor Committee Approves 40 Percent Minimum Wage Hike, Indexing Commission

The Senate Labor Committee on January 24 unanimously released a bill that would increase New Jersey 's minimum wage by 40 percent in just a year and a half. Specifically, the bill increases the minimum wage from $5.15 per hour to $6.15 on October 1, 2005, and from $6.15 to $7.15 on October 1, 2006. The bill is strongly supported by Governor Richard Codey and is expected to be enacted by the end of June.

The bill also would establish a five-member commission to annually review and recommend to the Legislature future increases to the minimum wage, making yearly increases inevitable.

Proponents of the minimum wage increase suggest there will be little negative impact on businesses or employees. However, studies demonstrate the opposite is true. Duke University researchers concluded in a 2004 study that increases in the minimum wage typically leave lower skilled workers with fewer employment opportunities. The least employable workers are left out as more experienced workers receive the benefits of the wage increase. Similarly, a 1998 Florida State University study concluded that a minimum wage increase in Oregon resulted in lost job opportunities for thousands of low-wage workers.

Business owners would be hit hard by an increase in the minimum wage. Unlike government employers who can raise taxes or borrow money to pay higher salaries, employers have a set amount of dollars for payroll. If state government mandates an increase in employers' payroll costs, businesses will be forced to reduce employee hours or benefits, or eliminate jobs.

Additionally, a 40 percent minimum wage hike will cause a ripple effect that would negatively impact all employers. Employers who now pay their employees $7.15, $8.00 or even $9.00 per hour will be pressured to increase those wages. Higher wage employees who have proven their worth to a company would demand a pay hike to keep their salary above the entry-level minimum wage.

Higher wages also would lead to higher employer payroll taxes for Social Security, Medicare and unemployment insurance.

Employers cannot simply raise prices to offset higher wages. In a global economy, with enormous pressures from neighboring states such as Pennsylvania , which has no plans to raise its minimum wage from $5.15 per hour, as well as from foreign countries, New Jersey employers must keep their prices competitive to stay in business. It is simply unrealistic to believe that businesses will absorb a 40 percent increase in the minimum wage without any ramifications.

It is more likely that employers will look to cut costs elsewhere. What good is it to provide a person with a $2.00 per hour increase in wages if their hours are reduced or if they must pay more for health care?

Make no mistake about it; increasing the minimum wage is not a panacea for the lowest paid of our society and may end up hurting some of the very people it seeks to help.

NJBIA also opposes provisions in the bill that would allow local governments to institute even higher minimum wage requirements for vendors and contractors. This has little to do with assisting the working poor and is simply a giveaway to organized labor. At a time when the State is grappling with the high cost of property taxes, adding this language to the minimum wage bill is inappropriate. For more information, contact John Rogers at ext. 209.

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Other Workplace Issues to Watch...

As the Legislature begins to prepare for both the gubernatorial and Assembly elections this year, there are a number of workplace bills to keep your eye on. While paid-family-leave bills have previously been a source of great concern, it appears that this issue has taken a back seat in the new Codey Administration. NJBIA, however, will continue to work against the leave bills and other costly bills to ensure that the policy decisions in Trenton do not adversely affect the State's businesses. Meanwhile, NJBIA vigorously opposes these bills working their way through the Legislature:

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Instant Unionization
S-194 (Smith)

This bill establishes a card check procedure for certain employers that are not covered by the National Labor Relations Act (NRLA). The bill would require the instant unionization of an employer whenever a majority of employees sign cards indicating their mere “interest” in forming a union. It would bypass the normal secret-ballot election process. Formation of a union by an election is one of the basic tenets of the NLRA. This bill seeks to eliminate the election process altogether. Employers win more than half of all elections when employees get to hear both sides and vote in a confidential election. The bill was released by the Senate Labor Committee on December 13, 2004, and is awaiting action on the Senate floor.

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Employer Neutrality
A-3042 (Van Drew)

This bill prohibits nonunion employers from using public funds to oppose unionization activities. Since most companies deposit all monies into one company account, it would be impossible for companies to meet the burden of proof, especially businesses like hospitals and nursing homes or contractors that have a high percentage of government-related income. The legislation would force companies either to remain neutral to organizing drives or to give up their government contracts or funding. This bill is really an attempt by unions to use State law to eliminate competition from qualified nonunion contractors. The bill was released by the Assembly Labor Committee on September 30, 2004, and is awaiting action on the Assembly floor.

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Plant Closing
A-3417 (Van Drew)

This bill establishes a statewide plant closing procedure for certain businesses. Specifically, the bill requires businesses with 50-199 employees to provide 90 days notice prior to the closing of its facility or the layoff of 50 or more employees. Additionally, the bill requires businesses with more than 200 employees to provide 180 days notice prior to any closing or layoff. The notice must be provided to the employee, the NJ Department of Labor and local officials.

Requiring a business which is struggling financially to provide as much as six months notice of any potential layoffs would actually exacerbate its financial woes. Suppliers and customers would react negatively if a business is forced to go public with its financial difficulties. Suppliers might demand cash payments for deliveries and customers might seek new vendors, fearing that the business could no longer service their needs. This kind of reaction would lead to an even greater loss of jobs. The bill was released by the Assembly Labor Committee on October 18, 2004, and is awaiting action on the Assembly floor.

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OPERATION RETURN TO WORK—March 11

Employers' Mission : To Secure a Successful “Workplace” Transition for Workers Returning from Temporary Service in the Armed Forces

More than 6,000 New Jersey residents have been deployed in places like Iraq and Afghanistan as mobilized members of the National Guard or Armed Forces Reserves. When they return to work, will you be ready for them? Find out by joining us at Operation Return to Work on Friday, March 11, 2005, for a briefing breakfast at Forsgate Country Club, Exit 8A, NJ Turnpike, Monroe Township .

Returning from combat areas halfway around the world requires a period of adjustment, not only for the soldiers, but for their families and their fellow workers as well. This special briefing is being held in conjunction with the New Jersey Department of Military and Veterans Affairs, New Jersey Employer Support for the Guard and Reserve (ESGR) Committee, and the New Jersey State League of Municipalities. Learn about your legal rights and responsibilities as an employer and find out how to ease the transition from the field of combat back to the office, store, or factory floor. The cost to register is $35. Contact Sherry Esteves at 609-393-7707, ext 219.

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Changes to Lobbying Laws Would Require Employees Who Contact Government to Register as Lobbyists

Imagine that you are struggling to obtain a permit from the NJ Department of Environmental Protection (DEP). You have recently removed your underground oil storage tank and have drilled wells to determine whether there has been any degradation of the water supply. After several months with no negative readings, you have your engineer call the case manager at DEP to request that the department issue a “clean bill of health.”

Did you know that under new regulations such a phone call could set in motion the need to register your engineer as a lobbyist?

Until now, registered lobbyists were those who spent most of their working hours talking with policy makers and trying to influence the passage of legislation or enactment of regulations. But last summer, the Legislature enacted substantial changes to the lobbying laws that turn businesspeople into lobbyists if they contact the State of New Jersey on anything from environmental permits to public bidding contracts.

According to new regulations proposed January 15 by the Election Law Enforcement Commission (ELEC), which is responsible for enforcing the new law, thousands of employers will have to register as lobbyists, pay an annual registration fee, and file periodic reports disclosing their activities. If businesses fail to register as lobbyists, but continue to contact State government, they could face fines and penalties of up to $1,000 for each violation.

Specifically, the regulations would require any person who “influences governmental processes” to register as a lobbyist. There is an exception for individuals who spend less than 20 hours in any calendar year on these activities, but this number is deceiving. In the past, ELEC has included time spent preparing for an effort to influence any governmental process, not just the time spent contacting a government official. Most activities regarding permitting, rate setting or bidding will probably cross this 20-hour threshold.

The proposed regulations define a “governmental processes” as:

• Promulgation of executive orders;
• Rate setting;
• Development, negotiation, award, modification or cancellation of public contracts;
• Issuance, denial, modification renewal, revocation or suspension of permits, licenses or waivers;
• Procedures for bidding;
• Imposition or modification of fines and penalties;
• Procedures for purchasing;
• Rendition of administrative determinations; and
• Award, denial, modification, renewal or termination of financial assistance, grant or loans.
  

However, there is an opportunity to comment on these proposed regulations prior to adoption. Realizing the scope of such a massive change in the lobbying law, ELEC has scheduled a public hearing to solicit testimony on the proposed regulations on Tuesday, March 15. The hearing will begin at 11:15 a.m. and be held at the Mary G. Roebling Building in Trenton . Additionally, you may submit written comments to ELEC by March 19. Send them to:

Michelle R. Levy
Assistant Legal Director
Election Law Enforcement
Commission
PO Box 185
Trenton , NJ 08625-0185

Businesses should consider the different types of government contacts that will be subject to the new regulations. We urge you to testify or submit comments. The more comments that are received by ELEC opposing these regulations, the greater the likelihood that the proposed regulations will be rescinded or modified.

For more information regarding the ELEC regulations contact John Rogers.

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Whistleblower Notification Posters Available

The NJ Department of Labor has made sample posters available to help employers comply with the new Whistleblower notification law that took effect September 14, 2004. A pdf version of the poster is available at www.njbia.org/humanr.htm . Employers who wish to obtain a larger version of this poster, or who would like assistance translating this poster to another language may call the Department of Labor and Workforce Development at 609-777-3200. It can also be found at the department's Web site at www.state.nj.us/labor .

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NEW JERSEY EMPLOYMENT WATCH
NJ Enjoys Solid Employment Growth but Sees Big Jump in Government Jobs

The State economy turned the corner last year, adding 58,800 private-sector jobs and another 17,100 government jobs for a total of 75,900 new jobs in all.

While the State turned in its best performance in four years, economists said the unusually high growth in the number of government jobs was problematical.

Economists with the Rutgers Economic Advisory Service said in a recent report that the 2.7 percent surge in public-sector employment was bigger than any other sector of the State economy. “This is one result of Statewide deficit spending, and is one of the contributing causes to the endemic property tax problem in New Jersey ,” the authors said.

Government job growth in New Jersey , whether measured as an absolute number or as a percentage increase, also outstripped comparable employment growth in neighboring states and the nation.

The 2.7 percent growth rate in New Jersey last year was three times faster than in the nation as a whole. In the neighboring states of Connecticut and New York , the number of public-sector jobs declined, while in Pennsylvania , Maryland and Delaware , they increased only marginally.

New Jersey's rapidly expanding government bureaucracy, far from being a sign of economic strength, can be viewed as a drag on growth because it is supported by rising state and local taxes, which robs businesses and consumers of spending power. Most of the growth in government employment came at the State level, where 7,500 jobs were added, followed by local schools (4,500), and local governments (4,300). Federal employment declined last year in New Jersey .
Putting aside the issue of government employment, the New Jersey economy had a good year in 2004. The net gain of 58,800 private-sector jobs was the best in four years. This followed a meager gain of 12,000 jobs in 2003 and declines in 2001 and 2002.

Even with last year's gain, the State's private-sector remains 3,300 jobs short of the all-time employment high of 3,431,200 jobs set in December 2000. Thus, four years after the start of the 2001 recession, New Jersey still has not won back all of the jobs lost in the downturn.

If government jobs are added back in, New Jersey 's employment picture appears to be brighter. Total statewide employment, which includes both private and public sector jobs, eclipsed its pre-recession high in April 2004.

The growth of the State employment, though steady over the last year, was uneven.

The sectors that contributed most to last year's private-sector job growth were private education and health services (15,200 jobs), leisure and hospitality (12,500), professional and business services (10,400), financial services (9,600), and construction (8,200).

These gains were somewhat offset by continued small losses in two sectors that, while they have put the worst behind them, are still shedding jobs—namely, manufacturing (down 4,600 jobs in 2004) and information (down 700), which includes telecommunications and computer technology.

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