Linda Doherty, President and CEO of the New Jersey Food Council (NJFC) released the following statement regarding S-15, legislation which would increase the minimum wage in New Jersey by 79 percent to $15 an hour:
“New Jersey’s food retail and distribution industry employs almost 200,000 workers annually. This proposed 79 percent minimum wage increase is a drastic rise in labor costs that will result in the loss of food industry jobs and higher prices for New Jersey consumers.
“New Jersey’s food industry is shrinking and facing unprecedented competition from online retailers, big box stores, drug chains and dollar stores. Some food companies have been unable to survive these industry challenges, as illustrated by the recent bankruptcy of A&P/Pathmark headquartered in New Jersey and the Chapter 11 filing of Fairway Markets with several New Jersey locations.
“Minimum wage increases reduce access to entry level jobs, particularly in labor intensive industries such as food retail and distribution. Additionally, this legislation does not take into account the fact that our members also provide generous health insurance benefits, 401k match savings plans, and fringe benefits like tuition reimbursement. These benefits significantly add to labor costs and raise the current wage rate by approximately $8 an hour. If our businesses have to absorb dramatic increases in labor costs, our stores will face tough choices, including cutting the workforce, reducing hours or scaling back benefits.
“A critically important consequence of this proposal is the significant impact on job growth. Economists John Dunham & Associates are in the process of conducting a comprehensive economic analysis of New Jersey’s food retail and distribution industry. Their initial findings show that New Jersey has lagged behind national job growth, both in lower-skilled jobs and in total jobs, in almost every year the minimum wage was increased.
“Currently, New Jersey is ranked 13th highest in the nation with a $8.38 minimum wage. In reviewing the historic data, New Jersey has lagged behind national job growth, both in lower-skilled jobs and in total jobs, in almost every year the minimum wage was increased. We reason that slow job growth is due to the higher minimum wage having a negative impact on business hiring decisions.
“Over this 25-year span, if New Jersey jobs had kept pace with national job growth, we estimate that there would be 18,000 more lower-skilled jobs and a staggering 620,000 more total jobs by year 2015. To put that in perspective, that is roughly 44 private sector jobs per municipality per year.
“Finally, an increase in the minimum wage will also have an impact on food prices. Since food retailers operate on very slim margins, they would be unable to absorb the entire cost of a 79 percent increase. Our economist’s research indicates that the price of necessities such as toilet paper would go up by 19 percent. These price increases hurt all New Jersey residents, particularly those who will not see a corresponding rise in their salaries, such as seniors on a fixed income or those who already make above the minimum wage.
“Our stores are the anchor of almost every New Jersey community, and our industry has an impact on the health and wellness of every New Jersey resident. This drastic proposed increase will jeopardize new food retail investment and job growth and will raise prices for food and groceries for all New Jersey families.”