The New Jersey state minimum wage of $8.25 is set to increase along with inflation for the first time ever. The state Department of Labor calculated the new rate, which takes effect Thursday, January 1, at $8.37, a 1.59 percent increase.
At the same time, the maximum reimbursement rate for mileage — set by the federal Internal Revenue Service, which may have set its limit before the recent plunge in gasoline prices — has risen to 57.5 cents from 56 cents per mile. The maximums for people claiming deductions for travel associated with medical and moving activities is 23 cents per mile, down a half cent from 2014. The maximum for travel on behalf of a charitable organization is 14 cents, unchanged from 2014.
Employers are not required to reimburse employees the maximum amount. And the IRS has been known to make mid-year corrections to its maximum allowances based on changing economic conditions.
The landmark increase in the state minimum wage is a result of the 2013 referendum to increase the hourly rate from $7.25 to $8.25 an hour in January of 2014 and amend the state constitution to link future increases to inflation, beginning in 2015. Nearly 61 percent of the electorate voted in favor of it.
Under the terms of the amendment the state Department of Labor and Workforce Development must calculate — by September 30 of each year — the increase in the consumer price index for all urban wage earners and clerical workers between August of the prior year and August of the current year. At the time the amendment was being debated, analysts predicted that inflation would lead to a 2.8 percent increase in the minimum wage in 2015, to $8.48 per hour. The actual inflation rate of 1.59 percent was below the lowest of the estimates in the studies at that time.
Though the actual increase is less than $20 a month for a minimum-wage worker putting in 35 hours a week, or less than $240 for the year, the raise is still important, as a senior scholar at the Washington, D.C.-based Wider Opportunities for Women told the Asbury Park Press. The organization says that two-thirds of minimum-wage workers are women.
“That indexing is important, and that’s what’s really critical to focus on,” Mary Gatta said. “But certainly $8.25 or $8.38 now, it’s still nowhere near economic security for families in New Jersey. It’s a good thing that the minimum wage has been raised, but it is still not an economic security wage. We have a ways to go when we talk about what families really need here.”
According to Wider Opportunities for Women, a single person without children in New Jersey working a job with benefits would need an hourly wage of $19.55 for basic economic security. For a family with a preschooler and school-aged child, both adults would need jobs paying $21.30 an hour for basic security.
Unions and other proponents of the minimum wage increase spent a reported $1.3 million to lobby in favor of the referendum. Business interests spent about $1 million to defeat the measure, arguing that it would lead to job losses, among other negative consequences.