New Jersey’s minimum wage for most businesses will rise to $11 an hour from $10  beginning Jan. 1 — Wednesday, the next step on its climb to $15 in 2024.

The hike will give most of the state’s lowest-paid workers an immediate 10% raise — and force their employers to increase consumer prices, slow down hiring or simply absorb the cost.

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The minimum wage hike started July 1 in a bid by Gov. Phil Murphy to jump-start the wages of low-paid workers in a state that has a high cost of living. One recent report found nearly 40% of New Jerseyans couldn’t afford basic needs.

See Murphy sign the minimum wage bill in the video above.

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New Jersey is one of two-dozen states that will increase the minimum wage. And some 17 cities and counties, including New York City, already have reached $15 an hour, a USA TODAY report said.

“These increases will put much-needed money into the hands of the lowest-paid workers, many of whom struggle with high and ever-increasing costs of living,” said Yannet Lathrop, a researcher and policy analyst at the National Employment Law Project, an advocacy group that compiled data for USA TODAY.

Five questions:

Who will benefit?

Some 1.2 million New Jerseyans were expected to see their pay rise, according to the left-leaning New Jersey Policy Perspective, a research group.

Despite the rising wage, it will still fall short of what it takes to make ends meet. The cost of basic household expenses in New Jersey in 2016 was $74,748, or $37.37 an hour, for two adults with one infant and one preschooler, and $26,640, or $13.32 an hour, for a single adult, according to a study by the United Way. 

What will happen to businesses that were exempt in 2019?

Seasonal businesses that make most of their money during the summer, employers with fewer than six employees, and agriculture businesses were given a reprieve last year. But they will increase their minimum wage from $8.85 an hour to $10.30 an hour in 2020.

Restaurants with tipped workers will need to increase their base pay from $2.63 an hour to $3.13 an hour. They need to ensure their employees make at least $11 an hour through a combination of wages and tips.

What is the impact of a higher minimum wage?

Worker advocates say a higher minimum wage will chip away at poverty. Employer advocates say it will lead to fewer jobs.

Who’s right?

The Congressional Budget Office last July, studying the impact of a national minimum wage of $15 an hour, found it would do both. It said:

  • About 17 million workers would get a pay increase, and another 10 million workers who make slightly more than the minimum wage could see their wages rise, too. That amounts to about 17% of the U.S. labor force that is employed.
  • Some 1.3 million workers would become jobless.
  • Another 1.3 million workers would no longer be in poverty.

How will businesses respond?

The New Jersey Business and Industry Association, the state’s biggest business lobby, surveyed its members in September and found 51% would be impacted by a $15 hourly minimum wage.

About one-third of those said they would increase prices; 21% said they would reduce staff; 15% said they would reduce benefits; and 13% said they would automate.

“It’s significantly raising our labor cost in an already tight market,” said Paul Altero, co-owner and founder of Bubbakoo’s Burritos, which has 35 stores, most of which are in New Jersey.

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But some big New Jersey employers, including Amazon, already pay at least $15 an hour. And other employers say the higher minimum wage has helped them improve productivity.

ECOS, a Cypress, California-based company with a manufacturing plant in Parsippany, makes ecologically friendly cleaning products. It increased its minimum wage to $17 an hour in 2014 and saw its voluntary turnover fall by 50%.

“Paying a strong minimum wage has strengthened our company and improved our competitive advantage in the marketplace,” Kelly Vlahakis-Hanks, ECOS’ president and chief executive officer, said.

What comes next?

State Sen. Vin Gopal, D-Monmouth, and Sen. Kristin Corrado, R-Bergen, introduced a bill last March that would suspend the scheduled minimum wage increases in case of an economic downturn — based on employment data, retail sales and state tax revenue.

Murphy, the chief proponent of the higher minimum wage, would appear to stand in the way. It means the wage is likely to rise to $12 an hour, or $11.10 for tourism businesses, in 2021.

Michael L. Diamond is a business reporter who has been covering the New Jersey economy for 20 years. He can be reached at 732-643-4038; [email protected]; and on Twitter @mdiamondapp.

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