Posted by: Middleclass Search | October 29, 2013

New Jersey’s Minimum Wage

In this year’s general election in the state of New Jersey, the state has a constitutional amendment to set a state minimum wage with annual cost of living increases. As you might guess those opposing a minimum wage increase are rolling out the obsolete data that states that low-wage jobs will be lost if minimum wage is increased. Several months ago we noted a study that took all previous studies data from both for and against raising the minimum wage and the effect on employment and found that the net effect was zero.

Part of the concern of raising the minimum wage is the ripple effect it has on all wages. Economists have long noted that in a non-fully employed economy the only two bargaining areas that employees have when negotiating wages are unions and the minimum wage.

A good minimum wage will help return the economy to a demand side approach. Since the Nixon administration the nation has been following supply side economics, an economic policy which has been called “voodoo economics” by many economists. I recommend that you read search “supply side economics” on the web since as a system engineer I don’t want to miss represent the concept but basically it argues that if you lower taxes, investors will have more money to invest in businesses thus creating more jobs. But what actually happened is many investors put the money into financial instruments and not job creating opportunities and the jobs that are created are not in the middle class wage group.

The strong middle-class was created in a time of demand economic policy that ran from the end of World War II to the early 1970s. There were some problems in demand economic policy basically stagflation (inflation rate is high and unemployment is high). Neither the supply approach nor the demand approach appears to incorporate the concept of a global economy. But the American middle-class fared much better during the demand economic policy.

A minimum wage is the first step in recognizing the need for “floors” in America’s wages in a global economy. Other “floors” politicians should consider are “Living Wage” and “Middleclass Wage”.

Vote for the minimum wage constitutional amendment in New Jersey general election.

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