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The policies that preserve New Jersey’s poverty

This is Part 2 of a series about poverty in New Jersey.  Read Part 1 and Part 3

While New Jersey had been steadily improving in its Economic Outlook Ranking from 48 in 2008—the last year of the Jon Corzine governorship— to 39 in 2013, the Democratic Legislature reversed this seeming progress with ballot proposals that have done little to lift its citizens out of the poor house.

The November 2013 ballot proposal to make the minimum wage part of the state constitution, and to increase that wage every year, is worth examining. Since the proposal passed, the minimum wage was immediately raised from the prior $7.25 to $8.25 per hour, a 13.8 percent increase, and it will be raised each year hereafter by the nationwide cost of living. However, the current condition of the economy, the unemployment rate, or pockets of urban and rural poverty will not be taken into account.

Rather than creating long-term solutions to poverty, increasing the minimum wage actually creates more problems. A high minimum wage can be a barrier to entry for unskilled workers and make it difficult for them to get their first job, thus preventing them from gaining the skills that will enable them to earn higher salaries and get out of poverty.

Add in the cost of Obamacare and the rest of the wage wedge (the difference between what the employer pays and what the employee gets), the obtainment of low skilled, full-time employment becomes extremely difficult, leaving people more people stuck in poverty.  A high minimum wage hurts unskilled job seekers the most.

The New Jersey Legislature added another ballot initiative to the Nov. 4, 2014 ballot in the name of open space that clearly relegates the state’s poverty problem. This initiative amends the state’s constitution to divert 4 percent—soon rising to 6 percent—of the state’s business tax to “open space,” without any indication of how the Legislature plans to pay for the diversion.

Since the Legislature has not indicated that it will cut spending, it will have to raise taxes even more on the worst-taxed state in the nation.  New Jersey already owns or has preserved 30 percent of the state’s land and this constitutional amendment will increase that amount to 43.3 percent during the first 30 years alone.

This state-acquired land will be taken away from lawful use by the people of New Jersey for homes, schools, stores, places to work, and recreational facilities.  Municipalities will have difficulty expanding their ratables to pay for their schools, police, fire, water, sewers, roads, sanitation and other municipal functions.  This land grab will make it difficult for business to be attracted to the state or to stay in the state and hire workers and lift them out of poverty.

As New Jersey’s poverty rate has risen, policy proposals should be weighed against this increase now more than ever.

This is Part 2 of a series about poverty in New Jersey.  Read Part 1 and Part 3

Featured image from Shutterstock

Richard Miner

Richard is a retired corporate attorney. In New Jersey, he was General Counsel of Mohawk Data Sciences, a NYSE-listed computer company, and VP and General Counsel of Momentum Technologies, a privately held computer company. He has a J.D. from Columbia Law School, a Masters in Corporate Law from NYU Law School, a B.A. in Economics from Brown University, and a certificate in Corporate Financial Management from NYU Stern School of Business. Raised in Ridgewood, NJ and a graduate of Ridgewood High School, he enjoys downhill skiing and races Lightning sailboats from his home at Lake Mohawk, NJ.

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Categories: Budget and Finance, Economy / Business, Healthcare, Labor / Unions, Must Read, Opinion, Policy
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