Rising minimum wage puts strains on New Jersey's small businesses
Some owners of small businesses in New Jersey say that it is becoming too expensive to continue to operate in the state, especially after a law mandates an increase in the minimum wage.
The minimum wage in New Jersey rose to $11 per hour as of Jan. 1, up from $10 per hour. It will rise by $1 every year until 2024 when the minimum wage reaches $15 per hour in the Garden State.
“Unfortunately, it is just getting too expensive as a small business to operate in New Jersey,” says Scott Mele.
Mele owns Trenton-based Tektite, a company that makes make flashlights, beacons and distress signals which are shipped all over the world. Mele has two employees who make minimum wage.
“They are worth it so I don't really have an issue with them making that kind of money,” he says.
But Mele says that rising minimum wage is one of a host of economic reasons that has him wondering if he should move his manufacturing business just a few miles across the Delaware River into Pennsylvania.
“It's a very portable business, I can manufacture in Pennsylvania just as easily as I do here,” Mele says. “And in fact, we just renewed our lease for one year instead of five years, because I'm actively looking for a location across the river.”
Michele Sierkerka, president and CEO of the New Jersey Business and Industry Association, says that small businesses throughout New Jersey are facing increased costs due to mandates from the state. She says that in the last year, New Jersey has also added to the cost of doing business paid sick leave and the expansion of paid family leave.
“When you increase their cost of doing business, their alternatives are – 1: Cut their expenses or 2: increase the costs of their products and services,” Sierkerka says. “Our members have told us that's exactly what they're going to have to do in response to the increase in minimum wage.”
In a statement on New Year's Day, Gov. Phil Murphy hailed the minimum wage increase, saying it will "give more workers the opportunity to join the middle class, which will strengthen our economy over the long-term."
It's basically the state forcing me to change the way I want to operate my business,” says Mele. “They said, ‘Well, you know, if you relocate to Pennsylvania you're going to save about $70,000 a year. That, for a company our size, that's a big deal.”
The minimum wage will increase again to $12 an hour on New Year's Day 2021.