President George W. Bush signed a bill in May 2007 that would eventually increase the federal minimum wage substantially but gradually, with the last hike in the summer of 2009 after he left office. National unemployment then was only 4.4 percent, and 22 states already had a higher minimum. So, the damage was not felt until later — particularly in New Jersey.
The federal minimum wage rose 12 percent on July 24, 2008, and by another 10.7 percent to $7.25 an hour a year later. By 2010, this had become a serious problem, made even more serious in suicidal states with even higher minimums such as California, Nevada, Florida, Illinois, Rhode Island and Michigan. As it turns out, however, the higher federal minimum wage had a uniquely vicious impact on New Jersey.
Out of nearly 3.8 million people working in New Jersey in 2010, more than 57 percent were salaried and, therefore, unaffected by the minimum wage. Among the remaining 1.6 million who did work for an hourly wage, only 31,000 (1.9 percent) were earning the minimum wage, according to a Bureau of Labor Statistics report.
But the small number of workers earning the minimum wage greatly understates the impact. Why? Because New Jersey had 82,000 people earning less than the minimum wage in 2010 — up from just 25,000 in 2007. In other words, after the last hike in the minimum wage, an astonishing 5.2 percent of all New Jersey workers supposedly affected by the law ended up earning less than the minimum wage, sometimes much less. That 5.2 percent figure was the second-highest in the nation, behind only Louisiana (5.9 percent). Jobs that pay less than the minimum far outnumber those that pay the minimum, particularly in New Jersey.
How could so many people be earning less than the minimum wage? The reason is that there all sorts of exemptions in federal and state minimum wage laws that act as a safety valve to minimize job losses that could otherwise prove politically embarrassing.
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