Towns Grapple With Minimum Wage Hike

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Under the landmark minimum wage bill recently signed by Gov. Phil Murphy, municipalities will now have to pay workers $10 an hour beginning July 1, up from $8.85. That wage will gradually increase to $15 by 2024.

The increase will immediately affect municipal budget planning in towns large and small, said Michael F. Cerra, executive director of the New Jersey State League of Municipalities.

“Municipalities are calculating their new budgets and preparing for the effects of this bill as we speak,” Cerra told The Two River Times in a Feb. 13 interview.

In coming days, the League will release a comprehensive guide to help its 565 member municipalities absorb and adjust to the new law. It has expressed its opposition to the wage law, fearing it could force some towns to either increase fees or reduce or eliminate services.

“While there may be merit to increasing the minimum wage, legislators did not look at the other cost drivers connected to it,” said Cerra. “Municipalities are not private sector. We operate under a 2 percent cap. Because of these other cost drivers, this bill is like death by a thousand cuts.”

In Two River towns like Middletown, Highlands and Fair Haven, township administrators are grappling with the numbers.

Middletown, with nearly 70,000 residents spread out over 58.7 square miles, is one of the largest towns in Monmouth County and, like many other municipalities, the township employs maintenance, department of public works operations and recreational workers at minimum wage.

Middletown Township administrator Anthony P. Mercantante said he has done a study of the township’s work- force and determined that the minimum wage boost will affect 17 workers in July. But that number will grow as the rate gradually increases and more workers must receive pay increases. By 2024 when the minimum wage reaches $15 an hour, the number of employees af fected by the bill will be 112.

Mercantante called the bill “misleading.”

“It’s a ‘ripple up’ effect that wasn’t considered,” Mercantante said Wednesday. “Some of our contracted workers have mandatory separations between levels of workers. This is seen a lot in the police department. If a minimum wage worker is required to make $15, by contract their super visor is going to have to receive a raise, too, and so on.”

Middletown Mayor Tony S. Perry said if all services and programs remain the same, taxpayers can expect that raise to increase its annual township budget by approximately $750,000.

“A lot of people question that number, that it doesn’t sound right, and think it’s an impossibility. What they’re not considering, and what hasn’t been clearly explained by legislators, is the total compensation and the downhill rolling effect it has on taxpayers,” Perry said. Highlands Borough administrator Kim Gonzalez said, in the case of her town, with a population of about 5,000 on 1.4 square miles, and others like it, smaller size means a smaller budget with maneuvering needed and little wiggle room to spare.

“We’re hoping to not have to cut services or programming, but I am reviewing our budget right now and decreases in certain areas are needed,” Gonzalez told The Two River Times Feb. 12. “We do have to see if we need to get rid of some expenses. Whether it be a small service to residents or something else. It’s unavoidable. This (bill) is going to impact us. When you’re a smaller town, working with a smaller budget, the dollars and cents add up.”

For example, Gonzalez pointed out that many municipalities employ crossing guards.

“Guards don’t usually start above $10 an hour, let alone $15. It’s something all towns need to watch and it can make a big impact on a community,” she said.

Fair Haven administrator Theresa S. Casagrande said the wage increase will impact municipalities differently, but it could also serve as a benefit to some.

“If raising wages can help you attract and retain high quality part-time employees it’s going to be a benefit to your town. And it’s beneficial to hire these types of quality part-time workers, because most do not qualify for benefits and it’s not as expensive for a town.”

Cerra said the League of Municipalities hoped the bill would exempt local governments from the minimum wage hikes, but Mercantante did not agree with that view.

“Though an exemption would have helped us financially, it would’ve put us in a tough spot because it wouldn’t have allowed us to compete for quality workers,” Mercantante said. “Many of our minimum wage workers are in our DPW. It’s hard work. If someone can make more by working a less physically strenuous job at Burger King or Kohl’s, that’s where they’re going to go.”

Seasonal workers are not included in the bill.

Both Perry and Gonzalez said they wish there had been more communication between legislators and municipalities before Murphy signed the bill, a sentiment shared by state Sens. Vin Gopal (D-11) and Declan O’Scanlon (R-13). Both voted against the bill.

“We all want people to make as much money as they can and there is room for a wage hike, but a lot more work needed to go into this bill.” O’Scanlon said to The Two River Times in a Feb. 11 interview.

O’Scanlon believes the bill should have included a “pause button” of sorts, in which small businesses, nonprofit groups and even municipalities could increase wages immediately, but in a year’s time adjust those wages up or down based on the strength of weakness of the economy.

“No one can predict what will happen five years down the line or one year down the line. And now that it was signed I honestly don’t think we’ll revisit the bill five years from now if the economy is in bad shape,” O’Scanlon added.

Gopal agreed some groups should have been exempt from the bill.

“This is a terribly written bill that is going to hurt non-profits, hurt small businesses and hurt municipalities,” Gopal told The Two River Times Monday afternoon. “The ones who will benefit most are the big corporations because they can absorb costs. This is a dangerous piece of legislation.”