In $15 Minimum Wage Debate, Assembly Republicans Warn of Unintended Consequences

O'Scanlon warns of strain on nonprofit healthcare providers in a Senate committee hearing on raising the state's minimum wage

O’Scanlon warns of strain on nonprofit healthcare providers in a Senate committee hearing on raising the state’s minimum wage

TRENTON — As lawmakers consider a Democratically sponsored bill to raise the state’s minimum wage to $15 an hour in as soon as five years, state Republicans are pointing to the wage hike’s potential impact to New Jersey’s already strained budget. In his testimony at the Senate Labor Committee hearing where that bill advanced Monday, Assemblyman Declan O’Scanlon predicted that healthcare providers who receive state funding would turn to the state  to offset the cost.

O’Scanlon offered The Arc of New Jersey, a healthcare provider and advocacy group for the disabled, as one example. The bill from Senate President Steve Sweeney to raise the minimum wage to $10.10 an hour by 2017 and to $15 by 2021 could, he said, leave providers in the lurch.

“At a budget hearing last month, we heard testimony from ARC and the community of mental healthcare providers,” O’Scanlon said. “These are people sympathetic to an increase in wages for healthcare workers who are making $10 an hour and haven’t had a raise in years. But together, they estimated a fully phased in minimum wage of $15 would have a shocking $250 million effect on their budgets.  If the State isn’t picking up that tab then they have no idea how to plug the hole.

“Between fully phasing in our public employee pension payments, transportation funding, and a host of other things, within five or six years, we’re looking at a $7 to $8 billion budget problem.”

Assemblyman Anthony Bucco (R-25) echoed O’Scanlon’s concerns, saying in a statement that same day that organizations would not only be forced to seek out more space in budget but also compromise their ability to provide essential services.

“Aside from the obvious economic impact, raising the minimum wage will devastate nonprofits’ ability to provide valuable services to our most vulnerable citizens,” Bucco wrote. “Either we will have to come up with significantly more funding in the state budget, which we do not have, or these organizations will need to make significant cut backs. The end result will be a loss of service to those that need it most.

“This will affect many organizations like the ARC of New Jersey and treatment centers for drug and alcohol abuse,” Bucco continued.

The NJBIA, one of the most important contributors to state Republicans’ electoral war chest, suggested that same day that the state devise ways to drive down the cost of housing, childcare and health insurance rather than mandate a higher wage. The group’s president also predicted a slowdown in New Jersey’s recovery from the 2008 recession. An analyst from the NJEA, the business group’s counterpart across the aisle, invoked Republicans’ eagerness for a phase-out of the state’s estate tax (O’Scanlon and Bucco have both argued vociferously for eliminating the tax) when addressing how the state intends to pay for the increase.