NJ's minimum wage will rise on Jan. 1 - but not for everyone. What workers need to know

Starting Jan. 1, New Jersey’s minimum wage will rise by $1 and reach its highest level ever, $15.13 an hour, thanks to a law passed by Democratic lawmakers and signed by Gov. Phil Murphy in 2019.

The hourly minimum currently stands at $14.13 an hour. The latest increase will boost it to almost double the $8.60 an hour workers were getting when Murphy signed the law.

The increase will affect about 350,000 of the state's roughly 1.9 million hourly workers, the state Labor Department said in a statement Thursday. But not everyone will get a bump. Several classes of workers are exempt, at least temporarily.

Here's what New Jerseyans need to know about the new minimum wage − and the debate about pushing it even higher in coming years.

NJ minimum wage 2024: How it compares

In neighboring Pennsylvania, the state hourly rate is still the same as the federal minimum wage of $7.25 an hour. New York workers, however, have a higher base: Come 2024, the minimum wage will be $16 an hour in New York City, Westchester County and Long Island and $15 for the rest of the Empire State.

The state of Washington and Washington, D.C., will have the highest minimum wages with an hourly rate of $16.28 and $17, respectively.

“There is no doubt that inflation has had an impact on every New Jerseyan," Murphy said in the Thursday statement. "Now that we are close to surpassing the $15 per hour milestone, it’s important that we continue to ensure that everyone working in New Jersey has access to a livable wage.”

Unemployment, disability pay also rising

Other work-related benefits will also go up in 2024, due to requirements of state law. Unemployment insurance benefits will increase from $830 to $854 a week, according to Murphy's office. Temporary disability will increase by $30 to $1,055 a week, and maximum weekly worker's compensation benefits will increase by $32 to $1,131 a week.

Who's left out of minimum wage increase?

But not everyone in New Jersey will qualify for the increase, as there are several carve-outs under the minimum-wage law. Many workers will be guided by separate timetables, hitting $15.13 an hour at later dates.

Seasonal employers, small businesses

The law grants seasonal employers and employers with six or fewer than workers until 2026 to reach $15 an hour. Still, their pay will increase by 80 cents next year to $13.73.

“You want to cut them a little bit more slack so they can organize themselves a bit better, but they’re not exempt from the law,” said Parul Jain, who teaches finance and economics at Rutgers Business School.

Agricultural workers

Workers employed on a farm will also see their wage increase at a slower pace, not reaching $15 an hour until 2027. In 2024, their wages will increase 80 cents to $12.81 an hour.

Tipped workers

Wages for tipped workers, such as restaurant servers, will stay at $5.26 an hour. If tips plus the subminimum wage don’t add up to at least the regular minimum wage, the employer has to make up the difference.

If a tipped worker spends more than 20% of his or her time on non-tipped duties, the employer must pay the minimum wage for time spent on those non-tipped duties.

Teen workers

Teen workers meanwhile are exempt from the state minimum wage if they don’t work in certain industries like retail and food service, according to the state Department of Labor.

A bill proposed by state Assemblyman Anthony Verrelli, D-Mercer, would remove that exemption for minors. The proposal was approved by the state Assembly Labor Committee in November, but it's not clear when or if it will get a vote before the full Assembly or state Senate.

“It is unjust to pay workers differently based on age, especially when minors contribute significantly to New Jersey’s workforce,” said Verrelli.

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Can New Jersey's economy handle more?

Murphy floated the idea of a higher minimum wage, upwards of $18 or $20 an hour, during a December segment of his radio call-in show on WNYC, “Ask Governor Murphy.”

Inflation has eaten away at some of the value of the increase state Democrats touted in 2019. Workers would need $18.22 in today's dollars to equal the buying power of the $15 an hour target the legislature approved four years ago, based on the federal government’s inflation calculator.

Figures from the federal Bureau of Labor Statistics show that nationally the average pay in leisure and hospitality this November was $21.55 an hour, while retail trade was $24.14.

“The market has already responded,” said Jain, the Rutgers professor. “Because, people don’t want to come, even if you hire to clean your house, to do anything, it may very well be in the vicinity of $25 to $30 an hour.”

According to the Massachusetts Institute of Technology’s “Living Wage Calculator,” two working parents with two children would each need to earn $30.22 an hour in Bergen County to afford a basic standard of living in 2023.

The “living wage” attempts to calculate how much a person would need to make to afford basic necessities including food, child care, health care, housing, transportation and broadband access.

“I don’t think it was fully anticipated that inflation would remain stubborn and certain cost-of-living factors would kick in a great deal,” Jain said.

An employer weighs in

Howie Felixbrod, who owns Blue Moon Mexican Cafe in Wyckoff, wasn’t thrilled about the prospect of such a level of pay.

“It’s difficult enough to pay them the minimum that’s going up to $15.13 an hour,” he said in a phone interview. Labor costs have gone up 30% over the past four years, Felixbrod said, and he estimated that he's raised prices three times in the past two years, particularly on alcohol.

Felixbrod said that should an increase go into effect he would “just have to keep raising prices.”

“There’s nothing else I can do, and it’s not like I’m the only one,” he lamented.

Daniel Munoz covers business, consumer affairs, labor and the economy for NorthJersey.com and The Record.

Email: munozd@northjersey.com; Twitter:@danielmunoz100

This article originally appeared on NorthJersey.com: NJ minimum wage to rise in 2024, but not for all. Here's a rundown