New Jersey's 24th Legislative District

Senator Steven Oroho

Senator Steve Oroho

Oroho: Murphy Misses Unintended Consequences of Forced Minimum Wage Increases

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Says Federal Tax Reforms Show the Right Way to Boost Pay

Senator Steven Oroho said that Governor Phil Murphy did not acknowledge the full impact of raising the minimum wage in a statement he issued today praising Amazon for lifting the pay of its U.S. employees to a minimum of $15/hour.

Sen. Steven Oroho said that Gov. Phil Murphy has not acknowledged that raising the minimum wage is likely to result in hourly workers losing other forms of compensation, including health benefits and performance incentives. (Pixabay)

“I am sure the Governor realizes that many hourly employees at businesses both large and small receive benefits, including health insurance, stock awards, and bonuses, that make the total value of their compensation much higher than just their hourly wage,” said Oroho (R-24). “While Governor Murphy is praising Amazon for increasing the wage portion of their employees’ compensation, he appears to ignore the fact that the company is eliminating other benefits at the same time to cover those increased wage costs. If other employers are forced by New Jersey elected officials to increase the wages they pay, they almost certainly will follow the example set by Amazon and reduce or eliminate other benefits like health insurance or bonuses to keep their labor costs from exploding.”

Amazon has confirmed that it is eliminating incentive-based monthly bonuses and restricted stock unit awards for hourly workers to coincide with their internal wage increase.

While the company says the change will make pay more predictable for employees, some warehouse workers have expressed concerns that they will make less overall following the change.

“My criticism is not of Amazon’s decision to adjust the structure of the compensation it offers in a competitive marketplace for workers, but of the suggestion that employers shouldn’t have the flexibility to find the right mix of pay and benefits to attract and keep employees,” said Oroho. “Similarly, if Amazon’s workers are unhappy with how their compensation is structured, they should have the freedom to find an employer that better meets their personal needs, even if it means accepting lower pay in exchange for other benefits that they value more, which actually may increase their family’s net cash flow. We shouldn’t take that choice away from workers at Amazon or anywhere else as many elected officials propose to do with a one-size-fits-all approach to the minimum wage.”

Oroho concluded by noting that government can’t force companies to increase total compensation, but it can create an environment where employers have additional resources to compete for the employees they need to be successful, which benefits workers.

“Over the past year, we’ve seen hundreds of businesses that employ millions of Americans announce increases in pay, bonuses, 401(k) contributions, and other forms of compensation as a result of the savings they realized through federal tax reforms,” added Oroho. “Businesses are choosing to compete for workers and reinvesting federal tax savings in their employees in many different ways. Workers at all levels are benefiting as a result. It’s a model we would be wise to emulate here in New Jersey.”

Following the enactment of the federal tax reforms, the U.S. unemployment rate has dropped to just 3.7 percent – the lowest level since 1969 – while wage growth jumped in the last quarter by 3.1 percent – the biggest increase in a decade.

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