Senator Steven Oroho (R-24) said a minimum wage increase signed into law by Governor Phil Murphy today will lead to reductions in other forms of employee compensation.

“The legislation signed by Governor Murphy fails to recognize that most employers have a fixed budget for total compensation, which often covers the cost of wages, bonuses, health benefits, life insurance, and vacation time,” said Oroho. “When one of those costs goes up, another cost has to be reduced. By mandating higher wages, the Governor’s action is certain to lead to the elimination of bonuses, a reduction of paid time off, and higher premiums, deductibles, and co-pays for health benefits for many workers.”

Oroho said that kind of compensation trade-off was demonstrated by Amazon when it announced in October that it was raising pay for hourly employees to $15/hour.

“The simple fact is that companies like Amazon will not adjust total compensation, despite paying a higher minimum wage,” Oroho added. “In exchange for getting bumped to $15 an hour, Amazon workers lost monthly performance bonuses and stock awards. Other employers may compensate by reducing other benefits that workers value, like health insurance and vacation days. State government shouldn’t assume that every worker wants to trade other valuable benefits they receive for the higher hourly wage that’s being forced on their employer.”

“The bottom line is State government continuing to tell companies how to run their businesses will push jobs out of state and then no one wins,” Oroho concluded.