O’Scanlon: $54 Million Increase in Subsidies Shows Cost of Murphy’s Minimum Wage Hike to Families & Taxpayers

Calls it a “textbook lesson” of the ripple effects caused by minimum wage hikes on the economy

Senator Declan O’Scanlon said that $54 million of new subsidies announced by Governor Phil Murphy to cover the rising cost of childcare due to an increased minimum wage highlights the pain caused by government mandated wage policies to both families and taxpayers.

“I’ve said it before and I’ll say it again – raising the minimum wage sounds lovely in theory but stings in reality,” O’Scanlon (R-Monmouth) said. “While this $54 million childcare subsidy may seem great for a few qualifying families that are struggling to afford childcare, there are many other low- and middle-income families that won’t get a penny of help as their cost of living rises as a direct result of Governor Murphy’s minimum wage increases. The simple fact is that most New Jersey families will be stuck shelling out more of their hard-earned money for a variety of services, including childcare, which have become less affordable as costs have been driven higher by expensive government mandates.”

O’Scanlon’s comments are in response to news that Governor Phil Murphy is increasing subsidies for childcare to a small number of qualifying families by $54 million. This is to compensate for higher cost of providing those services due to a law the Governor enacted which has begun the process of raising the minimum wage to $15/hour.

“Increasing taxpayer-funded subsidies to cover higher costs associated with Murphy’s minimum wage hike is like putting a Band-Aid on a gushing wound.” O’Scanlon said. “We’ll pay tens of millions more across all levels of government this year. It’s not just the $54 million that State taxpayers will pay for the childcare subsidies that Murphy just announced. Property taxpayers, for example, will pay millions more to cover higher wages for everything from their local public works to their recreation departments. There’s no level of government or taxpayer that will be spared from paying for these higher wage costs in one way or another.”

In addition to the $54 million subsidy for childcare, tens of millions more in spending was included in the FY20 State Budget to account for costs associated with the minimum wage increase, including:

• $20 million for direct service providers’ wage increases;
• $9 million for Work First NJ Child Care wage increases;
• $300,000 for state worker wage increases; and
• $1.5 million for grant increases to cover wage increases.

O’Scanlon said the pain will compound as the hourly minimum wage continues to increase by $1 each year under the law signed by Governor Murphy. State taxpayers will likely pay hundreds of millions of dollars more annually when the minimum wage reaches $15/hour on January 1, 2024.

“This $54 million of childcare subsidies demonstrates how willing Governor Murphy will be to shovel our tax dollars into the gaping holes created by his minimum wage increase,” added O’Scanlon. “Unfortunately, that’s just the tip of the iceberg. Each year as the minimum wage rises and costs escalate, you can be certain he’ll demand higher taxes and more government spending to compensate. It’s a textbook lesson of the ripple effects of minimum wage hikes on the economy.”