US - New Jersey considers tax break for hiring teens


Following its recent minimum wage increase, New Jersey is now considering offering employers incentives for hiring young workers, WPG Talk Radio reports.

The six-step minimum wage increase - raising it to $15 per hour in 2024 - is already having an impact on the state budget and the knock-on effect which could grow as the year goes on.

The new state budget includes a figure of $88million to boost wages for people working with the elderly, at subsidised child-care facilities, or with people with developmental or intellectual disabilities. The intention is to keep pay for workers at state-contracted companies above the state’s wage floor.

The next step could be offering tax credits to employers to who hire young workers.

Mike Wallace - vice president of government affairs for the New Jersey Business and Industry Association - said, “One of the unintended consequences of increasing the minimum wage is the unexpected decrease in the employment of young people. As the minimum wage increases, employers are going to be less likely to hire youth workers with limited skills, so this bill would just make it feasible for an employee to hire people under the age of 18.”

Last month bill S3483 (link via original reporting) was endorsed by the Senate Labor Committee, Mr Wallace says the bill is likely to be considered by the Legislature this autumn. It would give employers refundable tax credits they could use to offset business or income taxes. The credits combined could reach $10million a year.

“The bill would provide an employer with a refundable tax credit against the corporate business tax or the gross income tax, for the extra wages and payroll taxes paid to a worker under the age of 18,” Mr Wallace said.

The legislation increasing the minimum wage includes $10million of annual tax credits for companies employing workers with disabilities.

On July 1, the minimum wage increased from $8.85 to $10 per hour. It will increase by $1 each January 1 for the next five years and reach $15 per hour by the start of 2024. Increases will then be made to keep pace with inflation.

When the minimum wage was debated in the Legislature, the exclusion of youth workers was considered but disregarded. There remain some employers that are not required to pay minimum wage. These include boardwalk and other seasonal amusements, summer camps and libraries.
Mr Wallace said the first effects on employment of the increased minimum wage on could be felt from next year, “What we’ve seen in other states is between $11 and $12.50 is where we see the biggest negative impact on minimum wage employees.”

Progressive advocacy groups like the National Employment Law Project (link via WPG Talk Radio) quoted research showing minimum wage increases have a negligible impact on teen employment when speaking out last year against the idea of exempting teens from the minimum wage increase.