03/05/2012 06:09 pm ET Updated May 05, 2012

Raising the Minimum Wage: A Win-Win for New Jersey

Can you imagine trying to pay the bills and save for the future on $15,080 a year?

That's all a minimum wage job in New Jersey brings in -- a dollar amount that's well below the federal poverty level for a family of three. Getting by on that much -- to say nothing of getting ahead -- is especially tough in New Jersey, where the cost of living is higher than all but a few other states.

But while making sure hard-working New Jerseyans earn enough to support their families is a worthy goal on its own, it's not just families with low-wage breadwinners who benefit from an adequate minimum wage.

We all do.

Raising New Jersey's minimum wage to $8.50 an hour from $7.25 could inject as much as $1.5 billion into the economy. It would boost the spending power of families struggling to pay utility bills or buy new school clothes for their children. That means greater demand for goods and services throughout the economy. The end result? Many businesses will make more money and hire more workers.

The economic sparks created by raising the minimum wage can be intense.

For every $1 increase in the hourly minimum wage, a family will spend $2,800 more a year, according to a 2011 study by the Federal Reserve Bank of Chicago. A boost in New Jersey's minimum wage could benefit 460,000 workers who earn less than $10 an hour, a 2008 analysis by New Jersey Policy Perspective showed. That's because when the minimum wage is increased, a lot of people making more than the minimum -- but still not very much -- get raises too.

We should also prevent future wage erosion by tying the minimum wage to inflation. For example, if New Jersey's 1968 minimum wage of $1.40 had increased at the rate of inflation, it would be $9.35 today, not $7.25.

Despite what the critics say, raising the minimum wage will not make New Jersey less competitive. New York City Mayor Michael Bloomberg and New York State Assembly Speaker Sheldon Silver are pushing the same increase to $8.50 an hour across the Hudson River. Connecticut lawmakers have introduced legislation to raise that state's minimum wage, already $8.50 an hour, to $9.75.

Nor will raising the minimum wage cost jobs.

New Jersey's 1992 minimum wage increase didn't result in job loss, even though neighboring Pennsylvania kept its rate stable. Surveying more than 400 fast-food restaurants, a 1994 study by economists at Princeton and UC-Berkeley found that employment actually grew at New Jersey fast-food restaurants. A follow-up study in 2000 yielded similar results.

The plain truth is that a minimum wage increase would benefit all of us, without harming business.

That win-win scenario is exactly the sort of policy the state should embrace.