Minimum Wage Increase
Early in 2019, New Jersey Governor Phil Murphy signed legislation to raise the minimum wage from $8.85 per hour to $15 per hour incrementally each year through 2024. However, increasing the minimum wage without also increasing payments for child care providers will result in a crisis in child care affordability and access across New Jersey.
On July 1, 2019, the state minimum wage was raised to $10 per hour, which also raised costs for child care centers approximately 7%, equivalent to $19 million overall. Child care centers spend about 65% of their budget on labor costs, and raises were required for about 25% of workers, who were being paid less than $10/hour.
Child care centers, unlike other businesses who need to absorb higher costs, can’t pass these increases along to their customers, who are in this case, parents--many of whom are from low-income families or who are already struggling to come up with payments. Cutting worker hours would affect operating hours of child care centers, impacting working families. It’s also difficult to cut costs from within; state mandates require specific student-teacher ratios, and child care workers are already some of the lowest wage earners in the state.
“Child care workers have an enormous responsibility, nurturing and educating the children of New Jersey families. The additional compensation due to the minimum wage increase will be a tremendous lift for child care workers, but the reality is that providers will be unable to pay them without more state support. Higher wages for child care workers must come with higher state investment,” said Cecilia Zalkind, Advocates for Children of New Jersey (ACNJ) president and CEO.
If increases do get passed onto parents, they will be faced with an impossible choice, and many will ultimately have to remove their children from care, or turn to unlicensed centers. If workers’ hours are cut, centers may need to close earlier, impacting working parents. Even more catastrophic is that centers may be forced to close altogether.
Advocates are recommending additional funding from the state to make up that $19 million gap, but that would solve the problem only for this year. As more increases are scheduled annually, without a long-term solution, this will continue to be an ongoing crisis affecting thousands of New Jersey residents.