The state Department of Labor and Workforce Development released June job figures yesterday. Here’s the good news: job losses slowed to 2,100 overall and 1,500 in the private-sector. The bad news is that unemployment increased by 0.4% to 9.2%. That’s the highest in three decades and it is a full percentage point higher than any bordering state.
DOL Press Release
Raw Data Cross-tabs
This marks the 17th consecutive month of job loss in New Jersey.
News that is “not as bad” as the immediate past can be somewhat comforting, but with each month that passes we get closer to a decade of negative private-sector job growth. At a certain point, sluggish job growth stops becoming a stagnant economy and just becomes the average for your state.
Kudos to the Wall Street Journal for being one of the last papers to explain the basic, free market principle of a higher minimum wage; it yields higher unemployment among the very young and the very poor.
On July 24, the wage will increase by $.70 to $7.25 per hour. The trouble is that Congress cannot repeal the law of supply and demand. Therefore, unskilled workers (who are usually the youngest and/or the most impoverished in our society) who cannot generate that amount of value per hour are likely to see their wages fall to $0. The unemployment rate for American teenagers is already 24%.
[I]n a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.
First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."
Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.
Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.
Your blogger made the same argument on New Jersey Now last summer. So, while Congress passes laws and congratulates themselves for the seen results, more unseen Americans will be unable to find work because government decided to mandate a higher price for labor. That's a curious strategy for growing ourselves out of the recession.
The Tax Foundation takes a look at the top marginal tax rate in all 50 states if a 4% health-care surtax were imposed,
Funding for increases in the federal government's spending on health care continues to be debated in Washington. The newest funding proposal floated by the House Ways and Means Committee is a surtax levied on married tax returns with adjusted gross incomes (AGI) over $250,000 and single returns earning above $200,000. While there is speculation as to what the actual surtax rate will be, the 4 percent figure seems to be the focal point.
A 4-percent federal surtax along with recent increases targeted at high-income taxpayers at the state level has led to concern over how high the top tax rates would be in each state, especially large states with very high top marginal tax rates like California and New York. Some researchers merely sum the rates at the federal, state and local level to give a statutory total tax rate. A more accurate method is to calculate the effective marginal tax rate. The effective marginal tax rate takes into consideration deductions and exclusions in order to present a truer measure of an individual's rate. Technically, it is the change in tax liability for a $1 increase in income.
And your not-so-top three,
|
State |
Top State Rate |
Top Federal Ordinary Rate |
New Surtax |
Medicare Tax |
Top Effective Marginal Rate |
|
HI |
11.00% |
39.60% |
4.00% |
2.90% |
55.84% |
|
OR |
11.00% |
39.60% |
4.00% |
2.90% |
55.84% |
|
NJ |
10.75% |
39.60% |
4.00% |
2.90% |
55.61% |
Both budget committees passed a much smaller version of the proposed $75 million tax increase on health insurance premiums yesterday. The new hike will be closer to $13 million, and will remove one particularly harmful provision that could have forced an insurer out of the New Jersey marketplace. CIANJ's testimony in opposition to S-2016/A-4108 is available at this link. The committee statement on the legislation is available here.
Both houses of the legislature are expected to vote on the revamped budget - complete with partial property tax rebate restoration - on Thursday.
The Assembly and Senate budget committees will meet today to discuss where to appropriate the newly-found $400 million within the FY '10 budget. CIANJ is urging the legislature to use part of the money to offset the more than $75 million in tax increases that would be applied to health insurance premiums in New Jersey.
A-4108/S-2016 would more than double the tax rate on group accident and health insurance premiums from 1% to 2.25%. It also applies the 2.25% premium tax to dental service corporations. Many large companies self-insure, meaning small businesses and individuals would pay the largest share of resulting higher premiums. The state Mandated Health Benefits Advisory Council estimates a 1% increase in premiums results in 4,800 - 14,000 individuals being priced out of the market.
In the last three months, 20,000 lives have lost their health insurance coverage. The legislature needs to avoid exacerbating that problem, and it can do that today by rejecting A-4108/S-2016. Look for an update on this bill's status later today.
Your blogger came to Trenton with all of the appropriate intros written. The gloomy day as metaphor for the gloomy budget was atop the list. It looks like all of those have to go back into the can, as today's legislative vote on the budget has been postponed.
Governor Corzine just announced that the tax amnesty program has collected $600 million, which is $400 million more than expected. The legislature will re-commit the spending bill, and all related bills (including the $1 billion in tax increases) to committeeee. The full budget is now expected to be voted upon next week.
A balanced budget must be approved by June 30, according to the state constitution.
Look for the State House to resemble Bloody Kansas between now and then.
Some budgetary diction for our new readers:
A diversionis the taking money that would have gone to a specific fund, and sending it someplace else in the New Jersey bureaucracy.
A raid is taking money already in a dedicated fund's balance sheet, and removing it for another purpose.
A budget session uses both tactics.
Got it? Good. So does today's Philadelphia Inquirer, which outlines some of the budgetary diversions and raids that have come back to punish New Jersey individual and corporate taxpayers in the past, and what the raids in this year's budget could mean.
Transfers in amounts ranging from $2 million to $75 million will be part of votes set for tomorrow.
Critics in both parties say the money shifts - often characterized as "raids" - helped create the state's financial morass. They deplete reserves that may be needed later and usually serve as short-term fixes that leave holes in later budgets.
The most glaring example is New Jersey's unemployment fund, which helps workers when they lose their jobs.
For years the program, supported by taxes on businesses and employees, was flush with cash. Lawmakers and governors tapped it for $4.7 billion, using the money for other spending. But when the economic crisis struck, the program was too depleted to meet rising unemployment claims.
And because of that mismanagement, employers now face a $350 million tax increase to replenish the Unemployment Insurance (UI). What the Inquirer does not mention is that a Constitutional Amendment (SCR 60) to prohibit future raids of employee benefit funds received unanimous support from the New Jersey Senate, but has languished on the desks of an Assembly Committee this year.
So this summer, when legislators make their case as to why they deserve re-election, be sure to ask them if they support a Constitutional lock on TDI and UI, and why they voted for budgets that raided one or both funds.
After hours of testimony and debate, the Senate and Assembly Budget panels voted mainly along party lines to approve the FY'10 spending proposal and $1 billion in related tax increases. The one exception to the party-line vote was Senator Joseph Vitale (D), who voted "NO" over objections to cuts to NJ FamilyCare. Final legislative votes are scheduled for Thursday.
Hitting the links:
The Record focuses on cuts required of colleges and health aid
The editoral board of the Star-Ledger cheers the fact audits will now be required for towns requesting "Special" municipal aid.
The Asbury Park Press is the only paper to note this is the seventh straight year that medicaid prescription co-payments have been proposed by a governor and scrapped by the legislature.
Once on Governor Corzine's desk, he has until June 30th to sign the budget into law.
Long-time blog readers know CIANJ has advocated for the elimination of the Special Review Assessment - the alternative high school graduation test that has been been used heavily in under-performing school districts.
To graduate from a NJ public high school, a student is expected to pass the High School Proficiency Assessment (HSPA), which has been described by the Education Commissioner as one of 8th grade skills. Students who fail the HPSA three times are allowed to take the SRA, which is a subjective test graded by teachers in a student's home district.
Critics have long assailed the integrity of the test -- known as the Special Review Assessment or SRA -- for its questionable scoring and the fact that nearly everyone passes it.
"The SRA has morphed into a culture of low expectations," Newark School Superintendent Clifford Janey said. "We're losing sight of its original purpose. If I had my druthers, I would eliminate it or make sure that we don't have more than 10 percent of students ... taking the SRA."
That is certainly not the case in many urban districts, including Newark, where 36 percent of high school seniors took it this year. In some school districts, upward of 60 percent of students use the alternative test to earn a degree.
"It's a way of moving somebody out ... putting them in the work force where they can't compete adequately," said Joseph Del Grosso, president of the teachers union in Newark.
The State Board of Education is scheduled to meet later this week to consider serious reforms or the dismissal of the SRA.
There is no point in having a test that inflates graduation rates to tell everyone that everything is ok, when we know it is not.
It's budget committee day at the State House - one of the last legislative days before the Assembly and Senate meet their Constitutional obligation and go home for the summer. The plan spends more than $28 billion ($42 billion if you count federally financed spending) and raises about $1 billion in taxes.
Among the tax hikes CIANJ opposes are,
Look for continuing updates throughout the day. The Assembly budget panel meets at 9:00 a.m., while the Senate commences at 2:00 p.m.