Businesses That Hire Teens Could Receive Tax Credits Under NJ Bill
The credits would be equal to the higher wages and payroll taxes for the teen workers brought on by New Jersey’s 2019 minimum wage law, which ramps up the state’s minimum wage to $15 for most employees by Jan. 1, 2024.
TRENTON — Teenagers aren’t exempt from New Jersey’s rising minimum wage, but the employers they work for might wind up with a tax break reimbursing them for the increase.
Legislation sponsored by state Sens. Dawn Marie Addiego and Troy Singleton would allow employers who hire teens under 18 to apply for refundable tax credits against their corporate business tax or gross-income tax.
Addiego, D-8 of Evesham, said the tax credits would provide an incentive for employers to continue hiring inexperienced teens in spite of the larger expense caused by minimum wage increases.
“High school jobs, while often overlooked, can be crucial for families and students. Whether they are helping to support their families or saving for college, getting that first job builds a resume and sets youth up for later success,” Addiego said last week. “But hiring and training young, often transient, high school labor can be costly for businesses, and we don’t want the increase in minimum wage to deter them from giving our youth valuable opportunities.”
The credits would be equal to the higher wages and payroll taxes for the teen workers brought on by New Jersey’s 2019 minimum wage law, which ramps up the state’s minimum wage to $15 for most employees by Jan. 1, 2024.
The law was signed by Gov. Phil Murphy last year and is considered a hallmark of his so-called Stronger, Fairer agenda centered on assisting workers and middle-income families.
The first increase was in July when the wage floor rose from $8.85 to $10. It rose again on New Year’s Day to the current $11 an hour and is scheduled to go up $1 each year until it reaches $15 an hour.
The phase-in to $15 is slower for farm and seasonal workers and for small businesses with five or fewer employees, but the bill still proved to be controversial and was panned by most business groups. Most argued the phase-in was too fast and that stronger exemptions for small businesses was needed, along with language to allow the wage increases to be frozen if a recession or severe disaster occurs.
Supporters of the measure countered that the increase would buoy workers who deserve a livable wage in an expensive state such as New Jersey.
Addiego was among the majority that voted in favor of the increase, but her vote was among the most scrutinized since it was among the first she cast after suddenly switching her party affiliation from the GOP to Democratic majority.
Afterward, Addiego said her biggest concern with the bill was the absence of a carve-out for teenage workers, similar to the longer phase-in for seasonal workers and small businesses. She feared that the mandatory wage hikes would prompt employers to forgo hiring inexperienced teens.
However, the senator said she opted to vote in favor of the measure after receiving assurances from Senate President Stephen Sweeney, D-3 of West Deptford, that he would help back legislation giving businesses that hire teenage workers a tax credit as reimbursement.
A similar credit was part of the minimum wage bill already and provides employers with tax credits if they hire or retain disabled workers at the higher minimum wage.
The bill caps the total amount of credits available for businesses that hire teens at $10 million each year until 2028, when the credits would sunset and no longer be available.
While the legislation failed to make it to Murphy’s desk during the last session, it was quickly posted for a hearing in front of the Senate Labor Committee last week, which voted 4-0 to advance it.
The measure next heads to the Senate Budget and Appropriations Committee to consider. If approved by that panel, it would be cleared for a floor vote by the full Senate. The Assembly must also approve the same bill before it can go to the governor for consideration