Chris Christie Fails Economics With Minimum Wage Increase Veto

Owen Poindexter
Chris Christie gave a conditional veto to an increase in the minimum wage passed by New Jersey's Democratic legislature. The move, and his reasons for it show a failure to understand a basic economic principle.

chris christie, minimum wage, chris christie veto
New Jersey Governor Chris Christie failed to understand a basic economic principle in his veto of a minimum wage bill. PHOTO: Reuters

New Jersey Governor Chris Christie vetoed an increase in the minimum wage, but offered the conditions on which he'd sign the bill. The Democrat-controlled New Jersey legislature passed a bill that would raise New Jersey's minimum wage from $7.25/hour to $8.50/hour. The bill also would have reviewed the minimum wage each year to adjust for inflation. Christie sent the bill back, saying that he would sign an increase to $8.25, phased in over three years and not adjusted for inflation. Christie explained his reasoning in his veto message:

"The sudden, significant minimum-wage increase in this bill, coupled with automatic raises each year tied to the Unites States Consumer Price Index, will jeopardize the economic recovery we all seek. We can only build our State's earnings if we foster an environment that lifts up the working poor and struggling small businesses alike."

I'll grant that some small businesses would struggle with a sudden mandated wage increase for many of their employees (the bill was set to take effect on March 1st). Large corporations would be able to handle that easily, but a coffee shop, say, could be running a fairly tight margin already.

Here's the problem with Christie's logic: increasing the minimum wage would generally improve the economy, not, as he says, jeopardize it. The reason is simple: the more people earn, the  more they spend, and this is especially true for low-income workers, who generally aren't able to save money. Spending, in turn, is good for businesses of all stripes, so the extra money would circulate quickly and help the economy grow. I could get behind a more gradual implementation, as Christie suggests, but Christie's notion that increasing the minimum wage would hurt business is ambiguous in the short term and plain wrong in the long term.