"It was in and out of my arm, nothing penetrated," said McGrath.
Surveillance cameras captured the frightening scene across the street as bullets sent bystanders running for cover.
The incident happened at 6:30 Saturday evening. The tavern was hosting a campaign event for councilman Gerald Meyers. The mayor of Jersey City was also inside.
Police say the shooting was over a drug deal. Rahmed Jones, 24, who was arrested, told officers he was selling 40 Ecstasy pills to two men when they tried to run away without paying.
"No matter what efforts, there are too many criminals," said Jersey City Mayor Jerramiah Healy.
Investigators say that a bullet discovered outside the tavern by Eyewitness News reporter Anthony Johnson and his photographers may be one of the bullets that struck McGrath.