The city of Santa Fe should reconsider its decision to raise the minimum wage at this time, despite the announcement that the wage will rise to $10.51 in March.
The 2 percent wage increase — up from the current rate of $10.29 — is occurring because the city’s Living Wage Ordinance is tied to a price index calculated by the U.S. Bureau of Labor Statistics and released last week for 2012. The index considers economic indicators such as prices for certain goods and services. That, in turn, can prompt an increase in Santa Fe’s minimum wage. With this latest increase, Santa Fe drops to the second-highest minimum wage in the nation, with only San Francisco at $10.55 ahead of us. We are in good company.
We support the “living wage,” and believe that Santa Fe officials, starting years ago with former City Councilors Jimmie Martinez and Frank Montaño, and more recently with Mayor David Coss and the council, deserve praise for moving on wages when federal and state governments did not. There is a libertarian argument to be made, to be sure, that the market and individual business owners should set wages. However, this nation correctly decided back in 1938 to set a federal minimum wage — a big fat 25 cents an hour. Now, the feds are at $7.25 and the state of New Mexico at $7.50, with the current federal minimum hourly wage roughly equal, relative to inflation, to what was paid in 1960. It is clear that wages need to rise — a national increase in the minimum wage is overdue, and we were pleased to see Albuquerque residents vote for a wage increase to $8.50 an hour.
However, it is not clear that the city should remain tied to an economic index in perpetuity. For one thing, small-business owners who have slim profit margins are struggling to keep up with wage increases. During this recession, business profits have stagnated while business expenses keep going up. It does little good for a worker to earn more but work fewer hours — or worse, to be out of a job because his or her boss closed or laid off workers. The empty storefronts, whether downtown or along major streets such as Cerrillos and St. Michael’s, indicate a still-struggling economy.
A suspension of increases in the minimum wage would give the city the opportunity to step back and examine the ordinance’s unintended consequences. Many teenagers, who often need a job to help their families or to pay for college, are having a hard time finding summer jobs. Much of that, of course, is because of the recession. But it’s also true that many employers, when they are paying more than $10 an hour, will hire a more experienced person rather than giving a young person a chance. There’s also the reality that other teens might be leaving school because they can earn $10-plus an hour. City government should study carefully the effects of this well-intended law on teenagers. There are other consequences as well. If a business must pay $10.51 to its lowest-paid workers, that often means that more experienced workers make about the same as beginners. With higher costs, there is no room in the budget to raise the pay of the more experienced. This very high wage floor does not give businesspeople much room to maneuver, something they need.
We will add this, too. The “living wage” law, despite what opponents said, has not killed Santa Fe’s economy. Perhaps it has kept some chain businesses out — although the national food chain Buffalo Wild Wings just announced it is moving in — but we are a community that wants local enterprises to thrive. Santa Fe has the lowest unemployment rate in the state at 4.7 percent (Albuquerque is at 6.3 percent), hardly evidence that the living wage is destructive. Throughout this horrible economy, the city has wisely curtailed spending and managed its money carefully. We have been battered, yes, but this city has endured better than most. Perhaps, as supporters believe, putting more money in the hands of workers is one reason the city is in decent shape.
Even so, business owners need stability and predictability, and right now, they can’t afford added costs. The city should rethink this wage adjustment now and rework this ordinance. We needed the “living wage,” yes. And now, the small-business owners and entrepreneurs of this city need room to make a profit.