News Column

Chamber of Commerce Calls for Cap on Santa Fe Minimum Wage

Jan 25, 2013

Julie Ann Grimm

Santa Fe Minimum Wage

The Santa Fe Chamber of Commerce launched a fresh assault on the city's minimum-wage rule Thursday, arguing for a freeze on the rate and changes that would uncouple potential future increases from a federal cost-of-living index for the next three years.

Alan Austin, chairman of the chamber's economic development committee, and Simon Brackley, the chief executive officer for the business group, provided reporters and elected officials with a "white paper" on its position.

"The only way businesses can survive an annual wage hike is by raising prices, which ultimately leads to a higher cost of living. The living wage in Santa Fe has significantly increased unemployment while decreasing hours for those who were able to keep their job," the paper says.

More troubling, it says, is the negative affect on youth who need entry-level jobs.

"The best way to increase wages is to focus on job creation and prepare the workforce to fill the positions that are available, not to impose additional mandates on companies that are struggling to survive," the paper says.

Santa Fe's original "living wage" rules were adopted in 2003, and until 2008 they applied only to businesses of a certain size. Since then, all employers must pay the base wage, and increases are pegged to a federal cost-of-living index.

Last week, officials announced that another 2 percent wage increase will kick in March 1, raising the minimum from $10.29 per hour to $10.51.

Each year, the city looks at the annual average Consumer Price Index for Urban Wage Earners and Clerical Workers for the West Region -- a statistic calculated by the U.S. Bureau of Labor Statistics. The index considers the prices of a number of goods and services, as well as other economic indicators. If there is an increase, the city's minimum wage rises. Current rules don't establish a ceiling for how high the minimum wage can climb and also don't allow for it to decrease if the price index drops.

Although the minimum wage in San Francisco jumped to $10.55 this month, Brackley says Santa Fe still has the "highest minimum wage in the nation." When he compares Santa Fe's situation to the cost of living in other high-priced cities and their minimum wages, he said, Santa Fe's rules seem even more out of line.

According to a cost-of-living index compiled by Kiplinger's before the recent San Francisco hike, New York City's borough of Manhattan is the most expensive place to live, with a score of 228 and a minimum wage of $7.25. Santa Fe's score is 108, and its wage is more than $3 per hour higher.

Austin, the Santa Fe president of New Mexico Bank and Trust, said the chamber is not seeking a repeal of the city's minimum wage, but wants officials to cap the potential increases. The economy is bouncing back, he said, and Santa Fe wants to be "in that wave, and not held back by external forces."

"It's really difficult for an individual or a family that owns a business in Santa Fe to think about adding staff if, number one, the bar is pretty high to start with at $10.51 an hour. But when then they don't know what the number will be a year or two or three down the road, it's a deterrent. ... They really need some certainty in that process to make it possible for them to think about adding jobs."

The chamber's position paper also includes references to a 2005 analysis published by Employment Policies Institute, a Washington nonprofit that conducts research on labor issues. That group attributes a 3.2 percentage point increase in the city's unemployment rate to the first year the living wage was in effect.

Researcher Aaron Yelowitz argues that the Santa Fe minimum wage has had an adverse effect on the ability of teens to find jobs. The chamber also says the wage has enticed students to quit high school in order to begin work.

Santa Fe city councilors have not demonstrated much political will to change the wage rules. Although more than half the governing body was not in office when the rules were adopted, none has introduced a measure to re-examine the rules in recent years.

Mayor David Coss remains a strong proponent of the "living wage" and does not favor capping the increases. He said Thursday that the statements from the Chamber of Commerce aren't really new.

"Back in 2008, the business community came to me and the Living Wage Network and asked for a compromise," he said. "We've studied the effects, and we saw no impact on unemployment, job creating, business startup, business closing or inflation. But they said, 'Please ... we don't want it to go to $10.50. Can you wait a year and start with [tying the minimum wage to] the cost of living?' And now that five years later is has hit $10.50, they are reneging on the compromise."

Coss said the residents in the city have demonstrated satisfaction with the law and noted that Santa Fe's economy remains in better shape than any other metropolitan area in New Mexico.

Albuquerque's minimum wage also increased this year to $8.50 following voter approval of a November ballot question. The state minimum wage is $7.50 per hour, higher than the federal minimum of $7.25.

Source: (c)2013 The Santa Fe New Mexican (Santa Fe, N.M.). Distributed by MCT Information Services.

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