Santa Fe puts "living wage" to test By Electa Draper
Denver Post Staff Writer
DenverPost.com

Santa Fe - The movement by cities and states to increase their minimum wages beyond the stagnant federal level of $5.15 an hour has a new epicenter.

Santa Fe's minimum hourly wage, set at $8.50 in June 2004 and bumped to $9.50 on Jan. 1, is the highest in the country. And there are plans to hike it to $10.50 in 2008. "Living wage" advocates deem it economic justice, while many business backers call it economic suicide for the tourist-dependent city of about 66,000 residents.

Supporters say the increased wage has allowed workers to better afford the essentials of life and has enabled some to quit working two or three jobs. But detractors say the law has simply priced low-skilled workers out of the market while harshly punishing many small businesses with already-thin profit margins.

Santa Fe's mandate not only applies to city workers and contractors - the typical reach of such ordinances - but also extends across the private sector to any company with 25 or more people on its payroll. It demands that even traditionally low-wage industries, such as lodging, retail and restaurant, pay $9.50 an hour to full-time and part-time maids, cashiers, dishwashers and those in similar jobs.

And a sprawling network of advocates, from church groups to labor unions and national activists such as ACORN, which cheered Santa Fe down this path, are working to put increased-wage laws on the ballot this year or next in several states, with Colorado, Arizona, Michigan and Ohio among likely targets.

ACORN, or the Association of Community Organizations for Reform Now, tried and failed in the late 1990s to raise minimum wages in Denver, Houston and other places. But the longer the federal minimum wage sat at its 1997 level of $5.15 an hour, the more the groups could count successes. The District of Columbia and 14 states now top the federal level. And organizers estimate 100 municipalities have set new, higher minimums.

Businesses taking brunt

Both "living wage" proponents and opponents are claiming vindication in Santa Fe.

"On the most basic human level, it's been a tremendous success," says Carol Oppenheimer, a labor lawyer and coordinator with the Santa Fe-based Living Wage Network. "It's put a lot more money in the pockets of some 9,000 workers."

Some people, holding down two or three jobs to make ends meet, have found they can get by with one, she says.

"More working people have time to spend with their children - to make them breakfast or help them with their homework. It shows what a community dedicated to economic justice can really do. It's honoring the dignity of workers," she says.

For 19-year-old Lucinda Perez, a cashier with a large-chain drugstore, it's meant solvency.

"I can keep on top of my bills," she says.

But Rob Day, owner of the Santa Fe Bar and Grill and member of a group that unsuccessfully sued to stop the ordinance, says the increase is big enough to ruin many enterprises.

"I'm a Democrat, but I can tell you that all of us in the service industries were flabbergasted that they didn't just want to elevate the minimum wage, they wanted to take it to $8.50 and then $9.50 an hour," Day says. "For a lot of businesses, that increased cost was their profit margin. This will just drive up the cost of living even more."

Oppenheimer says that despite such protests, it should be noted that $8.50 an hour typically amounts to about $1,100 a month in take-home pay in a city where the average cost of a two-bedroom apartment is $850 a month. The rallying cry for proponents is that no one who works full time should have to live in poverty, not even if they live in 400-year-old adobe city oozing culture and history in its postcard setting along the foothills of the Sangre de Cristo Mountains. The median home price here hit a record $470,000 in the last quarter of 2005.

Day says it's right to tackle the high cost of living but wrong to put the burden on select businesses.

"They could subsidize housing or day care, create a program for affordable gasoline," he says.

Study: Employment up

In December, the University of New Mexico's Bureau of Business and Economic Research released a preliminary report on the first 18 months of the Santa Fe wage law. The city's employment increased slightly each quarter and, unexpectedly, the increase was particularly strong for hotels and restaurants, the report found. The number of families in need of temporary assistance declined significantly. But the city's gross receipts, including tourist and consumer spending, were disappointing.

Researchers say higher prices, from energy to housing, could have hurt spending.

Santa Fe City Councilor David Pfeffer, an architect and the lone opponent on the eight- member council to the wage law, says that the "UNM report is fatally flawed" because researchers used county statistics rather than city numbers. Researchers say that 88 percent of county businesses operate within city limits.

"The new wage has caused businesses to reduce staffs, relocate to the county, let go of less- skilled workers and hold off on business expansions," Pfeffer says. "The people who must suffer the most in this kind of government intervention in an otherwise healthy economy are the folks at the bottom of the scale."

At the El Rey Inn, owned by Terrell White for 33 years, 37 people are on the payroll. White says the competition for Santa Fe's limited workforce already had forced a virtual minimum wage of $7.50 to $8 an hour. White says he worries that the wage increase will prevent continued funding of his profit-sharing plan or cut into what he pays for employee health insurance.

"We're trying to do everything, and you just can't do everything as a small business," he says. He foresees a 5 percent to 7 percent increase in Santa Fe room rates.

Junior manager Anthony Baca, 28, has worked at the El Rey for about 10 years. He says he is not opposed to a decent minimum hourly wage but is troubled by Santa Fe's plan to raise it again in two years.

"Everyone will get the same pay, the same raises," Baca says. "That to me is not quite the American way. It took me three or four years to work up to $10.50 an hour."

Simon Brackley, interim president of the Santa Fe Chamber of Commerce, says the chamber opposes municipalities' taking on federal or state authority to set minimum wages.

"That each municipality in the country could have the power to interfere in the relationship between employer and employee is a recipe for chaos," Brackley says. "We've seen 22 businesses close or relocate. The high school dropout rate has gone from 4 to 10 percent. We've seen businesses cut medical insurance, overtime and part-time employees. The issue has been driven by emotions and ideology and not by economics."

But Living Wage Network community organizer Tomas Rivera says, "Some people have had hours cut or lost work, but I can tell you workers are really happy about the wage increase."

Staff writer Electa Draper can be reached at 970-385-0917 or edraper@denverpost.com.