Wage Law Has Mixed Results
By Laura Banish
Journal Staff Writer
A preliminary study that
explores how the city of
The analysis, conducted by the
It also shows an improvement in average wages in
But the findings also indicate that the cost of living has
increased in Santa Fe— as living wage opponents predicted— and that most of the
workers surveyed continue to live paycheck to paycheck.
Businesses told researchers they've reduced staff through
attrition. The study also says the increased wage may have had a negative
impact on people with disabilities, as employers are less likely to hire them
at the higher pay rate. The federal minimum wage is $5.15 an hour.
The city-mandated minimum wage went into effect on
Lee Reynis, director of UNM's Bureau of Business and Economic Research, said she's
not surprised at the ambiguity in the study's results.
"It's going to be a mixed picture. Different businesses
face different challenges," Reynis said.
"Some businesses have dug in their heels and others have figured out how
to make the wage increase work."
"Investigating the economy of a city is not like
conducting a controlled experiment in a scientific laboratory," the study
sates. "Many factors are at play in a regional economy, making it
difficult to quantify the effects of a particular policy change, in this case
the $8.50 minimum wage, on businesses, employees and the economy as a
whole."
Cost pressures
Findings from focus groups and surveys of business owners
and employees found that expenses are increasing faster than revenues and wage
income. Businesses felt bombarded with cost pressures and workers still found
it difficult to make ends meet as expenses continue to rise.
Several of the business respondents stated that, with the
higher pay, they either currently do not or will no longer hire school students
or unskilled workers, although this phenomenon requires further study,
according to the UNM bureau.
The study says that many workers have not gotten the
increase to $8.50. Some study participants work in establishments that should
be paying the $8.50 but are not, and the workers said their employers gave them
a "hard time" after they asked for their wages to be raised, the
study said.
About 52 percent of the businesses that responded to the
survey indicated that their firms had been affected by the $8.50 wage. Nearly
13 percent claimed they brought workers wages up to $8.50 even though they were
not required to do so.
Some business representatives also discussed the advantages
of moving just over the city limit boundary to avoid paying the $8.50 wage, but
said they were not able to move from their current locations for a number of
reasons.
In focus group interviews, some business owners reported an
increased cost without a corresponding increase in revenue while others saw a
need to support their employees' ability to afford
"For our town, (the living wage is) definitely a
positive.
Cost-saving measures
Businesses mentioned using a number of cost-saving
strategies since the living wage took effect. Examples include reducing the
number of new hires for seasonal or part-time work and reducing staff through
attrition. Changing duties and cutting overtime were also cited. Some employers
extended the time needed for workers to qualify for benefits.
A number of businesses reported holding employment under 25
to avoid being subject to the minimum wage.
Many of the workers interviewed had more than one job. Some
said they have been able to reduce the number of hours they work due to the
wage increase. But others said they had lost their jobs since the law took
effect or that their workload was significantly increased.
Some workers also have noticed a change in attitude, even
resentment, between workers and their managers, and feel more pressure at work.
"There is resentment between bosses and workers because
workers are asked to do more work in the same amount of time," a worker
said in the report.
According to the study, the unemployment rate in Santa Fe's
metropolitan statistical area, which includes Santa Fe and Los Alamos counties,
continues to be "well below" the state as a whole.
In 2002, the Santa Fe MSA unemployment rate averaged 3.8
percent. The unemployment rate rose to an average of 4.3 percent in 2003 and
2004 and has averaged 4.5 percent so far this year. However, the BBER study
says a higher unemployment rate does not necessarily mean reduced employment
opportunities.
The study also looks at case loads for four different social
assistance programs administered by the state of
Food stamp case loads increased faster in