Sunday, August 13, 2006

Santa Fe Living Wage Does More Good

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    The second half of Santa Fe's city-commissioned study of the economic effects of the living wage ordinance has at last been released. And just like the first half— released in December— it shows that even while paying wages 65 percent above the national minimum, the Santa Fe job market appears to be thriving about as well and in some cases even better than in places where wages are dictated by the market.
    The study, by the University of New Mexico's respected Bureau of Business and Economic Research, fails to support predictions by a number of business owners before the living wage law was adopted that it was a recipe for economic catastrophe. (The law raised the minimum wage for larger businesses first to $8.50 in 2004 and, most recently, to $9.50 an hour. A provision to raise the wage again, to $10.50 an hour, now requires a new vote of the City Council.)
    As the new study notes, the living wage law hasn't been an engine for economic growth— and indeed it was not meant to be. But even businesses most affected by the new law— Santa Fe's tourist-oriented hospitality industry, including hotels, restaurants and retail outlets— apparently haven't been harmed by the higher wage requirement. Businesses in these areas report they have cut jobs, by an average of three or four over the course of the year the new law has been in effect. But according to the study, the job losses probably weren't the result of having to pay higher wages, since the same types of businesses in Albuquerque reported similar or bigger job declines.
    The study did find a significant decline in one sector of Santa Fe's economy— construction— but suggests other factors were the cause. And that's not just the finding of the study, which noted that construction declined in Albuquerque, too. Santa Fe builders, including the head of the area home-builders association, say they already were paying more than the living wage rates before the law took effect. "No correlation at all" between the living wage law and the industry slump, says home-builders association member Gary Ehlert.
Interestingly, even though Santa Fe lost jobs in these two very important sectors of its economy, the number of jobs overall increased during the first year after the living wage requirement took effect. That's more good news for Santa Fe, because it suggests that the economy is diversifying.
    This latest study follows UNM's "baseline" study of the city's economy, prepared in 2004 before the living wage law took effect. Together, both studies represent solid research into the effects of the nation's most generous living wage law to date. Now that raising the minimum wage has become a national issue, we'd hope Santa Fe officials will opt to continue their contract with UNM to study the workings of our local economy.
    Whatever the conclusion from year to year, these studies contain invaluable data, whether you are for a living wage or against it.