Saturday, September 15, 2007

Good News On Living Wage

By Dan Boyd
Journal Staff Writer
    A long-awaited study on Santa Fe's groundbreaking living wage ordinance, released by the city on Friday, concluded the super-sized minimum wage hasn't increased unemployment or slowed the city's economic growth.
    The study's contents were music to the ears of Mayor David Coss, who fought for the ordinance while on the City Council.
    "I think it's going to be looked at nationwide," Coss said Friday. "The naysayers who say government dare not increase the minimum wage are going to have to look at Santa Fe."
    But while mostly rosy, the 76-page study showed a few thorns as well.
    Researchers admitted the question of whether the living wage has helped alleviate poverty is a complicated one that still doesn't have a complete answer.
    The study, which was conducted by the University of New Mexico's Bureau of Business and Economic Research, relied on data from the U.S. Census Bureau and various state agencies.
Santa Fe policy makers, including Coss, first imposed a minimum wage of $8.50 per hour in June 2004 and raised the wage ordinance to $9.50 per hour on Jan. 1, 2006.
    The law applies to all businesses with 25 or more employees and is the highest minimum wage in the country that covers both the public and private sectors.
    At the time of its passage, the trailblazing minimum wage law was blasted by some business owners, who predicted it would drive up business costs and lead to layoffs.
    Even after implementation, several businesses balked at the demands, and one local fast food restaurant, Arby's, reached a settlement agreement for non-compliance with the city last month.
    Yet according to the UNM study, 740 jobs were created in Santa Fe's private sector during 2006. That equates to at least $2.8 million in new wages per week.
    "The Santa Fe economy has generally been performing very well and, indeed, possibly better than the state as a whole," study authors observed.
    The study is the second of its kind to be released and city of Santa Fe officials said there weren't many major surprises.
    "For the most part, it reflected a lot of what we started to see with the $8.50 (ordinance)," said Laura Banish, the city's public information officer.
    One of the most eagerly anticipated aspects of the study dealt with the ordinance's impact on local youths and whether the wage ordinance would result in fewer starting-wage jobs for them.
    At first glance, such concerns appear to be unfounded.
    The study found youth employment increased in various subsets of those ages 14 to 22.
    A separate but related concern was that the allure of high-paying jobs would draw students away from school. That fear, too, appears to have been allayed.
    The dropout rate for the Santa Fe Public Schools district actually declined from 10 percent in 2003-04, the year before the law went into effect, to 5.7 percent two years later in 2005-06.
    On the down side, Santa Fe nonprofit organizations that provide vocational services to those with disabilities did report a negative impact.
    Of the three organizations surveyed for the study, two said they had to reduce or eliminate program offerings and one closed for good.
    It was unclear if the minimum wage increase was the driving factor behind that decision.
    "It was unfortunate to see that data," Banish said.
    Other than in a few specific areas, the legislation doesn't appear to have unsettled daily life in Santa Fe.
    From July 2003 to August 2007, the cost of living in the City Different compared to other American cities increased slightly. But according to study data, that was mostly due to a sizable jump in the cost of health care.
    The living wage ordinance was scheduled to be increased to $10.50 per hour on Jan. 1, 2008. A proposal soon to be taken up by the City Council would put off the increase and instead extend the law to all employers, regardless of size.
    In addition, the proposal includes an annual cost-of-living increase tied to the rate of inflation.