Friday, September 16, 2005

Santa Fe Wage Foes Cite Figures

By Laura Banish
Journal Staff Writer
    Critics of city-mandated minimum wage or "living wage" laws are working on a study that they say shows Santa Fe's local wage has led to increased unemployment.
    Living wage advocates, on the other hand, say they're skeptical about the study's credibility. The study is based on metropolitan statistical area data, which for Santa Fe means it includes all of Santa Fe County, part of which is outside the law's jurisdiction.
    The preliminary report— the full study is due out soon— shows that Santa Fe's minimum wage, which went into effect July 2004, created a 0.69 percentage point increase in the unemployment rate, costing the city 539 jobs. It also says that the city's monthly unemployment rates would have been substantially less if the living wage law was not in effect.
    Research for the study was done by Aaron Yelowitz, an associate professor in the Department of Economics at the University of Kentucky, and paid for by the Washington, D.C.-based Employment Policies Institute, a group that opposes increases in the minimum wage.
    "What we've found is that minimum wage increases, while they sound and look good on the surface, actually have a lot of negative impacts," EPI spokesman Mike Burita said.
    Burita said EPI is trying to have the full study published before October, when Albuquerque voters will decide whether to raise that city's minimum wage to $7.50 per hour for most workers and $4.50 for tipped workers at businesses with 11 or more employees.
    If passed, Albuquerque would join only a handful of cities nationwide, including Santa Fe, that have initiated broad-reaching local wage laws. Most living wage ordinances are generally limited to specific sectors of the work force, such as local government contractors.
    Santa Fe's living wage ordinance mandates that businesses with 25 or more employees must pay a minimum hourly wage of $8.50, more than $3 more than the federal minimum of $5.15. Santa Fe's wage is set to increase to $9.50 per hour starting Jan. 1, 2006, and $10.50 beginning Jan. 1, 2008.

Study attacked
    Morty Simon with the Santa Fe Living Wage Network said he finds EPI's findings and methodology to be "very suspect."
    He said Yelowitz, who conducted EPI's research, testified in court on behalf of New Mexicans for Free Enterprise and the Santa Fe Chamber of Commerce— plaintiffs in the lawsuit against the city's living wage. A district court judge upheld the city's living wage ordinance, and the case is now under consideration by the state Court of Appeals.
    However, in a telephone interview, Yelowitz defended the integrity of the study, saying he used data provided by the U.S. Bureau of Labor Statistics, which can be accessed online by anyone free of charge.
    "I use publicly available data so anyone can see how I can up with the numbers. I view it as being as objective and free from bias as possible because I'm not creating the data," Yelowitz said. "In principle, someone else can go do exactly what I did."
    While some may question the use of metropolitan statistical area data instead of individual city employment data, Yelowitz said he used the metro areas to keep the study to scale. His analysis used three other metropolitan areas in New Mexico— Albuquerque, Las Cruces and Farmington— as control groups.
    Before the study is complete, Yelowitz said he plans to compare individual city employment data.
    According to an EPI study sample, the May 2005 unemployment rate in Santa Fe was 4.6 percent, a higher rate than May of the prior year. If the ordinance had not been passed, unemployment would have been just 3.9 percent, according to Yelowitz's calculations.
    "It's very suspect to say what the employment rate should be. How would they know?" Simon said. "The only way to come to a decrease is to make up a fictitious number."

Different results
    John Talberth, an economist based in Santa Fe, has provided numbers that show the opposite. He claims there has been a decline in unemployment since the living wage was passed, and more than 600 new jobs have been created in the retail and restaurant sectors— industries said to be most impacted by the living wage.
    Santa Fe City Councilor David Coss called EPI's study "the latest round of scare stories."
    "(Anti-minimum wage groups) have been making these arguments since President Roosevelt created the minimum wage in the 1930s," Coss said. "They've always been wrong, and I suspect they're wrong again."
    Coss said he is waiting for a report that the city has requested from the University of New Mexico's Bureau of Business and Economic Research, which he believes will be "a much more unbiased review" of Santa Fe's living wage.
    According to BBER officials, their study will be released in two phases once a contract with the city is approved— one due out by the end of the year and a second in 2006. The first phase will be a follow-up survey on several focus groups, such as consumers, workers and business owners, to provide anecdotal information. The second half will consist of numerical data and analysis on employment rates and other related factors since Santa Fe's wage took effect.
    The latest labor force statistics from the state Department of Labor show that the unemployment rate for the Santa Fe metropolitan statistical area was 4.7 percent in July, up from 4.4 percent in June.
    A year ago, the area had an unemployment rate of 4.4 percent, which was lower than the current rate.
    Over-the-year job growth for Santa Fe was 2 percent in the month of July, the same as the average for the state, according to Department of Labor figures. In the private sector, leisure and hospitality employment stood out with gains of 300 jobs, up 3.2 percent.
    However, Santa Fe's construction industry was in a slump, down by 500 jobs, "the worst results for the construction industry in the local area for many years," the report states. Santa Fe's retail trade is also down, with 100 fewer jobs than one year ago.