Sunday, September 16, 2007

Minimum Wage Works

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    EDITORIAL: The latest study of the effects of Santa Fe's living wage law has just been released and, like the previous study released last year, it shows that the city with the highest minimum wage in the country has been doing just fine, economically. In fact, we may be doing slightly better than the state as a whole.
    The study, by the University of New Mexico's Bureau of Business and Economic Research, shows few negative effects on the economy that can be attributed to the $9.50-an-hour living wage that took effect in January. Last year's study also showed few negative effects after the minimum was raised to $8.50 an hour.
    Unemployment has fallen since the higher minimum wage became law. Job growth has been steady, if modest. The city's gross receipts tax revenues don't appear to have been affected, and the housing market has "held up very well" despite the national slump. "Overall from this data, we can detect no disinclination to invest in Santa Fe because of the living wage," the study noted.
Santa Fe's cost of living— always well above average— continued to increase. But the study notes that most of the increase both in 2005, after the wage increase to $8.50, and so far in 2007, after the second increase, can be attributed to sharp increases in the cost of gasoline and health care— both nationwide trends.
    The higher minimum wage doesn't seem to have affected young workers, despite predictions that it could cause an increase in the high school dropout rate as students left school for better-paying jobs than they might have gotten before the wage law was enacted.
    But unanswered in the study was the question of whether the higher minimum has ameliorated poverty in the city. While the number of people seeking public assistance dropped after the first minimum wage hike, the latest study shows that number increased slightly after the wage was hiked to $9.50. However, the study acknowledges, some of the increase may be due to increase in population— Santa Fe County has grown faster than the state as a whole.
    In short, the dire predictions by the business community that the higher minimum wage would prove disastrous have been shown to be unfounded. Policy makers— including the governor and legislators, who most recently couldn't bring themselves to raise the state minimum above $7.50 and not right away— should take note.
    The city of Santa Fe deserves credit not just for a brave social experiment, but also for having the foresight to fund continuing study of its effects. The latest study is the third in a series. The initial study— a "baseline" view of the economy before the increases took effect— gave us a highly revealing picture of how Santa Feans make ends meet. The most recent two have focused on the effects on employment and the market.
    Future studies might do well to focus on an additional issue: whether those on the bottom of the economic heap are faring better as a result of the higher minimum.