Measuring the Value of the Las Cruces Minimum Wage

Jun 23, 2018

As the City of Las Cruces examines the local impact of raising minimum wage, let’s review the facts.

After faith-based advocacy group NM CAFé led an initiative to raise the city’s minimum wage in 2014, the council approved a law with exemptions for certain jobs. Minimum wage increased to $8.40 an hour in 2015, $9.20 in 2017 and is set to reach $10.10 by 2019, with a cost-of-living adjustment to follow in 2020.

Even with the city’s study, New Mexico State University Economics Professor Chris Erickson said it’s difficult to properly isolate the impact of minimum wage in Las Cruces. He said that’s because major employers like White Sands Missile Range and NMSU have flat or decreasing employment rates, negatively impacting the region’s economy.

A 2017 study by the National Bureau of Economic Research examined the economic impact of minimum wage increases in Seattle. It found when the city raised minimum wage in 2015 from $9.47 to $11 per hour, it had no significant impact on low-wage employment levels.

But when Seattle jumped from $11 to $13 per hour in 2016, hourly wages increased but job hours declined about 9 percent. Low-wage employee earnings also dropped an average of $125 per month after the increase to $13.

“If you’re taking that study at face value and it’s a very good study then it said that raising the minimum wage to $10.10 in Las Cruces probably won’t have a negative impact and at least for low wage workers it’ll have a positive impact,” Erickson said. “Of course, you’ve got to balance that against the fact that you are raising wages paid by small business people and those small business people will be adversely affected.”

Small business people like Russell Allen, president of Allen Theatres, Inc., an independent theater chain in New Mexico. Allen said he has about 100 employees in Las Cruces, mostly teenagers working minimum wage. He said raising wages distorts an employee’s worth.

My biggest concern that instead of teaching the workforce that we’re arbitrarily putting a price on all positions when one job is worth one value and another job is worth another value based on your experience and your knowledge,” Allen said. “When you arbitrarily raise the minimum wage, you’re making it harder for those less-skilled, no-skilled employees to be able to perform and be able to take those positions.”

The scheduled 2019 minimum wage increase in Las Cruces from $9.20 to $10.10 means more money for teenagers working at Allen Theatres, a New Mexico movie theater chain.
Credit Michael Hernandez

Allen said besides film rental, payroll is one of his largest expenses. He said increasing minimum wage will shrink his employee pool.

“We enjoy at Allen Theatres, we’ve done it for 100 years of hiring teenagers, giving them real life skills and preparing them for their next job and it’s my fear the higher the wage is that I’m going to get to be able to do that less and less teenagers are going to get that opportunity to get some good life skills to take to their next position,” Allen said.

Erickson said many workers who earn minimum wage have personal factors preventing them from getting high-paying jobs, such as disabilities, drug addictions, prison records and more.

“But I want to emphasize that these people, even though they may not be able to obtain skills that will allow them to earn high wages, they’re still hard-working people. They’re still people who put in a day’s work, but they’re not the kind of people who are going to be earning high income and they may very well be supporting themselves on minimum wage,” Erickson said.

As of 2018, New Mexico’s minimum wage is $7.50 while the federal minimum wage has stayed at $7.25 since 2009. The federal minimum wage hit its inflation-adjusted peak in 1968 at $1.60 an hour. That’s $11.80 in 2018 dollars according to the Bureau of Labor Statistics CPI inflation calculator.

Recently, retailers like Wal-Mart and Target raised their minimum wages to $11 an hour, higher than the $10.10 the city set for 2019. NM CAFé Executive Director Angelica Rubio said while $10.10 still isn’t a livable wage, it’s the right step forward and leads to a good return on investment for Las Cruces.

“I think what’s important is that when people have more money in their pockets, they’re going to go out into the community and spend that more, whereas the case right now, people are spending a lot of their money on things like rent, on food,” Rubio said. “And so when people have more money in their pockets of course they’re going to be able to spend it on other things as well.”

Rubio said business owners who already pay above minimum wage are making an investment not only in their staff, but their community.

“When we’re investing in local businesses, that money stays here in this community and it has a better chance of staying here than it does by shopping in other places where we won’t actually see that money here in the city,” Rubio said.

Las Cruces continues to see new employers, despite the minimum wage increase with chains Sprouts, Chipotle and Stanton Optical all opening in the last year, just to name a few.