Some Las Cruces Business Owners Criticize City's Minimum Wage Analysis

Nov 15, 2019

The 15-cent increase is based on a cost-of-living adjustment tied to the Consumer Price Index.

Economist Dr. Manuel Reyes-Loya from the Hibbs Institute for Business and Economic Research at the University of Texas at Tyler presented the study to City Council at a recent work session.

The analysis simulated the economic impact of CPI indexing from 2020 to 2022. 

During that span, the report projects gross regional product, or total business output, to decrease $3.7 million-$4.6 million. At the same time, wages and salaries are estimated to increase roughly $2.5 million-$3 million. It also concluded the City would lose between 84 and 105 jobs.

The meeting was well-attended by business owners who strongly opposed the 2014 ordinance creating a city minimum wage law.

“It just doesn’t make sense. You guys really, really need to look into what it’s going to do to the daycare centers in New Mexico because we’re barely going to make it in Las Cruces," Sheri Seay, owner of Little Tumbleweed Daycare said.

“My payroll has increased over $600,000 a year," Pic Quik President Oscar Andrade said. "My staff and employees are paid much more than the industry but how long can I sustain this? The answer is not very long at all.”

“The Game has been contemplating what we’re going to do if we do this and if the city continues to be ahead of the state in the amount of money we have to pay, and you know what’s going to happen? Counter service. We’re going to go from 280 employees to about $140 employees," Marci Dickerson, owner of The Game restaurants said.

“At Lorenzo’s, I can’t do a kiosk and order. I’m looking at El Paso because it’s booming and they’re $7.50 an hour," Vince Vaccaro, owner of Lorenzo's Italian Restaurant said.

Vince Vaccaro, owner of Lorenzo's Italian Restaurant on East University Avenue in Las Cruces, speaks against the City ordinance to increase the minimum wage from $10.10 to $10.25 in 2020. The City held the work session at Lynn Middle School on Nov. 12.
Credit Michael Hernandez

Vaccaro said minimum wage increases phased in since 2015 have negatively impacted his business.

“They've affected my employees, my customers, benefits have been cut back, prices have gone up, hours have changed. A lot of things I would have liked to have done at my restaurant we've backed off because we can't afford it. We've also lost some positions. We've lost two in the last year," Vaccaro said.

He said his margins have also dropped and rather than rising prices, he’s taking less income. Unlike many other business owners, Karen Richardson makes minimum wage.

Richardson owns Karen’s Animal House, a pet training, grooming and daycare facility. Richardson has been in business for six years but began paying herself last year. She said she takes the minimum to pay her employees first.

“Being in business, you hire the people that you need to have to keep your business running. I consider my employees family. I pull my kids into my office on a regular basis... have mom-to-kid talks and so I'm the last one to get paid. I do not believe that I should be the highest paid,” Richardson said.

She said increasing the minimum wage also raises insurance and workers' compensation. Richardson added she thinks state and federal wage laws should supersede the City ordinance.

State lawmakers passed a law to gradually increase New Mexico’s minimum wage to $12 an hour by 2023. That effort begins in 2020 with an increase from $7.50 to $9 an hour. Federal minimum wage has remained at $7.25 for a decade.

The buying power of the federal wage peaked in 1968 at $1.60 an hour. If it had kept up with inflation, the federal minimum would be $12.07 in October 2019 dollars, according to a CPI inflation calculator from the Bureau of Labor Statistics.

“Those positions we need to pay more because we value human life, right?” District 1 City Councilor Kasandra Gandara said in reference to minimum wage jobs.

Gandara said small businesses are the City’s bread and butter. But she added it’s important that Las Cruces keeps up with inflation so workers can earn a living wage and overcome poverty.

“I think about our workforce, our workers who are working in those particular positions and the money that will be in their pocket and literally being the voice for those people as I've suggested I am. I've seen how people are living. This would really help individuals, lift them up and out of poverty and that's really what I'm looking at. So, trying to find a balance with that is, is what I'm hoping will come of this," Gandara said.

The balance of running a business and making minimum wage is a challenge Richardson knows firsthand. But to keep her doors open, she believes in prioritizing her workers.

"My business isn't going to stay open if I don't keep employees," Richardson said. "I've lived on a thread before, I'll do it again."

Update: The City is set to review a proposed ordinance Monday, Nov. 18 amending minimum wage requirements for tipped and overtime pay.