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Minimum Wage Impact Study Presented to Las Cruces City Council

Michael Hernandez

http://youtu.be/RzHNdqM6sD8

After calling for a study examining how minimum wage increases phased in since 2015 are impacting the city’s economy, Las Cruces City Council reviewed the results at a recent work session. 

The city hired economists from the University of Texas at Tyler’s Hibbs Institute for Business and Economic Research to conduct the study, which simulates the economic impacts of the city’s minimum wage raises from 2016 through 2020.

It forecasted over that five-year period, total personal income will increase $28.6 million. During the same time, Gross Regional Product, or business output will decrease nearly $14.1 million, less than one-half of one percent of total baseline output. The study also estimated 385 jobs, less than one-tenth of one percent of total positions over that span will be lost, mainly in the food service and healthcare support industries.

District 3 Councilor Gabe Vasquez said now that the city has objective minimum wage data, it’s hard for opponents of the increases to say they significantly harm the economy.

Folks that are on that side now have to look objectively at the study and realize that the economy hasn’t fallen, that small businesses haven’t fallen and in fact we’ve seen job growth in almost every industry including the two industries that would be most impacted by minimum wage increase. They have all added jobs over the period of the wage increase and so that’s positive,” Vasquez said.

Despite the findings, Hibbs Institute economists said their analysis is too simple to represent a dynamic economy like Las Cruces and can’t state with statistical certainty that they’ve measured well. District 2 City Councilor Greg Smith said he’s still concerned the city doesn’t understand the total economic impact.

“It’s very hard to say 'Well, we conclusively are doing the right thing or we’re doing the wrong thing’ and it would seem at this particular point that overall, we’re not doing a whole lot of damage and overall some people are benefiting so it really is very hard to say that we ought to stick with it or we ought to dump it,” Smith said.

A group of business owners including Pic Quik President Oscar Andrade attended the meeting to voice their concerns over future increases. Andrade said he employs more than 400 Pic Quik, Santa Fe Grill and Subway workers at his 20 convenience stores. He said raising minimum wage has slowed his growth but he’s willing to pay more for experienced, quality employees.

“Nobody wants to continue to make the same level of income they have the previous year so we have to increase our retails, we have to look at our use of employee sales per hour,” Andrade said. “So, if I have more productive employees at $14, $16 an hour that are generating, that have enthusiasm and have the personalities to increase sales, I’d much rather have that person than the entry level $10.10 an hour employee.”

Bureau of Labor Statistics data show the Las Cruces economy continues to recover. The city’s unemployment rate reached 4.9 percent in May. That’s lower than the statewide rate of 5.1 percent and is below 5 percent for the first time since the 2008 recession.

Las Cruces Green Chamber of Commerce President and CEO Carrie Hamblen said because the minimum wage is such a complex topic, it’s important to get input from all sides.

“Studies will show that when you increase minimum wages, you’re increasing the benefits to the community but the small businesses have every right to be concerned on whether or not that’s actually going to come to them. So, I think a study is very valuable,” Hamblen said. “I think it’s going to be challenge and I think having different partners and community groups involved in that conversation will be really essential to its success.”

The council took no action to change the minimum wage law, but Vasquez said he will vote to put more money into working families’ pockets every time.

“28 more million dollars in our local households is incredible and that’s what our minimum wage will do,” Vasquez said. “That $14 million reduction in GRP, we have to work as a community to address that and I think we can working together with the business community and with recruiting large employers and with education and workforce training, so I think we can do both.”

Both Vasquez and Smith said the city should monitor the Consumer Price Index cost-of-living adjustment set for 2020.

Michael Hernandez was a multimedia reporter for KRWG Public Media from late 2017 through early 2020. He continues to appear on KRWG-TV from time to time on our popular "EnviroMinute" segments, which feature conservation and citizen science issues in the region.