A recent broadcast of the CBS Sunday Morning TV program focused on the US auto industry and its remarkable recovery even in a recessionary market. The story attributed the success to a collaborative effort between management, labor and government that focused on production, quality and incentives. Each group gave up its previous conceptions and methods in order to work together for the common good to build and sell quality cars at good prices. Thousands of jobs have been saved because of the agreement and strategy.

The so-called “living wage” experiment in Santa Fe is headed in exactly the opposite direction. In Santa Fe the labor group, in this case the City Council, has demonstrated little, if any, interest in the business-friendly reputation of the community or the local business climate, little to no interest in the quality of work or customer service, little to no interest in productivity or incentives, little to no interest in the competiveness of the local market and little to no interest in the workplace readiness skills of workers. It appears that the Council is only interested in votes from labor groups.

Santa Fe’s experiment with a locally mandated minimum wage is now nine years old. At this point it is effectively a constantly increasing tax on businesses who add entry-level employees. The mandated wage rises every year. It never goes down. Before the mandated minimum reaches $25 an hour let’s examine its consequences.

A few questions to ask:

  • The wage has been sold as a solution to poverty. Is there any evidence at all that local poverty rates have declined? Isn’t the issue financial literacy?
  • How many students have been incentivized to drop out of school by the temptations of a $10 an hour starting wage?
  • There are dozens of closed businesses in Santa Fe. How many of them would have survived if they could compete with out of town businesses on a level playing field?
  • How many layoffs have occurred because of the mandated wage?
  • How many people have had hours cut?
  • How many businesses have had to cut their charitable contributions?
  • How many have cut benefits?
  • How many businesses have cancelled plans to expand or relocate to Santa Fe?
  • How many programs that employed interns or students have closed or cut back?
  • What have been the effects of “compaction”? Higher salaried staff feeling insulted because entry level staff come in at the same level.

The only way businesses can survive is by raising prices. Which leads to a higher cost of living….the circle is complete. How much longer can Santa Fe businesses survive in a environment that prevents them from competing fairly with out of town companies?

In this tight economy the hardest hit are young people seeking their first job. What chance do they have of being hired if they are unable to gain any experience? More and more older people are reentering the workforce. They have experience and the workplace readiness skills that youth need so badly. And, why would anyone start a business that depends on entry level staff if the mandated entry-level wage could easily be $15, $17 or higher in a year or two?

The Santa Fe mandated minimum wage is now 27% higher than the rest of New Mexico. As businesses close, gross receipt tax collections will fall and repayment of bonds will become even more difficult. Santa Fe businesses deserve an opportunity to compete on a level playing field with other businesses.

The Chamber urges an immediate freeze of the minimum wage at the current $9.85 an hour before we lose any more businesses and jobs and encourages a thorough and thoughtful examination of the consequences of the living wage impact on the business economy to date.

We are ready and willing to collaborate with government, labor and the community to find ways to support job creation and career advancement for local people. The Chamber believes that a strong business climate is critical to a strong future for our great community.

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