Live from the Nuke Free Zone

Last year, the Zone noted a very localized, substantial increase in the minimum wage of Santa Fe, NM, an inland city reasonably representative of average American cities. The increase not being surrounded by a statewide increase, we thought it would make a good test case for arguments for and against raising minimum wages: namely, that if minimum-wage opponents were right, and high minimum wages hampered small businesses or destroyed jobs, we would see such businesses and jobs fleeing Santa Fe for the presumably more commodious wage environment outside city limits.
Net result? They haven’t. The key findings from the article linked start off with pretty much the central point:

Santa Fe employers affected by the city minimum-wage law increased the number of employees overall by .35 employees when compared to the year before the ordinance took effect. During the same period, overall employment levels in Albuquerque fell by 2.4 employees.

Albuquerque makes a perfect “control group” for this study since it’s a similar city nearby in the same state without such a minimum wage law. In various sectors the article breaks down, Santa Fe’s employment generally paced or exceeded Albuquerque’s in job creation rates; narrow sectors where Santa Fe lagged Albuquerque or lost more jobs can be found, but as the findings clarify, “Santa Fe’s retail and health-care industries lost more jobs than did Albuquerque’s, but at statistically insignificant levels.”

An interesting tidbit comes from a restaurant owner who is against the minimum wage; he complains that it cost him $80,000 last year and he had to raise prices 5%. One argument I’ve heard made against minimum wages is that when wages increase, business costs increase and so prices must increase, so that no net increase of buying power occurs among minimum wage workers. That argument holds water only if labor costs are 100% of the cost of the goods; if your wages nearly double and this makes costs and thus prices increase 5%, your buying power is doing pretty well for itself.

In summary: minimum wage, looking pretty good in Santa Fe. Not looking so great in the Republican Senate, where GOP leaders tied it to a lead balloon and let it die, but we’ll fix that soon enough.