Few will benefit from mandated wage hike

Freedom Newspapers

New Mexico Gov. Bill Richardson and many Democratic lawmakers are intent on raising the state’s minimum wage from $5.15 an hour to $7.50 an hour. The bill now before the Legislature is one that should fail, however.

Folks just can’t make a decent living on $5.15 an hour, Richardson and company argue. The problem, of course, is the new minimum amounts, which would be phased in starting next year, won’t come without a cost to businesses. The added wages will not drop from heaven but will from business owners whose employees, and ultimately the customers, will take the hit.

In the end, few will benefit from this state-mandated wage hike.

When the state forces a business owner to hike the pay of unskilled workers, he or she often will have little choice but to respond in one of these ways, just as they have when previous minimum-wage hikes have been mandated:

• Hire fewer unskilled workers.

• Cut hours of existing employees.

• Raise prices to consumers.

None of those options benefit New Mexicans. Politicians who support a minimum-wage hike obviously don’t want to look at the history of what happens when business operating costs go up. That review shows only a small percentage of mostly young, unskilled workers could get more money — in part because many people in these lesser-skilled jobs already are paid more because the demand for labor requires it in many cities, including many in eastern New Mexico.

“No serious economist doubts that the minimum wage destroys jobs. The only question is how many,” writes Doug Bandow, a syndicated columnist who has worked as a special assistant to President Reagan and for the Cato Institute, a non-profit think tank in Washington, D.C.
“Economists … estimate that every 10 percent increase in the minimum (wage) reduces employment by between 2 percent and 6 percent. They figure Congress’ 1996 minimum wage hike cost between 153,000 and 457,000 teens their jobs.”

There is no reason to suspect this New Mexico measure, which has passed the House of Representatives on Monday and is headed to the Senate, will have a different impact. Concessions made last week by those who want the wage increase are somewhat helpful to small business owners because they phase in the wage hike over two years instead of one. And food processors would be exempt if the measure passes.

But the better solution, as always, is to let the free market determine wages. No one, after all, is forced to take a job if they think the pay is too little. In this part of the state most employers already know that people who are in low-paying jobs that offer no extra pay such as sales commissions seldom will work for minimum wage because of the cost of gas or child care or other bills. So the business owners, without any urging from government, already pay considerably more. With unemployment in our region hovering in the 4 percent to 5 percent range, that isn’t likely to change anytime soon.

We urge you to consider joining business people across the state this morning in calling some or all of the following legislators or the governor’s office about this minimum-wage proposal, between 8:30 and 9:30 a.m., and telling them you oppose the measure:

Timothy Jennings, 981-4863; Linda Lopez, 986-4737; Joseph Fidel, 986-4362; Michael Sanchez, 986-4727; Dede Feldman, 986-4482; Mary Jane Garcia, 986-4726; and Gov. Richardson’s office, 476-2200.