Raising The Floor

The wage that Gallegos receives from her new job at Wal-Mart is an increase from the $5.50 an hour she made working at Arby's, but it's still not enough to pay the bills. Ever since she had her first child, she's relied on the extra $200 a month she gets from food stamps to help pay for groceries, and she's depended on Medicaid for her kids' healthcare. The health insurance offered through her job is too expensive, she says, and since she doesn't qualify for Medicaid herself, she simply does without. “I make that choice—either health insurance or my bills getting paid, and I choose my bills, because I don't want to be homeless,” Gallegos explains. Because she can't afford health insurance, and because life happens, she now owes approximately $5,000 in medical bills—which she doesn't know when she'll be able to pay.

Gallegos is one of an estimated 30,000 people living in Albuquerque who earn less than $7.15 an hour—which is the number that has attracted the attention of City Councilor Martin Heinrich.

But a proposal by Heinrich that would give Albuquerque voters a chance to decide whether or not to raise the city's minimum wage has been met with some criticism. The proposal, aptly named the Albuquerque Fair Wage Initiative, asks that voters have the chance this coming Oct. 4 to choose whether or not the city should break away from the federal standard of $5.15 an hour, which, despite inflation, hasn't changed since 1997.

The initiative, which would up the minimum wage to $7.15 an hour, thereby promising higher paychecks to citizens like Gallegos, takes into concern small businesses, and grants an exception to operations with less than 10 employees. It also allows for the cost of healthcare or childcare provided to employees to be factored into the required base pay. Yet, for some city councilors, that doesn't seem to be enough. City Councilor Tina Cummins, who's been vocal in opposing Heinrich's bill in other local news outlets, but declined to comment to the Alibi on the subject, said she thought the proposal was unsound and didn't think the Council should be dealing with the topic. City Councilor Sally Mayer, who didn't return Alibi's calls, is the bill's other most vocal opponent and was quoted as saying that the bill is “an outrageous get-out-the-vote gimmick” that “just makes me sick.”

Mayor Martin Chávez has also expressed disapproval for the bill. James Lewis, the mayor's chief administrative officer, said that Chávez is in support of raising the minimum wage, but that he believes it needs to be done at the federal level, since the federal government has always handled it. James said that Chávez will raise the issue this June when he attends the U.S. Conference of Mayors, in hopes of getting other mayors to join him in putting pressure on the government. According to one local news outlet, Chávez said that he'll veto the bill if it reaches his desk.

Yet, despite some of the apparent unrest with the bill, there is a wealth of information that suggests that raising Albuquerque's minimum wage might just be what the doctor (or the economist) ordered.

Welfare to Work

The Santa Fe City Council raised the city's minimum wage in the second half of last year to $8.50 an hour. The result is a prime example of what can happen with a simple thing like a minimum wage increase, says Heinrich. There were concerns that raising the minimum wage so drastically in the city would bring negative economic consequences, but, even so, it still managed to bring in 200 new jobs in the retail sector and 400 jobs in food and service positions last year, according to the New Mexico Department of Labor. Additionally, Santa Fe's average monthly unemployment dropped by .6 percent, and, according to the state's Human Services Department, Santa Fe's Temporary Assistance for Needy Families (TANF) caseload dropped by 4.9 percent, while the state's levels concurrently rose by 4.5 percent.

Heinrich uses the above examples to explain that minimum wage increases take people out of welfare and bring them to work. He argues that this has positive effects for cities in numerous ways—from offering more desirable lifestyles to citizens through better pay and higher job satisfaction, to reducing the burden on taxpayers by lowering the number of people on welfare programs.

Additionally, Heinrich says that raising the minimum wage helps local economies. He points out that if Santa Fe County's economic performance in the last half of 2004 (when they instated the new minimum wage) is compared to that of 2003, the gross receipts in the retail sector increased by 5.7 percent; a figure which greatly exceeds inflation.

Santa Fe isn't the only community which has benefited so far from wage increases. To date, 10 other states and 13 municipalities have raised their minimum wage, and, according to the Fiscal Policy Institute (a foundation-funded research facility in New York that studies the effect of tax and budget issues on low-income wage earners), states with an elevated minimum wage experienced above 300 percent more retail growth between 1998 and 2004 than did their lower-waged counterparts.

Heinrich said the reason states with higher wages outperform other states so dramatically is because the money that goes to lower-wage earners gets recycled back into the local economy. Gallegos is a good example of how this happens, as she testifies that if she were to receive higher pay she would use the bulk of it to help pay off her bills. Most people in her situation do the same and use higher wages to pay for things like clothes for their kids, groceries and doctor's visits—all purchases that, in one way or another, go back into the local economy.

Small Business

An argument against raising the minimum wage is that it would hurt small businesses by lowering their profit margins. Yet, one local business who has raised employees' base pay on its own accord says that it hasn't suffered any setbacks—and, in fact, it's gained momentum. The local La Montanita Co-op chain decided this year, after considerable research, that they were going to implement a “living wage” of $8.13 for all of their employees—which is the amount that they calculated someone living in Albuquerque would need to make in order to pay all their bills and still put a little into savings. All of their employees receive this wage within six months of hire if they take the appropriate training, says Sharret Rose, the Co-op's Human Resources Team Leader. She adds that La Montanita couldn't be happier with the results.

After only a few months of instituting the new wage, the Co-op is already experiencing lower turnover rates and higher productivity among their employees, says Rose. And in terms of financial consequences, La Montanita has opened two new stores in Gallup and Santa Fe within the last three months.

Heinrich adds that the Co-op's tactic isn't unusual, and that most small businesses already pay their employees at or above what the new minimum wage would be—and that it's mainly big-box chains like Wal-Mart that pay lower wages. Therefore, it wouldn't affect small businesses as much as it would affect larger corporations, he said.

The Feds

Heinrich said it's important for cities to pay attention to minimum wage increases, because the federal government isn't likely to. Considering that the last minimum wage increase was in 1997, and that a proposal to raise the federal standard was turned down by Congress and the White House just this March, it will probably be years until another one is approved. Heinrich is struck by the irony that congressional members have voted themselves numerous cost-of-living wage increases, funded by the taxpayers, over the same course of time.

Inflation rates also need to be examined, he said, pointing out that today's minimum wage is the lowest it has ever been for all but two of the last 50 years. In fact, in 1968, by today's standards the minimum wage was approximately $9.00 an hour.

Heinrich's bill was scheduled for a hearing before the Council on May 16 (see “Council Watch,” page 11). To find out more about the effects of minimum wage increases, visit Heinrich's website at http://martinheinrich.com.