by Kwaku Sraha
October 9, 2012

Raising the Minimum wage is good for residents of Albuquerque, their families, small businesses, and the city’s economy. As the great recession continues to be felt across New Mexico, leaders and policy makers are looking for ways to keep the city’s economy healthy. Raising the minimum wage to $8.50 an hour, and automatically increasing it each year to keep up with the cost of living, would not only greatly help the many hardworking individuals and families struggling to survive on the current $7.50-an-hour wage, it would also aid Albuquerque’s economic recovery.

The question to raise the city’s minimum wage will be on the ballot for the November 6th general election. While this in itself is a victory, there is still a lot of work and education to be done before election day. Opponents have caused great confusion about how a minimum wage increase would affect employment. The fact is, it would create jobs. One easy way to understand the issue is this: raising the minimum wage allows working families to pay for basic necessities – rent, food, child care, transportation, and health care. Unlike higher paid workers who can save a significant portion of their income, minimum wage earners spend all of their wages on day-to-day necessities, When that money is circulated back into the economy jobs are created.

At the current minimum wage of $7.50 an hour, a full-time, year-round worker in Albuquerque earns just $15,600 a year. It would be hard enough for a single person to survive on this income, so imagine trying to support a child or two on this salary. Studies suggest that close to 40 percent of workers who would benefit from a minimum wage increase have children. The Economic Policy Institute has released an analysis of the impact of raising the Albuquerque minimum wage that shows that 14.3 percent of workers would see their hourly wage jump to $8.50 if voters approve the measure in November.

Opponents of raising the minimum wage argue that it would hurt the very people we are trying to help by reducing employment opportunities. There is no basis for this argument. The impact of wages on employment levels is one of the most heavily studied issues in economics – and a higher minimum wage does not adversely affect employment. A study just released by NM Voices for Children looks at Santa Fe, which has raised its minimum wage to $10.29 an hour. Santa Fe has an unemployment rate of 5.8 percent – the lowest of the state’s four metropolitan areas. It is also the only city of those four that has had any job growth.

A series of rigorous studies by the Institute for Research on Labor and Employment at the University of California, Berkeley, found that higher minimum wages have no adverse effects on employment levels. The report Minimum Wage Effects across State Borders looks at neighboring states with different minimum wages. Researchers compared all the counties that are located on a border between two states with different minimum wage levels. Looking at data from 1990 to 2006, they found that employment levels were not impacted in counties that had higher minimum wages than their neighbors in a bordering state.

Consumer spending drives the economy. A minimum wage of $8.50 will increase consumer spending and is, therefore, an effective strategy for improving our economy. A minimum wage increase in Albuquerque is long overdue. Boosting the wages of low-income workers who could then purchase the goods and services they need is good medicine for Albuquerque’s economy.

Kwaku Sraha is NM Voices’ Finance Manager