A higher minimum wage is right for New Mexico

February 5, 2019

Yes, New Mexico needs a higher minimum wage.

That’s a position we have supported and continue to support. As with all sweeping changes, though, this change impacts not just workers or big corporations, but the many small business owners across the state who are barely managing to keep the doors open. How lawmakers change the minimum wage law — it currently is $7.50 an hour statewide — to help workers without damaging businesses, is tricky. As we know in Santa Fe, where a higher minimum wage is already in place, it can be done. But the devil, as they say, will be in the details.

House Bill 31, sponsored by Rep. Miguel Garcia, D-Albuquerque, and Rep. Joanne Ferrary, D-Las Cruces, increases the minimum hourly wage to $10 an hour by July, adding an annual increase until the wage hits $12. Then, the wage would be adjusted yearly for the cost of living. The bill also eliminates a lower minimum wage for employees who receive tips.

Then there’s House Bill 46, sponsored by Rep. Patricia Roybal Caballero, D-Albuquerque, which would increase the minimum wage to $15 in 2020; afterward, the wage would be adjusted annually because of the cost of living. This also eliminates the lower minimum wage for tipped workers. Statewide, $15 is too big a jump.

In the Senate, Sen. Clemente Sanchez, D-Grants, has Senate Bill 437, which brings the wage up more slowly. The statewide minimum would hit $9.25 in October and then $10 in April of 2020, while allowing an hourly wage of $8.25 for high school students and keeping the lower minimum wage for tipped workers in place.

By the time the legislation reaches Gov. Michelle Lujan Grisham’s desk, here is what we hope to see. A higher statewide minimum wage — $10 is a fine start so long as pay will increase in the years ahead without always having to return for approval on increases. A bigger increase too quickly would not be good for the overall New Mexico economy.

If the United States minimum wage were indexed to the cost of living, millions of low-wage workers would have more money in their pockets. Tying the wage to the cost of living is key. In New Mexico, some 160,000 workers could see their pay increase if the minimum wage goes to $10 an hour, Department of Workforce Solutions Secretary Bill McCamley testified last week.

When figuring out how to deal with workers who receive tips to supplement their wages, the entire discussion becomes more complicated, however.

That’s because — like it or not — the business model for the restaurant industry is based upon tips making up part of an employee’s salary. Restaurant owners pay a minimum tipped wage — $2.13 an hour in most parts of the state — but it’s understood that when tips are included, employees will make at least the $7.50 hourly minimum wage. When they don’t, restaurant owners must make up the difference. That’s known as the tip credit — and it could be abolished if HB 31, for example, is adopted without amendment.

People in the restaurant business believe that requiring the $10 minimum wage for servers, instead of increasing pay, would mean the men and women who wait tables or tend bar would earn less. Their reasoning is this: Such a big boost in the minimum wage would mean steep hikes in the costs of eating out. Diners would tip less. In the end, servers might earn higher minimum wages but take home considerably less pay. Instead of helping workers, the bill as written could hurt them.

That’s not even taking into account that restaurants might feel forced to alter how they do business, eliminating server jobs altogether. Instead of sitting down to a comfortable meal, people could go out to eat, order from the counter and pick up their suppers — no service, no conversation with a friendly waiter or waitress, and most of all, fewer jobs. We do not want to damage a thriving industry and need to avoid unintended consequences.

We think, as testimony continues to be heard on this legislation, lawmakers should be sure to listen to people in the restaurant industry, especially servers who depend on tips. There is room for compromise. We could see, for example, setting the minimum wage at $10 and raising the minimum wage for tipped employees — perhaps by the same $2.50 an hour that the statewide minimum would increase. Cities, too, should still have the opportunity to set a higher pay, just as Santa Fe does with its “living wage,” now $11.40 an hour.

The goal should be to raise the minimum wage and give service workers a higher base pay without upending the business model for restaurants and other service-based industries. We can do this.

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