Debate continues on New Mexico minimum wage increase: What impact will it have in the state?
Figure will climb to $9 an hour soon with other increases planned
FARMINGTON — Russell Allen says his family's chain of movie theaters – originating in Farmington before expanding across New Mexico, Colorado and Arizona – has for the better part of a century been the place where many small-town teenagers found their first job.
Generations of high school students learned how to show up on time, maintain a good personal appearance, interact with customers and perform basic tasks like running a vacuum cleaner and selling movie tickets, the company president said.
"I really like hiring them and giving them their first job," he said.
But that tradition may come to a stop within the next couple of years, he fears, as New Mexico implements a series of minimum wage increases. Pay for the state's lowest-paid employees will rise from the current $7.50 an hour to $9 an hour on Jan. 1, 2020 — just a couple of weeks from now. Other increases will follow — $10.50 an hour on Jan. 1, 2021; $11.50 an hour on Jan. 1, 2022; and $12 an hour on Jan. 1, 2023.
Proponents of the increases say the minimum wage hike is long overdue and will help the state's poorest families emerge from poverty. Allen acknowledges that is likely true.
"Even I want people to make more money," he said. "If you make more money, your life is better."
But he also believes the increases will have a strong negative effect on his company's bottom line and force him to adopt some changes he doesn't want to make. By the time the minimum wage reaches $12, he said, his theater chain likely will be forced to automate many functions that currently are performed by a human.
"That's what upsets me the most — the possibility of what it's going to do to the next generation of workers," he said.
Activist seeks to empower residents
Sarah Silva, former director of NM CAFé, a faith-based organizing group in Las Cruces that works to empower state residents to act on their own behalf toward a better quality of life, is proud of the work she and her organization did to get that city to increase its minimum wage five years ago. She sees little to no evidence that the city's higher minimum wage has harmed the business community and an abundance of evidence that the economy is, in fact, thriving.
"Anecdotally, I've seen a lot of new small businesses pop up," she said. "When I look at downtown, it feels good. I see lots of (help wanted) signs. And I think tipped workers feel like they're finally getting a paycheck and no longer must depend on their tips. As a consumer, it looks like we're still thriving under a new minimum wage statute."
Silva said she looks forward to the adoption of a statewide increase in the minimum wage, because she feels like workers in small, rural communities have been left behind in recent years as many of New Mexico's larger municipalities — Las Cruces, Santa Fe and Albuquerque, as well as Santa Fe and Bernalillo counties — have adopted minimum wage hikes that apply only to their residents.
But she doesn't consider minimum wage hikes a cure-all.
"Raising the minimum wage is not a one and done," she said. "It's not the only policy that's going to pull people out of poverty. I think the state needs to be more holistic in its approach."
A patchwork of standards
While the federal minimum wage of $7.25 an hour has not increased since 2009, the issue is one that individual states and municipalities largely have taken on themselves to address in recent years. Minimum wage standards across America are now a patchwork, with laws varying widely.
A total of 29 U.S. states have enacted a minimum wage law that exceeds the federal standard, and dozens of cities or counties have enacted a local ordinance of their own, some of which more than double the federal figure. Support for a higher minimum wage is consistently strong in public opinion polls, but the issue often divides the business and labor communities.
That's certainly true in New Mexico, where the adoption of the minimum wage increases last spring by state lawmakers has prompted representatives of the two sides to express markedly different expectations for the impact of the change.
Mike Beckett, owner of Coas Books, which operates two stores in Las Cruces, said his business traditionally has filled one of the same functions as Allen Theatres by employing young people. For many years, many local high school students have found their first job in one of his stores, learning a work ethic they put to good use later in life.
Beckett said he already understands the impact an increased minimum wage can have. When the Las Cruces City Council passed an ordinance in 2014 that adopted a series of minimum wage hikes in the city — the latest of which will take place on Jan. 1 and increase that figure from $10.10 to $10.25 an hour — he said his company quickly went from 35 to 25 employees because of the additional labor costs.
He said it is small businesses like his that really suffer from minimum wage increases.
"Walmart can raise prices 3 cents (and make up the difference)," he said.
But mom-and-pop businesses that don't do that kind of volume face a much bigger challenge, he said. And booksellers are in a particularly bad spot, he said, explaining that he doesn't even have the option of raising his prices, as those figures are dictated by publishers.
"I can no longer fix my building, I can no longer dream of expanding or looking at different areas," Beckett said, adding that he typically works 60 to 70 hours a week.
As a businessman in his 50s, Beckett said he feels like he's too old to start over, but he is nevertheless considering getting out of the retail business. Another option would be to move his business a few miles south across the state line and reopen it in El Paso, where he would have to pay his employees only the federal minimum wage of $7.25 an hour. Doing that would save him $160,000 a year in labor costs, he said.
Will automation replace workers?
Relocating his theaters certainly isn't an option for Allen, but he has other options he said he may have to consider.
Allen Theatres employs roughly 350 to 400 minimum-wage employees, Allen said, noting they represent approximately 98 percent of his work force. That means his company could be more deeply affected by the new law than almost any other business in the state.
He said the obvious answer to raising wages — increasing his ticket prices — comes at its own cost in the form of fewer customers. He said that kind of increase in his employment costs inevitably produces negative consequences.
"You have some kind of decrease in attendance and a decrease in employment," he said. "I don't want to decrease my employees, and I obviously don't want to decrease my attendance. But there's a chain of effect."
Allen said the only costs he has control over as a theater owner are labor and advertising. To deal with the former, he said he will have to look at installing ticket kiosks in his theaters instead of keeping someone on staff to run the box office. Automation in other jobs will follow, he believes.
The full impact of the minimum wage increase won't be felt for a while, Allen said. He said his company — which, according to its website, operates 17 theaters in 13 towns, including Farmington, Las Cruces, Hobbs, Roswell, Alamogordo, Clovis and Gallup in New Mexico — already pays employees more than $9 an hour in Hobbs, an oil patch town with a booming economy, and $10.10 an hour in Las Cruces, as mandated by the local ordinance.
But by 2021, when the minimum wage increases again, and for the two years thereafter, the company will begin to bear the full brunt of the hikes. That means it won't be as easy for the chain to put young people with no experience to work as it has been in the past, he said, although the law does include exemptions that apply to young people and some others.
"It's a challenge," Allen said. "It makes it harder to hire the kids that have no skills, and so we are being forced to be more selective in our hiring. (The ones who do get hired) are probably going to be those who can prove they're worth that increase in compensation."
But Silva believes Allen's company is doing just fine in Las Cruces, pointing to its planned opening of The Allen Experience, a 31,000-square-foot expansion of an existing cinema to include a bowling alley, restaurant, bar, gaming area and party rooms. She questioned why the company would be making such an investment if it were truly struggling with the city's higher minimum wage.
She hastened to add that she does think the businesses community in Las Cruces was dealt a bad hand when the City Council voted to increase the gross receipts tax around the same time the series of minimum wage hikes was adopted.
"That was a double whammy for small businesses," she said. "I was a huge proponent of exempting small businesses from that. It was not my intention to see both those (changes) go into effect around the same time, and it was disappointing to see the City Council take advantage of small businesses that way. I think it would have been done more thoughtfully."
Silva is now a coach and facilitator for racial equality movements across the country. But she still lives in Las Cruces, and she said she watched with intense interest as New Mexico lawmakers fashioned the state's new minimum wage law last spring.
She is eager to see the new law take effect, arguing it will demonstrate to workers of all stripes that they are valued. She believes the battle for a higher minimum wage is as much about showing respect to those workers as it is improving their standard of living.
"That's the future I was working for back in 2014, and I'm glad to see it continuing," she said.
What's the best way to help people?
Beckett said he has received a strong backlash in his community for his vocal opposition to the higher minimum wage, but he maintains the new laws are robbing him of his motivation to operate a business in Las Cruces.
He described himself as his company's lowest-paid employee on an hourly basis and said many of his fellow merchants in Santa Fe have experienced the same difficulties since it became one of the first cities in the country to adopt a higher standard in 2004 at $8.50. Santa Fe's most recent increase in March brought the figure to $11.80.
Jamie Church, the chairman and CEO of the Farmington Chamber of Commerce, said in November she had heard little about the impending increase from her membership, but she expected that to change as January approaches.
"Changes always come with some unknowns," she said. "As that date comes closer, we could have some members reach out to us with some concerns."
Her organization has been alerting its members about the coming hike in its weekly e-newsletter, and she said she planned to poll her membership about their feelings on the issue. But as of last month, the increase didn't appear to be on anyone's radar, she said.
Beckett said he has been treated dismissively by the Las Cruces City Council in regard to the issue, and he bristles at the idea that elected officials who have never operated a business and had to meet a payroll are dictating to him how much he has to pay his employees.
He understands the desire of lawmakers to help New Mexico's lowest wage earners, but he believes their efforts are misguided, and they should let the market determine compensation.
"I hope I'm wrong," he said. "I hope it all works out fine. I think they're trying to solve a problem, but this isn't the way to do it. You have to let businesses do what they do best."
Allen agreed. He said economic development and better education are the best ways to raise wages.
"I just think (raising the minimum wage is) the wrong way to move," he said. "Some jobs just aren't worth a whole lot of money. Unfortunately, I have a whole lot of those."
But Silva said everyone needs to be appropriately honored for their work — something she understands personally, given her childhood circumstances.
"I grew up in a household that had to rely on food stamps, and having a mom that could provide out of her own pocket from time to time (because of a job) was a big deal," she said. "I could feel the pride and respect and dignity, but I could also feel the shame when she couldn't.
"This helps me feel like we're doing better for our kids when we honor the work of their parents."
Mike Easterling can be reached at 505-564-4610, or via email at email@example.com.
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