March 13, 2006
by Dylan Skriloff
A new study provides strong evidence that the city-wide $8.50 minimum wage law enacted in Santa Fe, New Mexico has had harmful effects on the economy and has led to job loss among low-skilled workers.
Rockland Living Wage proponents, Legislators Harriet Cornell and Denise Kronstadt recently referred to a New York Times Magazine cover story about the Santa Fe law and proclaimed it to be a resounding success. But research by University of Kentucky Economist Dr. Aaron Yelowitz on behalf of the Employment Policies Institute (www.EPIonline.com), indicates that over 500 low-skilled jobs were lost from the market while many more low-skilled workers were replaced by teenagers entering the job market.
Dr. Yelowitz said, "I find strong evidence that the composition of workers changed after the ordinance." The likelihood that a low-skill employee was an unmarried teenager rose by 5.2 percentage points, according to his study.
The study captured a good deal of attention in Albuquerque, New Mexico where a law similar to the one in Santa Fe was being debated. The study inspired an editorial against the wage hike from the Albuquerque Journal, which had previously been inclined to support the hike.
"The unimpeachable research provided a strong counter to the claims made by wage hike supporters. It was an important factor in the voters' ultimate rejection of the wage hike," EPI stated in its February newsletter.
It also raised debate in Santa Fe, where an effort to overturn the implementation of the $9.50 level of the minimum wage was thwarted by organized labor this January. Those against the wage hike did force the City Council to agree to again vote on matter before the next round of increases in January of 2008 were to take effect.
Interestingly, despite the wage hike, there was no significant increase in the overall earning power of the lower income percentiles in Santa Fe. Dr. Yelowitz speculated this might indicate that lower wage workers were replaced with higher wage workers already on staff. Another problem with the law is that because it only applies to businesses employing 25 or more employees, it created an incentive for small business to minimize the number of its workforce.
In January the New York Times Magazine published a several page cover-story article on the Santa Fe minimum wage experiment, touting it as an unexpectedly profound success and painting the issue as a political winner for "the left."
It is the RBA's position that drastic increases in the minimum wage often cause economic discord and harm the very sector of the population it is intended to help. The RBA has been a leader in the fight against the Living Wage movement in Rockland County for the past decade.
For more information see "Living Wage" Defeated in Broome County from the October, 7, 2005 RBA newsletter and also see articles from the July 18, 2005, August 3,10 & 29, 2005 and December, 27, 2005 newsletters. |
