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I recently had a very pleasant visit to the South Valley Economic Development Center where they “provide facilities, resources and training for new and expanding small businesses, with an eye to job creation and fostering the economic revitalization of the surrounding South Valley community.”
They have a wonderful test kitchen that supports people in the South Valley who dream of owning restaurants, making and distributing salsas and other New Mexico specialty foods, and generally creating jobs for the people of the valley.
As the Bernalillo County Commission considers a mandated wage increase similar to the one recently approved by the voters in Albuquerque, the restaurant industry requests you strongly consider the following.
Our industry operates at very low margins and employs many first-time employees. In fact, nearly 40 percent of adults receive their first job in the hospitality industry.
These employees are often teenagers and young adults with very few, if any, work skills. However, owners and operators of restaurants take the time and the risk associated with this unproven workforce to utilize training resources that develop appropriate skills and help these workers become contributing employees. As an employee’s skill level and value to the employer improves, so typically will their wage. If for some reason, the employer does not increase wages commensurate with new skills and experience, the employee can leave and seek employment at a business that values their skills and experience and is willing to pay them more.
It seems every few years we wrestle with this issue of raising the minimum wage. Although on the surface it may sound good and/or feel good, we have got to acknowledge that any time we artificially impose a cost on a business, it has unintended consequences.
In the short term, businesses will reduce employee hours and/or reduce their workforce because the additional costs cannot be absorbed quickly. This fact is made clear in the unemployment numbers suffered by teens in Santa Fe at 22 percent compared with the average teen unemployment of 16 percent nationwide.
However, in the long term, a labor cost increase will be passed through to the consumer, increasing the cost of a meal, groceries and other necessities – ultimately hurting the very people the wage hike is supposed to help. This consequence also negatively impacts seniors and others living on fixed incomes.
Perhaps the context that needs to be considered in discussing a minimum wage increase is to ask the question differently. Perhaps we should ask what is the threshold a consumer is willing to pay for a meal, and then adjust the minimum wage upward. Is it $8.50 an hour, $10 an hour, $30,000 a year?
What is the public willing to accept as real inflation caused by mandated cost increases? We all know Santa Fe has one of the highest beginning wages in the country; we also know that the cost of living in Santa Fe is 13.6 percent higher than in Albuquerque.
It seems the most logical and least negative impact on the economy is to create more opportunities for workers to be trained and develop skills, so subsequently they will be of more value to employers.
We must also recognize that the restaurant industry is typically a community’s most philanthropic business base, providing food, in-kind services, sponsorships and cash to local charities, nonprofits, sports teams, senior citizen centers, soup kitchens, etc. With already low margins, artificially mandated cost increases jeopardize this type of activity.
In conclusion, our industry respectfully but strongly suggests the Bernalillo County Commission take the time to observe the impact the recent mandated wage change has had on Albuquerque business. Then make a deliberative decision that balances the needs of the citizens with the job providers in the county.
There is every chance the state Legislature will provide its own solution to this situation. In the interim, however, we strongly encourage the commission to vote no to a minimum wage increase.
