Workers, business owners debate minimum wage at Council work session
By Mike Cook
Las Cruces Bulletin
It’s a hot topic, but it was a very polite discussion Monday, July 13, as the Las Cruces City Council held a work session and listened to members of the public discuss the impact of the city ordinance passed last December that raised the local minimum wage.
According to City Treasurer Mark Krawczyk, on Dec. 1, 2014, “Ordinance 2726, Section 14-62 was amended to provide for an increase in the minimum wage (from $7.50 an hour) to $8.40 an hour on Jan. 1, 2015, to $9.20 an hour on Jan. 1, 2017, and to $10.10 an hour on Jan. 1, 2019.”
A further amendment to that section requires the city council to meet in July 2015, 2016 and 2018 to determine if additional changes are necessary — hence the July 13 meeting.
At the work session, Krawczyk said it is difficult to assess the impact of the minimum wage increase after only six months, especially since data is currently available for only four of those months and many variables must be considered. Krawczyk said his office is tracking the effects of the increase, and he will continue to report his findings to the council.
Lupe Nevarez and Carmen Lucero, owners of The Children’s Garden (TCG), which operates six child care locations in Las Cruces, were asked to make a detailed presentation on the impact of the minimum wage increase on their business and the clients they serve. Nevarez said the current minimum wage — $8.40 an hour since January 1 — is not at issue. But, she said, when the rate goes up to $9.20 an hour in 2017 and then to $10.10 an hour in 2019, it could cause rates for child care services to go up more than 50 percent, and could raise some parents’ wages enough that they would no longer qualify for children care subsidies or Medicaid. Families with two working parents will be at particular risk, she said.
TCG has 103 employees and provides child care services for about 800 children, ages six weeks to 13 years, Nevarez said. It has a five-star rating (the highest available) from accrediting agencies and receives a 75-percent subsidy from the state for most of the children it serves.
Nevarez is also concerned about the impact of the minimum wage on her payroll. “It’s scary,” she said. “There’s no room for us to pay this (increased) minimum wage because our enrollment goes up and down (which) causes our revenue to go up and down.” Operating a child care facility “is very expensive,” she said. “We don’t have a huge profit margin,” And, the increased minimum wage will make it very difficult to give raises to qualified staff.
State government, Nevarez said, needs to “step up to the plate” and adequately address the issue of child-care subsidies. The state “needs to support early childhood education,” she said.
During an open forum, about 20 people, including private citizens, business owners, a state senator and representatives of two local chambers of commerce, spoke for about three minutes each on the impact of the minimum wage increase. Here are some of their comments: Cassandra Calway, who said she represented employees of many local businesses who have gotten the minimum wage increase, including some restaurant servers who have received a paycheck for the first time, said, “I don’t want to live in a city with a working class of poor people who rely on subsidies.” As the workers of this city, we hope the leaders of this city have faith in us that we deserve to have a living wage.”
A volunteer with NM CAFé, said, “We are on the verge of great things in Las Cruces,” and part of that is increasing the minimum wage.” But, said, the city won’t move ahead if one-quarter of its population continues to live in poverty. She said business licenses, residential construction permits and the city’s gross receipts tax have all increased since the minimum wage went up in January. NM CAFé is a nonprofit that is part of the PICO National Network and “trains and builds the capacity of low and moderate-income families to help shape public policies aimed at improving people’s quality of life in New Mexico,” according to http://www.organizenm. org/.
Daniel Claeys, general manager of Subway in Las Cruces, who oversees 70 employees in eight local restaurants, said the current minimum wage will increase costs for his stores by more than $80,000 this year. If the minimum wage goes up to $10.10 in 2019 as scheduled, it will mean increased costs of almost $250,000, he said. If the minimum wage had been in place in 2014, Claeys said, “We would have taken a loss of $10,000.” Claeys said he has had to cut employee hours by 10-20 hours in each of the stores he manages as a result of the minimum wage increase, which he said will raise the cost of living and force some businesses to close.
Carrie Hamblen, executive director of the Las Cruces Green Chamber of Commerce, said the chamber has launched a program to 1) help equip businesses to streamline, to increase productivity and to communicate better; and 2) encourage local residents to patronize locally owned businesses.
Russell Allen, owner of Allen Theatres and chair of the Greater Las Cruces Chamber of Commerce board of directors, said the minimum wage increase has had a negative impact on his business in Las Cruces. Allen Theatres have shown a 2.2 percent increase in attendance in Farmington, a 4.9 percent increase in Hobbs and a 5.7 percent increase in Carlsbad. His Las Cruces theatres, however, are down 2.1 percent, he said. “The economy is not good. That’s what we really need to focus on. We’re not growing.
Dana Wortham, owner of Caliche’s Frozen Custard, said the minimum wage increase has caused Caliche’s to increase its payroll by 13 percent this year. And those increases will continue as the minimum wage goes up. And that, along with increases in utilities and insurance, “truly is not sustainable.”
“I do not feel this should all be on the backs of small business owners. We can only go so high on pricing and we will price ourselves out of the market,” she said. Wortham said Caliche’s had planned to open a third location in Las Cruces, but that is “up in the air now” because of the minimum wage increase.
Bill Allen, chairman and CEO of the Greater Las Cruces Chamber of Commerce, read portions of seven letters he said he has received from Las Cruces businesses, organizations and churches who have been negatively impacted by the minimum wage increase. Letters were from the First Assembly of God Church, the Baptist Child Development Center, Coas Books, Jardin de los Niños and others.
State Sen. Bill Soules, D-Doña, said, after careful study, he introduced a bill in the 2015 Legislature that would have raised the state minimum wage to $8.50 an hour. The bill was vetoed by Gov. Susana Martinez.
“When money moves, the economy improves,” said Soules. That’s particularly true, he said, when the money goes in at the bottom, as with an increase in the minimum wage. More money in the pockets of low-wage workers means an increase in spending in the local economy, Soules said, adding that “the sky has not fallen” since the minimum wage was increased in January, as some had predicted. The number of local business licenses has increased since then, and the unemployment rate is down, he said.
District 1 Councillor Miguel Silva said research into the minimum wage increase needs to continue, as councillors and city officials talk to more business owners and employees about its impact and “define ‘living wage’ in this community.”