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The impact on the Las Cruces economy of the 15-cent-an-hour increase in the local minimum wage scheduled to take effect Jan. 1, 2020, will be mild, according to a report received Nov. 12 by the Las Cruces City Council during an evening work session at Lynn Middle School.
Several business owners and others speaking at the meeting said cost-of-living (COL) increases in the city minimum wage and increases in the state minimum wage that begin Jan. 1, 2020, will hurt the local economy.
The 2020 COL increase from $10. 10 to $10.25 an hour likely will result in a loss of 84 to 105 local jobs in the subsequent three years, 2020 through 2022, Manuel Reyes, acting research director for the University of Texas at Tyler Hibbs Institute for Business and Economic Research, said at the meeting. The Hibbs Institute worked with city staff to provide an analysis of the economic effects of previous minimum wage increases and projections of the 2020 increase. He said the local economic impact of the 2020 increase would be about $7.75 million in 2020, with additional COL increases raising it to $9.5 million in 2021 and $11.2 million in 2022.
In the ordinance it passed Dec. 1, 2014, the city council included language that tied a three-tiered increase in the minimum wage over five years to the consumer price index, with built-in COL increases. Under the ordinance, the city minimum wage increased from $7.50 an hour to $8.40 effective Jan. 1, 2015, to $9.20 in 2017 and to $10.10 in 2019.
“You put the burden on small business,” American Document Services owner Rick Jackson said at the meeting. “I still think the city can do something to chip in,” Jackson said. He suggested reducing taxes and utility charges on local businesses and giving them a break on city bids. “Don’t put it all on us,” Jackson said.
The city needs to focus on improving education and job training rather than continuing to increase the minimum wage said 2019 city council candidate Robert Palacios. Minimum wage increases, he said, are “hurting our city.”
Marci Dickerson, who owns the Game Sports Bar and Grill and Dickerson Catering, said the city will see a decrease in entry-level jobs if it stays ahead of the state minimum wage, adding that she believes a lot of local workers were not accounted for in the Hibbs study.
“I live this every day,” Vescovo Toyota owner George Vescovo said. After the last minimum wage increase, Vescovo said he “let people go,” cut benefits and raised prices. “We’re getting the extra burden,” he said. “The way we fix this is bringing businesses that pay a little bit more.”
City attorney Jennifer Vega-Brown said the state minimum wage increase, approved by the 2019 legislature and signed into law by Gov. Michelle Lujan Grisham, begins Jan. 1, 2020, with a mandated increase from the current $7.50 to $9. It will increase to $10.50 in 2021, to $11.50 in 2022 and to $12 in 20203. With city COL increases accounted for, Vega-Brown said the state minimum wage will exceed the Las Cruces minimum wage in 2021 or 2022.
“Can I survive at $12 an hour?” asked Pic Quik owner Oscar Andrade, who owns 20 stores and has more than 300 employees in Las Cruces, he said. “The answer is ‘no.’” Andrade urged the city let state legislators know what the impact of the state minimum wage increase will be on southern New Mexico. “We do live too close to El Paso,” Andrade said. “A $12 minimum wage is going to be devastating to this economy.”
Rawson Building Supply owner and former State Senator Lee Rawson said Las Cruces has “such a competitive disadvantage” with El Paso because of its higher minimum wage.
The El Paso minimum wage is $7.25 an hour, according to the National Conference of State Legislatures.