HB31 Phased In Minimum Wage

Why NM Legislators Should Vote for HB 31

HB 31: Phased-In Minimum Wage Increase

Committees:  First: House Labor, Veterans’ & Military Affairs; Then: House Commerce & Economic Development

Summary:  Allows for a phased-in minimum wage increase, starting with $10/hour in FY20, $11/hr in FY21, and $12/hr in FY22. Subsequent increases would track cost of living increases, tied to the consumer price index (though if the CPI decreases, the minimum wage would not decrease). This increase would apply to tipped workers as well as non-tipped workers.

History:  There are multiple minimum wage bills; the governor supports this version. A $10 minimum hourly wage is an improvement but still leaves New Mexico below its neighbors: The minimum wage is $11 in Arizona and $11.10 in Colorado. Both those states are on track to raise the minimum wage to $12 an hour in 2020.

Why This Bill Is Good for NM

  • NM minimum wage hasn’t been raised in more than a decade. Nearly a third (31%) of our workforce is earning at or close to the current minimum wage: $7.50 per hour.
  • Sixty-five percent of those who would benefit are over age 25 (not just teenagers working summer jobs at McDonalds).
  • One in three children in NM lives in poverty. Healthy, stress-free, well-fed children with parents who aren’t working two or three jobs are more likely to grow into productive adults.
  • The Economic Policy Institute’s Family Budget Calculator estimates that in Bernalillo County, a single adult with no children needs to earn an hourly wage of $16 to reach a modest but adequate standard of living without any public assistance. In rural Hidalgo County, it’s over $17.
  • NM will gain more income taxes, according to a Fiscal Impact Report on the 2017 version of the bill.
  • Myth: Unemployment will increase. Truth: Multiple studies show that the effects of wage increases in both urban and rural counties are good for local economies and small businesses. Increasing the minimum wage improves both employment and economic activity and does not increase the unemployment rate.

HB 31: Phased-In Minimum Wage Increase
Counterpoints to Objections

In House Committee hearings, opposition to a phased-in minimum wage increase has focused on the possible negative impact on restaurants, tipped employees, and rural communities. Research however, indicates that these claims are unfounded, as described below.

Opposition argument: Servers will have less take-home pay because diners will tip less, knowing that servers are not getting a “tip credit” toward the minimum wage in their pay.

Counter argument:

  • Studies in New York show that when the minimum wage was increased, take-home pay of servers “increased significantly.”
  • Furthermore, job growth went up: employment at full-service restaurants went up 4%. (https://ny.eater.com/2018/11/20/18103228/tipped-minimum-wage-hike-job-study-new-york-nyc)
  • The actual number of restaurants went up by over 10%, twice the rate of any neighboring state.
  • Average annual salaries also went up by roughly 10%. That’s inclusive of both tipped and non-tipped workers, who also saw minimum wage hikes.
  • Seven states have a fully implemented One Fair Wage policy and have: 1) higher restaurant sales per capita, 2) higher job growth in restaurants, 3) the same or higher tipping averages, and 4) half the rate of sexual harassment as the 43 states with subminimum wages for tipped workers. (http://rocunited.org/2018/09/one-fair-wage-sweeping-nation/)

The restaurant industry includes 7 of the 10 lowest paying jobs in the country. People who work in the industry are twice as likely to need food stamps and three times as likely to live in poverty as the rest of the US workforce. And 70% of restaurant workers are women. Since a living base wage is not guaranteed, and women are instead forced to depend on tips, they frequently have to put up with sexual harassment from customers, co-workers, and management. The EEOC has targeted the restaurant industry as the single largest source of sexual harassment charges filed by women with a rate FIVE TIMES higher than any other industry.

Opposition argument:  Raising the minimum wage would have “devastating” effects on rural communities.

Counter argument:

Opposition Argument: Servers may lose tips because of forced tip-pooling, or because restaurant owners will institute a service charge instead of tipping.

Counter argument: Federal law makes clear that employers cannot under any circumstances keep any portion of the tips earned by their workers.
(https://www.nytimes.com/2018/03/23/business/economy/tipping-workers.html)

Supporting Organizations

  • Somos Un Pueblo Unido
  • NM Voices for Children
  • Olé New Mexico

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