Santa Fe’s minimum wage and unemployment

Some advocates of mandated increases in the minimum wage have argued that Santa Fe, the city with the highest minimum wage in the nation, provides a counter-argument to opponents of such laws who say that high minimum wage laws cost low-skilled workers their jobs. Yet, Santa Fe’s overall unemployment rate is relatively low and at 5.8 percent as of July 2012, far below the federal rate which exceeds 8 percent.

What does this mean? Could high minimum wages have little, no, or even a positive impact on unemployment? Not so fast. First and foremost, local labor markets are unique in their own way. Santa Fe has a population of only 70,000 and is unique within New Mexico as an international tourism destination, hub for the arts, and center of state government.

However, minimum wage laws DO impact young people disproportionately. So, what has the impact been in Santa Fe?

According to data obtained from the Employment Policies Institute, for 16-24 year-olds, as of July, the unemployment rate for this group was averaging 20.3 percent in Santa Fe, NM. Nationally, this figure was averaging 16.6 percent in July. So, it’s roughly four percentage points higher in Santa Fe, NM, than it is nationally.

In other words, Santa Fe has a low unemployment rate for middle and high-skilled workers, but if you are looking for a low-skilled, entry-level job, you should go elsewhere. That’s not surprising, but it is worth pointing out as the minimum wage issue works its way through the Courts.