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Home | Blog | High cost of living? Just Raise the Min. Wage.

High cost of living? Just Raise the Min. Wage.

December 16, 2005

Tags Interventionism

The City Council of Santa Fe, New Mexico has raised the minimum wage to $9.50 per hour and the fallout was what you would expect:

"Managers of some Santa Fe restaurants were mulling price increases and other measures in the wake of Wednesday's City Council vote to carry out a Jan. 1 increase in the city's minimum wage.
Fewer overtime hours and reduced health benefits for some workers could result from the new $9.50-an-hour requirement for businesses with more than two dozen workers, restaurateur Al Lucero said Thursday.
'I think the City Council has literally created economic havoc in the city of Santa Fe," said Lucero, owner of Maria's New Mexican Kitchen. "They succumbed to the pressure of the unions and the do-gooders who never had to make a payroll in their lives.'
Price increases wouldn't surprise backers of the minimum-wage law and economic experts who have testified on their behalf. However, they have insisted that small increases won't harm affected businesses and wouldn't outweigh the need to provide a "living wage" to low-income workers."

I certainly don't need to recap the effects of a minimum wage here, but what is interesting is the thinking surrounding the "living wage" in places with a very high cost of living like Santa Fe. Santa Fe is essentially a resort town, and as such its zoning and aestheitc requirements for any new buildings drive the cost of housing up considerably. If Santa Fe is anything like other resort towns here in the West, it is incredibly difficult to build anything in the town since the existing residents don't want any high density housing for the workers mucking up their perfectly planned and controlled community. Thus, the city council's approved zoning and building requirements drive up the cost of living and it becomes impossible for the workers to afford to live in or near town. Then, the city council, having produced this state of affairs with its own policies, decides to assuage its feelings of guilt by raising the minimum wage.

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