Minimum wage puts state at economic disadvantage

By Walter Bradley

Today we are experiencing a vibrant, robust economy.
We have growth in jobs, unemployment under 4 percent and higher wages.

According to the New Mexico Labor Department, Curry County ranks 18th in the state with an average wage of $11.42 an hour. In polling businesses in our area, the average minimum wage for food service and retail building material jobs is $5.75 with increases within 90 days. The average minimum for insurance and financial jobs is $7.50 and for dairies it is $8. The federal minimum wage is $5.15 and the state average is $7.41.

Since our businesses and the state are already at or above lawmakers’ proposed minimums, is there a problem with the state raising the minimum wage? Definitely yes — if you want to keep our economy growing.

The problems arise form arbitrarily raising the wage floor, which causes a reaction to all existing wages in the form of wage adjustments to keep employees. It puts New Mexico businesses at a competitive disadvantage to our surrounding states, which have a lower mandate.

New Mexico companies that sell their products and services in New Mexico can and will increase their prices to defray increased wage cost. All of our manufacturers and most of our agriculture producers (dairies, cattle growers and farmers) sell their products at a national market price. These businesses do not control their prices, so when the wage floor is raised by government there will be a wage increase adjustment to all industry groups followed by increases in prices of New Mexico products and service.

These increases on businesses that cannot increase their prices will cause a major negative economic impact. Their growth will stop, there will be a reduction in jobs; some will relocate to other states and some will close.

A solution offered is to “exempt” these businesses from the law. An exemption has no effect since these businesses are already above the minimum. No one is exempt from the wage adjustments caused by raising the floor and combined with a low pool (3.8 percent) of workers, from which all businesses compete.

Arbitrarily raise the wage floor and you will raise all cost.
The only solution that is not harmful to our economy in any way is for government to leave it alone and continue to let the natural market raise wages and consumer prices. If it is not broken … don’t try to fix it.

If government must raise minimum wage it should be done federally across the board to all states. We are finally on the grow; New Mexico should not become a “wage island” surrounded by states with less restrictions waiting to feed on our job loss.

Walter Bradley is director of government and industry relations for Dairy Farmers of America Inc.’s southwest area. Contact him at 763-4528 or by e-mail:
wbradley@dfamilk.com