Santa Fe was one of the first cities in the country to adopt a local minimum wage ordinance, and in many ways it became the early test case for the policy’s unintended consequences. Now that city lawmakers have approved yet another wage hike up to $17.50, this trend is likely to continue.
The city’s 2003 ordinance set an $8.50 minimum wage for businesses with 25 or more employees, with plans on rising to $10.50 by 2008. EPI research found that after the initial jump to $8.50 in 2004, the likelihood of unemployment for Santa Fe workers increased by 3.3% and usual hours worked fell by one to three hours per week.
City officials reached similar conclusions, recognizing how disruptive a 23% wage hike in just two years could be for local businesses. They ultimately scaled back the original plan and tied future increases to inflation starting in 2008.
While Santa Fe initially tapped the brakes, New Mexico’s minimum wage climbed from $7.50 in 2019 to $12 in 2023 — a sharp increase that put additional cost pressure on employers across the region.
Now, two decades later, Santa Fe is once again pushing aggressively ahead. The City Council has approved another round of increases, raising the city’s minimum wage from $15 to $17.50 by 2027. Given the impacts in the early 2000s, it is unlikely the result will be any different in Santa Fe this time around.
While New Mexico’s minimum wage hikes over the years have taken a toll on restaurant jobs statewide, Santa Fe’s even-higher rate has caused even more employment losses.
Since the state raised its wage to $12 an hour in 2023, New Mexico’s overall restaurant employment has fallen 1.6%. Santa Fe, where wages continue rising beyond the state rate, has seen restaurant employment decline an even steeper 3.5% over the same period. This is even more concerning relative to nationwide trends, where restaurant employment has grown slightly over the same time frame.
Santa Fe’s wage hikes have a history of hurting local restaurants. In fact, since before COVID, as Santa Fe’s minimum wage soared high above the New Mexico rate, the city has experienced a higher rate of employment losses than statewide.
These trends are hard to overlook. Even with the statewide wage frozen at $12, New Mexico has experienced some job losses — yet Santa Fe, which continues to raise its wage far beyond the state level, is seeing declines at more than double the statewide rate. The vast majority of economic evidence shows that this outcome is par for the course with high wage hikes, which often lead to employment losses — especially for younger or entry-level workers.
As the city prepares for another increase in 2027, policymakers should take a hard look at what the data already show – steep, rapid wage mandates come with real employment costs, and Santa Fe may be setting itself up for a repeat of its earlier mistakes.