Albuquerque Minimum Wage Hike Will Cost Jobs
Low-skilled will bear brunt of job loss, says Employment Policies Institute
Publication Date: April 2006
Topics: Minimum Wage
Washington, DC – The Albuquerque City Council’s decision to raise the minimum wage will put low-skilled employees out of work. Citing the 540 lost jobs and 16% increase in unemployment that followed Santa Fe’s minimum wage increase in 2004, the Employment Policies Institute (EPI) warns Albuquerque leaders that their city will suffer similar consequences.
University of Kentucky economist Dr. Aaron Yelowitz analyzed the effects of Santa Fe’s minimum wage increase to $8.50 in 2004 and found that, following the hike:
* 540 jobs were lost resulting in a 16% increase in unemployment. This job loss was concentrated among the low-skilled.
* For those who didn’t lose their job, the living wage ordinance reduced their workweek an average of 1.6 hours. Those with 12 years or fewer of education saw their hours reduced by 3.5 per week.
* Job loss among the low-skilled was due in large part to displacement by high school students attracted into the labor market by the higher wage. In fact, the likelihood that a low-wage employee was an unmarried teenager enrolled full-time in high school more than doubled after the ordinance was enacted.
* As a result of the job loss and hours reduction, there were no detectable income gains for the lowest 10th, 25th, or 50th percentile of earners.
“The same laws of economics that govern Santa Fe apply to Albuquerque and the rest of the nation,” said Mike Flynn of the EPI. “As a result of this mandated wage hike, low-skilled employees will have their hours cut or even lose their jobs altogether.”
To read the study, “How did the $8.50 Citywide Minimum wage Affect the Santa Fe Labor Market,” and other research on the negative consequences of minimum wage hikes, visit www.EPIonline.org.