Study Shows One in Twenty Employees Will Lose Job Under Santa Fe’s Living Wage Law

Hispanics and Non-High School Graduates Hit Hardest
  • Publication Date: February 2003

  • Topics: Living Wage

Washington – Santa Fe’s least educated and low skilled will be at risk for loss of employment under Santa Fe’s proposed “living wage” increase, according to new research from The Employment Policies Institute (EPI). The mandated wage increase is a poor instrument for targeting those in poverty, as those mostly affected by the increase are either second earners or children in a family living above the poverty line.

The research was conducted by Dr. David Macpherson, a professor of economics from Florida State University whose work has been featured in publications including Journal of Labor Economics, Industrial and Labor Relations Review and the Journal of Human Resources. Dr. Macpherson is a leading analyst of Current Population Survey data from The Census Bureau and Bureau of Labor Statistics, which was the source of his research on this report.

Key findings in “The Effects of the Proposed Santa Fe Minimum Wage Increase” are:

  • Approximately 154 of the 2,727 affected employees would be expected to lose their jobs because of this ordinance. This translates to over 5% of affected employees or about one in every twenty employees.
  • Second, the employees who lose their jobs will lose an estimated $1.9 million, while employers will see their labor costs increase by an estimated $6.6 million after cutting back the workforce.
  • Three-fourths of the expected beneficiaries are either single adults, teenagers living with their parents, in a family without children or the second earner in a family with children. Less than one-fourth of affected beneficiaries are the sole supporter of a family with children, the often-mentioned target of these wage increases.
  • Families who are eligible for means-tested benefits like food stamps can lose a substantial portion of their benefits, and may lose their eligibility altogether for certain programs.

“If the goal of Santa Fe is to maximize financial assistance to the working poor, this research indicates that the living wage is clearly an inadequate tool to do so,” said Kristen Lopez Eastlick, Director of Policy Analysis for EPI. “The enormous employer costs and high risk of job loss for low-skill workers offsets any benefits to the small population of those that would benefit. An alternative approach, such as an increase in the Earned Income Tax Credit, is a much sounder approach that will truly target those in need.”