Last November, voters in Albuquerque, New Mexico approved a ballot measure increasing the city’s minimum wage from $7.50 per hour to $8.50 per hour, or nearly $2,100 a year per employee. On January 1 of this year, the wage hike went into effect; within two weeks, local businesses were already faced with tough choices about how to handle the hire costs.
At El Charritos restaurant, the owner–who wants to avoid a price hike that could reduce sales–has cut the business’ hours of operation and opted not to fill six previously-open positions. Facing the same dilemma is an Albuquerque homeless shelter, Joy Junction. The shelter’s founder indicated he’ll be forced to come up with $62,000 to meet the labor mandate’s costs, and he’s unsure how that will be achieved.
Proponents of the wage hike should have seen this coming: Research from economist Aaron Yelowitz at the University of Kentucky finds that for every one dollar increase in a city’s compensation floor (including increases to its minimum wage), there’s a sharp rise in unemployment for less-skilled groups, and a 26-hour decline in annual hours worked for those who keep their jobs.
Fewer hours and lost jobs for employees—not what Albuquerque voters had in mind when they voted “yes” last November.