Opinion: Minimum-wage hikes another blow to economy

New Mexico small businesses not quite down for the count took another punch in the gut on Friday. That’s when minimum wage jumped to $10.50 an hour.

First COVID-19 made thinking people think about staying out of restaurants and retail stores that attract crowds. Then government insisted on it for everyone. And now those businesses that don’t have much business anymore are required by law to pay entry-level employees $3 per hour more than they paid them in 2019.

Happy new year, Mom and Pop.

To be fair, New Mexico lawmakers did not know the pandemic would bring our economy to a crawl when they implemented a series of minimum-wage increases two years ago.

But government deciding how best private businesses should operate will only add to the burden of lost jobs and rising costs that have accompanied the virus since it arrived in March.

And the damage isn’t done yet. The state’s minimum wage will go to $11.50 an hour a year from now, then to $12 an hour in 2023.

We won’t know for some time exactly how the wage hike will impact jobs, but here’s one thing we know for sure: The city of Clovis passed out more than $4 million in federal grant money last month to local businesses that proved they’d lost that much because of COVID-19. And we know the losses were actually far greater; grants were capped at $100,000 and nine applicants proved losses beyond that.

Forcing businesses to pay workers more in such a climate is not going to spur our economy and may well drag it down more.

Our lawmakers apparently think private business is so profitable it can simply absorb the costs associated with increased wages. Small business owners know that’s not true and the fallout from the pandemic proved it.

Bureau of Labor statistics report that in November, 14.8 million people said they had been unable to work because their employer closed or lost business because of the virus.

Ryan Bourne and Chris Edwards are economists for the libertarian Cato Institute. In a recent op-ed for The Hill, they advocated for states, including New Mexico, to rescind recent and future minimum-wage increases:

“Minimum wage laws have always been a barrier to job opportunities for the lowest skilled, most inexperienced workers,” they wrote. “But today’s deep recession centers on industries that employ millions of lower-paid workers, making the laws more damaging than usual.”

New Mexico’s lawmakers convene later this month for a 60-day session. Let’s hope rescinding the minimum-wage hikes will be on their radar.

— David Stevens

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