Local Labor Economist on Minimum Wage

Local Labor Economist on Minimum Wage


>>REPRESENTATIVE FERRARY IS
STILL WAITING FOR SENATE COMMITTEE HEARINGS ON HER BILL
BUT THERE IS A COMPETING SENATE PROPOSAL SCHEDULED FOR
SATURDAY DISCUSSION THAT WOULD RAISE THE MINIMUM WAGE TO
10-DOLLARS INSTEAD OF $12 AN HOUR IN FERRARY’S BILL. RESTAURANTS LIKE IT BECAUSE IT
KEEPS THE TIP CREDIT INTACT. IT HAS BEEN YEARS SINCE NEW
MEXICO TOUCHED ON THE MINIMUM WAGE BUT CITIES AND COUNTIES
HAVE BEEN BUSY. LAS CRUCES, ALBUQUERQUE AND
SANTA FE ARE AMONG THOSE WHO HAVE CHOSEN TO BOOST BASE PAY
RATES AND ACROSS THE COUNTRY OTHER CITIES AND STATES HAVE
DONE THE SAME. THAT MEANS WAGE EXPERTS LIKE
UNM MELISSA BINDER HAVE DATA TO STUDY THAT HELPS PREDICT
WHAT THE IMPACT OF RAISING THE MINIMUM WAGE MIGHT BE. SHE SAT DOWN WITH
CORRESPONDENT GWYNETH DOLAND THIS WEEK.>>MELISSA BINDER, THANK YOU
SO MUCH FOR BEING WITH US TODAY. MUCH OF THE DISCUSSION
IN SANTA FE THIS YEAR ABOUT THE MINIMUM WAGE SEEMS TO BE
ABOUT WHERE TO SET IT? AT WHAT
LEVEL? $10 AN HOUR, IS IT $12 AN
HOUR? HOW DO WE GO ABOUT
FIGURING OUT WHAT RATE IS GOING TO WORK BEST?>>SO, ONE WAY TO LOOK AT IT
IS TO SEE WHAT IT WAS HISTORICALLY AND ADJUST FOR
INFLATION. UNDER THAT IDEA YOU’RE TRYING
TO KEEP THE PURCHASING POWER THE SAME AS IT WAS IN THE
PAST. IF YOU LOOK AT 1968, FOR
EXAMPLE, THE MINIMUM WAGE WAS 1.60, WHICH DOESN’T SOUND LIKE
THAT MUCH, BUT IN PURCHASING POWER TERMS IT WOULD BE ABOUT
11.50 NOW. SO, THE NUMBERS THAT PEOPLE
ARE TALKING ABOUT ARE PRETTY CLOSE TO THAT HISTORICAL
PURCHASING POWER.>>BASED ON THAT MATH ALREADY. DO YOU KNOW WHAT THOSE NUMBERS
LOOK LIKE IN NEW MEXICO HISTORICALLY?>>WELL, FOR MOST — SINCE
MINIMUM WAGE HAS BEEN IN EFFECT NATIONALLY, MOST OF THE
STATES AND NEW MEXICO HAS JUST FOLLOWED THE FEDERAL. BUT, WHAT HAPPENS OVER TIME IS
THAT BECAUSE IT IS NOT INDEXED TO INFLATION, IT IMMEDIATELY
STARTS LOSING PURCHASING POWER AND SO, YOU KNOW, NEW MEXICO
NOW IS 25 CENTS ABOVE THE FEDERAL MINIMUM WAGE SO
PRETTY CLOSE. IT IS TOO BAD, THOUGH, THAT
WHEN YOUR PRODUCER CALLED ME TO ASK IF I WOULD SPEAK ON THE
SHOW, I SAID, REALLY, AGAIN, IT IS JUST THAT I AM OLD
ENOUGH WHERE I HAVE SEEN THIS MULTIPLE TIMES BECAUSE EVERY
10 YEARS THE MINIMUM WAGE BECOMES RIDICULOUSLY LOW AND
NEEDS TO BE ADJUSTED. THERE IS AN EASY FIX TO THAT.>>WHAT IS IT?>>JUST INDEX IT TO INFLATION
AND SANTA FE AND ALBUQUERQUE DO THAT AND THEN YOU DON’T
HAVE TO HAVE THESE — THIS DISCUSSION OVER AND OVER
AGAIN.>>SO, IF THEY SET IT, YOU
SAID 11.50 WOULD TRACK RIGHT NOW. BUT IF THEY PICK A DOLLAR
AMOUNT, SAY THEY PICK 12 AND IT IS TOO HIGH, WHAT DO YOU
RISK BY SETTING IT TOO HIGH?>>I THINK A FEW 50 CENTS OR
EVEN A DOLLAR ONE WAY OR ANOTHER IS NOT GOING TO MAKE
OR BREAK IT. THERE IS A COUPLE OF IDEAS
ABOUT LIKE WHY YOU SET A MINIMUM AND THE MOST BASIC ONE
IS THAT YOU DON’T WANT WORKERS TO BE EXPLOITED. YOU CAN ALWAYS FIND SOMEONE
WHO WILL WORK AT A LOWER WAGE. BUT THERE SHOULD BE A MARKET
CLEARING WAGE AND AT THAT POINT, THERE WOULD BE ABOUT
EVERYONE WHO WANTED A JOB WOULD FIND ONE AND SO ON.>>ONE INDICATOR THAT THE
MINIMUM WAGE IS TOO LOW IS ESTABLISHMENTS THAT PAY
MINIMUM WAGE ALWAYS HAVE SIGNS UP THEY ARE HIRING. THAT IS AN INDICATION THERE
AREN’T ENOUGH WORKERS WILLING TO WORK AT THAT WAGE. IT IS INTERESTING TOO BECAUSE
IT IS NOT JUST LIKE ANYONE IS FREE, OBVIOUSLY, TO PAY ABOVE
MINIMUM WAGE BUT IT SETS A NORM, IT REALLY DOES, AND IT
SAYS WHAT LABOR IS WORTH AND IT IS A SIGNAL AND LARGE
COMPANIES AND SMALL COMPANIES TOO ARE — THEY DON’T WANT TO
NECESSARILY PAY MORE BECAUSE THEY WANT TO TRY TO FIND THOSE
WORKERS AT THAT NORM. I THINK IT IS AN INTERESTING
IDEA.>>I JUST SAW AMAZON SET ITS
MINIMUM WAGE AT $15 AN HOUR ACROSS THE BOARD. THERE IS A PR ELEMENT TO IT
THERE, YOU KNOW. THERE IS A, WE WANT TO APPEAR
TO BE A COMPANY THAT CARES, EVEN IF THEY AREN’T
NECESSARILY.>>ALSO, YOU KNOW, THE
ARGUMENT ABOUT IT BEING TOO HIGH AND THEN THERE NOT BEING
ENOUGH PEOPLE EMPLOYED, WHICH I CAN TELL YOU MORE ABOUT WHAT
THE RESEARCH SAYS ABOUT THAT. BUT, HUMANS ARE NOT, YOU KNOW,
LABOR IS NOT THE SAME AS OTHER THINGS THAT WE BUY. SO, THERE IS SOMETHING ABOUT
THE VALUE OF LABOR THAT REALLY MAKES IT DIFFERENT AND THAT IS
WHY THIS IS A MORE EMOTIONAL KIND OF DISCUSSION THAN OTHER
KINDS OF — THIS IS AN ECONOMIC ISSUE. A LOT OF ECONOMIC ISSUES ARE
STREAMLINED AND –>>PEOPLE GET QUITE PASSIONATE
ABOUT IT AND THEY SAY, YOU KNOW, IT IS JUST A MINIMUM
WAGE, THIS ISN’T MEANT TO BE A CAREER, THESE AREN’T PEOPLE
WHO DO THIS THEIR WHOLE LIFE, THEY ARE TEENAGERS. IS IT ALL TEENAGERS THAT MAKE
MINIMUM WAGE?>>ACTUALLY NO. ACCORDING TO STATISTICS THAT I
JUST LOOKED UP, ABOUT 20% OF MINIMUM WAGE WORKERS ARE
TEENAGER, 16 TO 18 AND THEN ABOUT HALF ARE OVER 25 AND SO
THERE ARE DEFINITELY PEOPLE WHO CAN SPEND THEIR WHOLE
LIVES IN MINIMUM WAGE, THERE IS NO QUESTION ABOUT THAT.>>WE HAVE NOT UPPED THE
MINIMUM WAGE HERE SINCE 2009. WE HAVEN’T, YOU KNOW —
>>EVERY 10 YEARS.>>YOU’RE RIGHT ABOUT THAT. AND I THINK YOUR ARGUMENT IS
IF YOU INDEX IT TO INFLATION, YOU DON’T HAVE TO KEEP COMING
BACK TO THIS EVERY 10 YEARS, BUT HOW DO OTHER STATES DO IT? ARE THERE STATES DOING IT VERY
WELL?>>SO, I ACTUALLY AM NOT THAT
FAMILIAR WITH WHAT OTHER STATES ARE DOING. LIKE I SAID, THE CITY OF
ALBUQUERQUE AND CITY OF SANTA FE HAVE DONE INDEXES. I REMEMBER MIT ROMNEY WHEN
RUNNING FOR PRESIDENT SAID THAT HE WISHED THAT AS A SMALL
BUSINESSMAN IT HAD BEEN INDEXED BECAUSE IT WOULD
REDUCE UNCERTAINTY. SO, I THINK THAT THAT IS A
REALLY COMMON SENSE WAY OF ADDRESSING THIS.>>SO, $10 AN HOUR, IF THAT IS
WHERE WE ARE GOING IN SANTA FE, IS VERY DIFFERENT THAN $10
AN HOUR IN OTHER COMMUNITIES IN TERMS OF PURCHASING POWER
IN ONE WAY IN PARTICULAR. TALKING ABOUT ALBUQUERQUE AND
SANTA FE, IS IT A PROBLEM WHEN CITIES DO THINGS DIFFERENTLY
FROM THE STATE OR FROM OTHER COMMUNITIES? DOES THAT CREATE UNCERTAINTY
AND CHAOS? IS IT TOO DIFFICULT FOR
EVERYONE TO FOLLOW?>>I HAVEN’T NOTICED TOO MUCH
CHAOS IN SANTA FE AND ALBUQUERQUE. I DON’T THINK THAT THAT IS
REALLY A PROBLEM AND IT MAKES SENSE BECAUSE, LIKE YOU SAID,
THE COST OF LIVING IS HIGHER IN CITIES THAN OUTSIDE OF
CITIES.>>SO, GOOD POLICY, ARE YOU
SAYING, WOULD BE TO CONTINUE TO LET CITIES CHOOSE THEIR
OWN?>>I DON’T SEE ANY REASON WHY
YOU WOULD RESTRICT CITIES FROM DOING THAT.>>SO, BUT WE SHOULD RAISE IT
AT THE STATE LEVEL AT LEAST TO THE INDEXED TO INFLATION RATE?>>THAT IS WHAT I WOULD
RECOMMEND.>>SO, MOVING FORWARD, WHAT DO
YOU THINK ARE SOME OF THE BEST PRACTICES FROM AN ECONOMIST’S
PERSPECTIVE WHEN MUNICIPALITIES OR STATES ARE
LOOKING AT HANDLING MINIMUM WAGE? WHAT ARE SOME OF THE THINGS WE
SHOULD KEEP IN MIND WHEN LOOKING AT IT?>>WELL, ONE RULE OF THUMB
THAT ACTUALLY COMES FROM THE WORLD BANK IS THAT YOU WANT TO
BE AT ABOUT HALF OF THE MEDIAN AVERAGE HOURLY WAGE IN THE
PRIVATE SECTOR. THAT SEEMS TO BE A NUMBER THAT
DOESN’T — YOU CAN HAVE A MINIMUM WAGE THAT IS TOO HIGH. IN THE 1980’S AND 90’S A LOT
OF COUNTRIES IN LATIN AMERICA HAD REALLY HIGH — ACTUALLY
ONE OF THEM WAS VENEZUELA. NO ONE GOT PAID IT. IT WAS WAY TOO HIGH. SO IT WAS JUST WIDELY IGNORED. ANOTHER INDICATION THAT THE
MINIMUM WAGE IS REASONABLE IS THAT ACTUALLY PEOPLE FOLLOW
THE RULES.>>I AM GOING TO HAVE TO STOP
YOU THERE. IF PEOPLE FOLLOW THE RULES
THEN IT IS WORKING. THAT IS A GREAT POINT. THANK YOU SO MUCH FOR BEING
WITH US TODAY.>>THANK YOU FOR HAVING ME.

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