KRWG News: Local Economist Discusses Ways to Review Minimum Wage Increase


Published on Dec 8, 2014

Ammendments in the Las Cruces Minimum Wage Ordinance call for City Council to review the effects of the increase before the next increase moves forward.

Jim Peach, Professor of Economics at New Mexico State University says that when it comes time for the review of the increase, there will be no way to look at local data to find out if raising the minimum wage had a positive or negative effect on the community.

“No, We simply don’t have the numbers for the county level in the United States,” Peach said. “So, We can’t do that. We don’t know now how many people earn the minimum wage. And so we don’t know how many people this will affect.”

A 2010 published in the Review of Economics and Statistics showed a 10% increase in minimum wage effected about 1% of employment. Peach says that is common in most studies done on minimum wage.

“There have been about 1,500 studies on the affects of the minimum wage,” Peach said. “And the conclusion that is reached in almost all of them is that an increase in the minimum wage has very little effect on economies, locally or nationally.”

Peach says the January increase isn’t large enough to have a big effect.

“They are essentially paying in inflation adjusted terms the same that they would have been five years ago,” Peach said. “So this is not going to be a terrible burden even on local businesses, I don’t think.”

He says the only thing it may have an effect on is where businesses decide to locate, the county or the city.

“So, if someone were to start up a new business, they might decide to locate in the county instead of the city,” Peach said. “But that would also depend on the type of business and the demand and how geographically sensitive the demand for that business was.”

Peach says that the only thing the council will really have to look at is testimony from the public.

“What they will probably look at is complaints from local business,” Peach said. “And local business will complain. It will be a cost increase for them, but everything increases in price. In 1968, a gallon of gas was 35 cents, and now depending what week it is it’s almost 10 times that much.”

Las Cruces City Council said that they will look at how they are going to review the effect, and which groups will be included in the discussion early next year.

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