New Mexico’s future prosperity is deeply intertwined with the well-being of its children. Ensuring every child has the opportunities they need to thrive is not just a moral imperative but a crucial investment in the state’s future. Poverty, however, casts a long shadow, limiting these opportunities and perpetuating cycles of disadvantage. In New Mexico, a concerningly high number of children – nearly one in three, totaling 145,000 – live in poverty. This alarming statistic is a primary driver behind New Mexico’s consistently low ranking in national child well-being assessments. Such a high rate of child poverty presents a significant challenge to the state’s long-term prospects.
This high rate of child poverty is reflective of broader economic challenges within New Mexico. One in five New Mexicans lives below the poverty line, and the state’s median income lags 17 percent behind the national average. A significant portion of the workforce, 31 percent, earns low wages, at or near the state’s minimum wage of $7.50 per hour. This encompasses 245,894 hardworking individuals, and impacts a further 100,596 children who have at least one parent earning these low wages.
While some municipalities in New Mexico, including Albuquerque, Las Cruces, Santa Fe, Bernalillo County, and Santa Fe County, have taken steps to raise their local minimum wages, the state-wide minimum wage has remained stagnant since 2009. At $7.50 an hour, its real value has significantly eroded due to inflation. What $7.50 bought in 2009 now only purchases approximately $6.30 worth of goods. To maintain its original purchasing power, the minimum wage would need to be $8.95 today. While New Mexico’s minimum wage has stagnated and lost value, 28 other states, including neighboring Colorado and Arizona, have proactively increased their state minimum wages. These states have demonstrated that raising the minimum wage can significantly benefit working families and stimulate local economies.
To foster environments where children can flourish, families require economic security, enabling them to invest in their children’s futures. Legislation to incrementally raise the state minimum wage to $12.00 per hour by 2022, while also prohibiting subminimum “training wages” and preserving municipalities’ rights to set higher local minimums, would be a transformative step. This policy change would lift the wages of nearly a quarter of a million workers and inject an estimated $204.8 million annually into the state’s economy. Such an increase in the minimum wage in New Mexico is an achievable and impactful reform that would significantly improve the overall well-being of the state, creating more opportunities for families, children, seniors, people of color, and women to thrive, while simultaneously boosting local economies.
The Far-Reaching Consequences of Economic Insecurity on Families
Economic insecurity permeates every facet of life, significantly impacting physical and mental health, educational attainment, and nutritional well-being. Families of four living at or below the federal poverty level, earning less than $24,000 annually, experience poorer health outcomes compared to higher-income counterparts, even with access to healthcare. These populations are disproportionately affected by chronic health conditions such as cardiovascular diseases and hypertension. For women facing economic hardship, inadequate nutrition, health issues, and high stress levels often contribute to premature births and low birth weight babies.
Mental health also suffers under the strain of economic insecurity. Children are particularly vulnerable to the adverse effects of poor mental health, with research showing that high stress levels, frequently linked to poverty and economic instability, can impair cognitive function and emotional regulation in children. Child poverty is strongly correlated with negative outcomes in adolescence and early adulthood, including increased rates of teen pregnancy, risky health behaviors, and school dropout. Prolonged exposure to high stress, known as toxic stress, can even alter brain development, leading to lasting problems and reduced lifespan.
Nutritional deficiencies are often intertwined with poor health outcomes. Low socioeconomic status and food insecurity are intrinsically linked. Children experiencing food insecurity may face challenges in academic performance, behavior, and physical development. While improving diet can mitigate these effects, access to fresh, nutritious food is often limited for low-income families. However, increased family income can lead to immediate positive changes in nutrition. Research consistently demonstrates that household spending on food increases with income. Even small income gains can be impactful, as studies indicate that a healthy diet costs only approximately $1.50 more per person per day than an unhealthy one. Unfortunately, even this modest dietary improvement remains out of reach for many families in New Mexico under the current economic conditions.
Policy solutions can effectively address these challenges and expand opportunities for New Mexican families. Raising the minimum wage in New Mexico is a tangible and attainable policy change that would empower thousands of workers to improve their quality of life and that of their children. By alleviating poverty, a higher minimum wage would contribute to better health outcomes, improved academic and work performance, and enhanced overall well-being for vulnerable populations, including women, people of color, and children.
Broad Benefits for Workers and Families Across New Mexico
The Positive Impact of a $12.00 Minimum Wage
Increasing the minimum wage in New Mexico to $12.00 per hour by 2022 would have a direct positive impact on approximately 150,901 workers, nearly 20 percent of the state’s workforce. These individuals would see their wages rise as the new minimum wage surpasses their current earnings. An additional estimated 94,992 workers, earning slightly above the new minimum wage, would also experience indirect benefits. As employers adjust pay scales upwards to reflect the higher minimum, these indirectly affected workers would also likely receive a wage increase.
This minimum wage increase to $12.00 is projected to inject an estimated $205 million per year into the paychecks of New Mexican workers earning at or near the minimum wage. On average, each worker would see an annual wage increase of $833. Directly affected workers would experience an average annual increase of approximately $1,114, while indirectly affected workers would see an average annual increase of about $387.
Impact Across Household Income Levels
In New Mexico, a significant 56 percent of low-wage workers reside in households with annual incomes below $35,000. Alarmingly, 41 percent of these workers live in households earning less than $25,000 per year. These households, already facing significant economic challenges, would experience substantial relief and improved financial stability from an increased minimum wage in New Mexico.
Advancing Equity: Impact by Race and Ethnicity
Racial and ethnic minority families in New Mexico disproportionately face economic barriers and would experience some of the most significant benefits from an increase in the minimum wage in New Mexico. Systemic inequities have resulted in higher poverty rates among communities of color. Children of color in New Mexico are significantly more likely to live in low-income households compared to their white counterparts. The median incomes for Hispanic households ($38,924) and Native American households ($33,893) are substantially lower than that of non-Hispanic White households ($57,069) in New Mexico. Hispanic individuals, who constitute almost half (48 percent) of the state’s population, represent about 51 percent of the low-wage workforce. A minimum wage increase would significantly expand economic opportunities for people of color. Approximately 21 percent of the Hispanic workforce would be directly affected, and 13 percent indirectly affected. This demographic group is projected to experience the largest total wage increase, estimated at $102.7 million annually.
Benefits for Diverse Household Types
New Mexico’s diverse family structures would all benefit from an increased minimum wage in New Mexico. Single adults without children constitute the population segment most directly impacted. The high proportion of single, childless minimum wage workers may reflect the financial challenges of marriage and raising children on low wages. A minimum wage increase could provide greater financial flexibility for these individuals. Married couples with children would also see substantial wage increases, averaging around $1,241 per year in additional earnings for those directly affected. This additional income could significantly ease financial strain, allowing families to spend more on groceries, healthcare, and other essential living expenses. For instance, an extra $90 per month could enable a family of three to increase their grocery budget by a dollar per person per day, potentially leading to a significantly healthier diet.
Impact Across Age Demographics
The majority (70 percent) of low-wage workers who would benefit from a minimum wage increase in New Mexico are age 25 or older, with 35 percent being over 40, and 14 percent over 55. For seniors supplementing retirement income, an increase could help cover housing and medical expenses. For younger adults, increased wages could facilitate access to higher education or help with the costs of raising children, such as childcare.
Investing in the Future: Impact on Children
Approximately one-fifth of all children in New Mexico – 100,596 children – live in households that would be directly or indirectly affected by a minimum wage increase in New Mexico. Raising the minimum wage has the potential to lift children out of poverty and improve their health, nutrition, and academic performance. Given the strong link between educational attainment and socioeconomic status, an increased minimum wage could lead to higher high school graduation rates, reduced teen pregnancy rates, and increased college completion rates, particularly among people of color who are disproportionately affected by school dropout rates.
Empowering Women: Impact by Gender
An increased minimum wage in New Mexico is particularly critical for working women, who already earn less on average than their male counterparts, and especially for single mothers supporting families. In New Mexico, single-parent households account for 63 percent of families in poverty, and single mothers head 81 percent of these households. A minimum wage increase would disproportionately benefit women, with an estimated 133,329 women and 112,565 men earning low wages seeing a wage increase. While more women would be affected, men are projected to receive a slightly larger average annual wage increase due to existing gender-based pay disparities and differences in industry and occupation distribution.
Industry-Specific Impacts
Twenty percent of low-wage workers in New Mexico are employed in female-dominated industries like education and healthcare, sectors urgently needing wage improvements. Despite the presence of high-paying positions within these industries, many workers in essential roles, such as preschool teachers and caregivers for the elderly and disabled, receive very low wages. Low wages in human services are often perpetuated by a cyclical effect. When families needing care for children or aging parents earn low wages themselves, they have limited capacity to pay for well-compensated caregivers. This can lead to lower-quality care, which, in the case of early childhood education, can negatively impact children’s school readiness and long-term earning potential. Raising the minimum wage in New Mexico is essential to break this cycle, providing families with greater financial flexibility for care, improving wages for caregivers and early childhood educators, and enhancing the quality of care for those who need it most. As healthcare is the fastest-growing sector in the state, it is imperative that these jobs offer wages above poverty levels. Other low-wage industries in New Mexico include retail, food service, and hospitality.
Occupational Impact
Service occupations employ the largest share of low-wage workers who would benefit from a raise, comprising 46 percent of this workforce. These occupations include food servers, retail clerks, and home health aides. An additional 28 percent of low-wage workers are employed as sales clerks or in office administration positions.
Hours Worked by Low-Wage Earners
The vast majority (nearly 90 percent) of New Mexico’s low-wage workers work more than 20 hours per week, with 61 percent working full-time (over 35 hours) and 29 percent working mid-time (20 to 34 hours). This data underscores the necessity for many low-wage workers, including parents, to work significant hours. Maintaining one job with consistent hours is often more practical than juggling multiple part-time jobs, explaining why the majority of low-wage earners work over 20 hours a week.
Educational Attainment of Low-Wage Workers
While workers without a high school diploma are more likely to be in low-wage jobs, a significant portion of New Mexico’s low-wage workforce has achieved higher education. In New Mexico, 63 percent of low-wage workers have completed high school and have some college education. The state’s low minimum wage and weaker economy contribute to a situation where many workers, regardless of education level, are trapped in low-wage jobs. An increased minimum wage in New Mexico could empower more workers to pursue credentials in high-growth industries, leading to higher-paying jobs and a stronger workforce overall.
Impact by Type of Employer
The majority (81 percent) of low-wage workers in New Mexico are employed in the for-profit sector, while 13 percent work in the government sector. Contrary to common perception, government jobs are not always high-paying, with pay rates varying based on education and job tenure, as in other sectors.
Benefits for Local Businesses and the New Mexico Economy
Raising the minimum wage in New Mexico is not only beneficial for workers and families but also for local economies and businesses, particularly small businesses. Numerous economic studies have examined the effects of minimum wage increases in both urban and rural areas, demonstrating positive impacts on both employment and economic activity. Research comparing contiguous counties across the United States has revealed significant earnings gains following minimum wage increases, without detectable job losses overall.
Businesses have various mechanisms to absorb increased operating costs associated with minimum wage increases. In fact, these increases can often reduce direct costs by decreasing employee turnover. Lower turnover translates to reduced spending on recruitment and training. Studies also indicate that higher wages can lead to increased employee productivity, improved morale, reduced absenteeism, and fewer lost sales.
Research suggests that small businesses, such as restaurants, can often absorb a 10 percent minimum wage increase by raising prices by only 1 to 2 percent. This slight price adjustment is unlikely to put any single business at a disadvantage, as similar price increases would likely occur across the industry within the affected area. Furthermore, minimum wage increases boost the purchasing power of low-wage workers.
While higher-income earners may save a portion of their additional income, low-wage workers typically spend their entire income on immediate necessities. Therefore, wage increases for this group directly stimulate the economy as this additional income is quickly injected back into local businesses through spending. This effect is particularly pronounced in rural economies, where consumer demand is often weaker.
Towards a Living Wage for New Mexicans
While raising the state-wide minimum wage in New Mexico to $12.00 per hour is a significant and positive step towards economic security for many hardworking New Mexicans, it should be viewed as the beginning of a broader movement towards a living wage. The Economic Policy Institute’s Family Budget Calculator estimates that in Bernalillo County, a single adult without children needs to earn $16.00 per hour to achieve a modest yet adequate standard of living without relying on public assistance. As the minimum wage continues to progress towards a living wage, more New Mexican workers and families will be empowered to escape poverty. Increased economic security for individuals and families will foster thriving local economies, making New Mexico a more attractive state to live, work, and raise a family.
Policy Recommendations for a Stronger New Mexico
New Mexico faces a critical need for policy improvements to address the economic challenges facing its families, workers, and children. The state’s consistently low rankings in well-being indicators highlight the urgency of the situation. However, this need also presents a unique opportunity to chart a new course for New Mexicans, establishing a foundation for success for all workers and their families. With new leadership, 2019 presents a pivotal moment to enact policy changes that will significantly improve economic security for families across the state.
To achieve meaningful progress, the following policy recommendations regarding the minimum wage in New Mexico are crucial:
- Increase the Minimum Wage: The legislature should enact legislation in the 2019 session to raise the minimum wage to at least $10.00 per hour starting January 1, 2020, with incremental increases each year until reaching $12.00 per hour or higher by 2022. Fiscal impact analyses for such an increase are available in the appendix of this report.
- Index to Inflation: To prevent the erosion of purchasing power over time, the state minimum wage should be indexed to inflation. While some local minimum wage ordinances include indexing, the state law currently does not.
- Prevent Preemption: Efforts to raise the state minimum wage have faced challenges from preemption attempts, which restrict local governments from enacting higher minimum wage policies. Given the significant variations in cost of living across New Mexico counties, local governments must retain the flexibility to implement policies best suited to their communities. Minimum wage legislation should explicitly prohibit preemption.
- Prohibit Training Wages: Legislation should prohibit the practice of paying a subminimum “training wage” during the first 90 days of employment. This practice is often abused by employers and can harm low-wage workers. Eliminating training wages is essential to ensure minimum wage legislation fully supports the well-being of low-wage workers and their families.
Endnotes
[i] Annie E. Casey Foundation. (2018). 2018 Kids Count Data Book: State Trends in Child Well-Being.
[ii] New Mexico Voices for Children. (2017). New Mexico Kids Count Data Book.
[iii] U.S. Bureau of Labor Statistics, Consumer Price Index Inflation Calculator
[iv] Labor Law Center. (2018). State Minimum Wage Rates. Retrieved June 28, 2018, from https://www.laborlawcenter.com/state-minimum-wage-rates/
[v] Wolfson, P. & Belman, D. (2016). 15 Years of Research on U.S. Employment and the Minimum Wage. Tuck School of Business Working Paper No. 2705499. http://dx.doi.org/10.2139/ssrn.2705499
[vi] Gallup (2010). In U.S., Health Disparities across Incomes are Wide-Ranging. Retrieved July 3, 2018, from http://www.gallup.com/poll/143696/Health-Disparities-Across-Incomes-Wide-Ranging.aspx
[vii] Paulsen, M. S., Anderson, M., Munck, A. P., Larsen, P. V., Hansen, D. G., Jacobsen, I.A., & Sondergaard, J. (2012). “Socio-economic status influences blood pressure control despite equal access to care.” Family Practice, 29(5), 503-510. http://doi.org/10.1093/fampra/cmr130
[viii] Shonkoff, P. J. & Garner, S. A. (2011). “The Lifelong Effects of Early Childhood Adversity and Toxic Stress.” American Academy of Pediatrics, 121(1), e232-e246. doi:10.1542/peds.2011-2663 http://pediatrics.aappublications.org/content/early/2011/12/21/peds.2011-2663.short
[ix] Annie E. Casey Foundation. (2018). 2018 Kids Count Data Book: State Trends in Child Well-Being.
[x] Shonkoff, P. J. & Garner, S. A. (2011). “The Lifelong Effects of Early Childhood Adversity and Toxic Stress.” American Academy of Pediatrics, 121(1), e232-e246. doi:10.1542/peds.2011-2663 http://pediatrics.aappublications.org/content/early/2011/12/21/peds.2011-2663.short
[xi] Bureau of labor Statistics. (2014). Consumer Expenditure Survey, 2013.
[xii] Mozaffarian, D. (2014). “Off the Cuff: The $1.50 difference.” Harvard School of Public Health Magazine.
[xiii] American Community Survey, 2016 data.
[xiv] U.S. Census, American Community Survey, 2016
[xv] Alschul, I. (2012). “Linking Socioeconomic Status to the Academic Achievement of Mexican American Youth through Parent Involvement in Education.” Journal of the Society for Social Work and Research, 3(1), 13-30. doi:10.5243/jsswr.2012.2
[xvi] American Community Survey, 2016 data
[xvii] Thomason, S., Austin, L., Bernhardt, A., Dresser, L., Jacobs, K., & Whitebook, M. (2018). At the Wage Floor. Center for the Study of Child Care Employment. Retrieved July 3, 2018, from http://cscce.berkeley.edu/at-the-wage-floor/
[xviii] Thomason, S., Austin, L., Bernhardt, A., Dresser, L., Jacobs, K., & Whitebook, M. (2018). At the Wage Floor. Center for the Study of Child Care Employment. Retrieved July 3, 2018, from http://cscce.berkeley.edu/at-the-wage-floor/
[xix] Reich M., Jacobs, K., & Bernhardt A. (2014). “Local Minimum Wage Laws: Impacts on Workers, Families, and Businesses”. IRLE Working Paper No. 104-14. Retrieved June 26, 2018, from http://irle.berkeley.edu/workingpapers/104-14.pdf; Schmitt, J. (2013). Why Does the Minimum Wage have no Discernible Effect on Employment? Center for Economic and Policy Research. Retrieved June 26, 2018, from http://cepr.net/publications/reports/why-does-the-minimum-wage-have-no-discernible-effect-on-employment
[xx] Dube, A., Lester T. W., & Reich, M. (2010). “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties.” IRLE Working Paper No. 157-07. Retrieved June 26, 2018, from http://irle.berkeley.edu/workingpapers/157-07.pdf
[xxi] Dube, A., Lester T. W., & Reich, M. (2010). “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties.” IRLE Working Paper No. 157-07. Retrieved June 26, 2018, from http://irle.berkeley.edu/workingpapers/157-07.pdf
[xxii] Schmitt, J. (2013). Why Does the Minimum Wage have no Discernible Effect on Employment? Center for Economic and Policy Research. Retrieved June 26, 2018, from http://cepr.net/publications/reports/why-does-the-minimum-wage-have-no-discernible-effect-on-employment
[xxiii] Schmitt, J. (2013). Why Does the Minimum Wage have no Discernible Effect on Employment? Center for Economic and Policy Research. Retrieved June 26, 2018, from http://cepr.net/publications/reports/why-does-the-minimum-wage-have-no-discernible-effect-on-employment
[xxiv] Reich M., Jacobs, K., & Bernhardt A. (2014). “Local Minimum Wage Laws: Impacts on Workers, Families, and Businesses”. IRLE Working Paper No. 104-14. Retrieved June 26, 2018, from http://irle.berkeley.edu/workingpapers/104-14.pdf
[xxv] Aaronson, D., Agarwal, S. & French, E. (2008). “The Spending and Debt Response to Minimum Wage Hikes.” FRB of Chicago Working Paper No. 2007-23. http://dx.doi.org/10.2139/ssrn.1144222
[xxvi] Economic Policy Institute. (2018) Family Budget Calculator. Retrieved July 16, 2018, from https://www.epi.org/resources/budget/
