New Mexico’s future prosperity is deeply intertwined with the well-being of its children. Ensuring every child has the opportunity to thrive is paramount, yet poverty remains a significant barrier. In New Mexico, nearly one in three children live in poverty, a stark reality that contributes to the state’s low ranking in overall child well-being. This concerning statistic underscores the urgent need to address economic factors that impact families, and the New Mexico Minimum Wage is a key component of this issue.
This article delves into the complexities of the new mexico minimum wage, its impact on families and the economy, and the ongoing debate surrounding its adequacy. We will explore the current situation, analyze the effects of a low minimum wage, discuss the potential benefits of an increase, and examine policy recommendations aimed at ensuring a living wage for New Mexican workers.
The Stark Reality of Low Wages in New Mexico
New Mexico faces significant economic challenges. A considerable portion of the population lives in poverty, and the median income lags behind the national average. Specifically, a substantial percentage of New Mexico’s hourly workforce earns low wages, at or near the state’s minimum wage. This situation impacts not only individual workers but also families, particularly children.
While some cities and counties in New Mexico have taken steps to raise their local minimum wages, the state-wide new mexico minimum wage has remained stagnant for over a decade. At $7.50 per hour, its real value has eroded significantly due to inflation. To put it in perspective, $7.50 in 2009 has the purchasing power of only about $6.30 today. If the minimum wage had kept pace with inflation, it would be considerably higher. Meanwhile, numerous other states have proactively increased their minimum wages, recognizing the need to support working families and stimulate local economies.
For children to flourish, families require economic security. This security enables them to invest in their children’s futures, providing enriching environments and opportunities. Raising the new mexico minimum wage is a tangible policy change that could inject millions of dollars into the paychecks of hardworking New Mexicans, benefiting families, local businesses, and the state as a whole.
The Ripple Effect of Economic Insecurity on New Mexican Families
Economic insecurity casts a long shadow over families, impacting various facets of life, from physical and mental health to educational attainment and nutrition. Families struggling at or below the federal poverty level often experience poorer health outcomes compared to their more financially stable counterparts, even with access to healthcare. They are disproportionately affected by chronic illnesses such as cardiovascular disease and high blood pressure. For women facing economic hardship, the consequences can extend to their pregnancies, increasing the risk of premature and low-birthweight babies.
Mental health also suffers under the weight of economic insecurity. Children are particularly vulnerable. Research indicates that heightened stress levels in children, frequently exacerbated by poverty and financial instability, can impair cognitive function and emotional regulation. Child poverty is strongly linked to negative outcomes in adolescence and early adulthood, including teenage pregnancy, risky behaviors, and failure to complete high school. Prolonged exposure to stress, termed toxic stress, can have lasting detrimental effects on brain development and overall well-being, potentially shortening lifespans.
Nutritional deficiencies are often intertwined with economic hardship. Low socioeconomic status and food insecurity are closely linked. When children lack consistent access to nutritious food, their academic performance, behavior, and physical development can be compromised. While improved diets can mitigate these effects, access to fresh, healthy foods is often financially out of reach for low-income families. Increasing family income, even modestly, can lead to immediate positive changes in food security and dietary habits. Studies consistently demonstrate that families spend more on food when their income rises, and even a small increase can enable healthier food choices. However, for many families in New Mexico, even these incremental improvements remain unaffordable under the current new mexico minimum wage.
Policy interventions are essential to address these challenges and create opportunities for New Mexican families. Raising the new mexico minimum wage is a concrete step that would empower thousands of workers to improve their quality of life and that of their children. By alleviating poverty, it would contribute to better health outcomes, improved performance in school and work, and enhanced well-being for vulnerable populations, including women, people of color, and children across New Mexico.
Examining the Benefits of Increasing the Minimum Wage in New Mexico
The Broad Impact of a $12.00 Minimum Wage
Increasing the new mexico minimum wage to $12.00 per hour would have a significant and direct impact on a substantial portion of the state’s workforce. It’s estimated that a considerable percentage of New Mexican workers, currently earning less than $12.00 per hour, would see their wages rise immediately. Furthermore, another significant number of workers, earning slightly above this threshold, would likely experience indirect benefits as employers adjust their pay scales upwards.
Such an increase would inject a substantial sum of money into the New Mexican economy annually, directly into the hands of workers earning at or near the minimum wage. The average annual wage increase per worker would be noteworthy, providing a much-needed boost to household incomes. Directly affected workers would see a more substantial annual increase, while indirectly affected workers would also experience a meaningful raise.
Impact Across Household Income Levels
In New Mexico, a significant majority of low-wage workers reside in households with very low annual incomes. A considerable percentage live in households earning less than $35,000 a year, and an even larger portion in households earning less than $25,000 annually. These households, already facing significant economic challenges, would experience substantial positive impacts from increased economic security resulting from a higher new mexico minimum wage.
Addressing Racial and Ethnic Disparities
Families of color in New Mexico often encounter greater economic obstacles and would disproportionately benefit from an increase in the new mexico minimum wage. Systemic barriers have contributed to higher poverty rates among these communities, and children of color in New Mexico are significantly more likely to live in low-income households compared to their white counterparts. Median incomes for Hispanic and Native American households are considerably lower than those of non-Hispanic White households in the state.
Given that a substantial portion of New Mexico’s population is Hispanic, and this demographic represents a significant portion of the low-wage workforce, a minimum wage increase holds the potential to substantially improve economic opportunities for people of color. A significant percentage of the Hispanic workforce would be directly affected, with an additional percentage experiencing indirect benefits. This population group would also see the largest overall wage increase among New Mexican workers.
Benefits for Diverse Household Types
New Mexico is characterized by diverse family structures, and an increase in the new mexico minimum wage would positively impact various household types. Single adults without children constitute a significant portion of those who would be directly affected. The prevalence of single, childless individuals among minimum wage workers might reflect financial constraints on marriage and family formation. A higher minimum wage could offer greater financial flexibility for these workers. Married couples with children would also see significant gains, with directly affected families experiencing a notable average annual increase in earnings. This additional income could alleviate financial strain on essential expenses like groceries, healthcare, and housing, leading to improved family well-being.
Impact Across Age Groups
The majority of low-wage workers who would benefit from a new mexico minimum wage increase are adults aged 25 and older, with a substantial percentage being over 40 and a further portion over 55. For older adults supplementing retirement income, an increase could ease financial burdens related to housing and medical expenses. Younger adults could use the extra income to pursue higher education or manage the costs of raising children.
Positive Outcomes for Children
A significant number of children in New Mexico reside in households that would be directly or indirectly affected by a new mexico minimum wage increase. Raising the minimum wage has the potential to lift children out of poverty and improve critical aspects of their lives, including health, nutrition, and academic performance. Given the strong link between educational attainment and socioeconomic status, a higher minimum wage could contribute to increased high school graduation rates, reduced teen pregnancy rates, and greater college completion rates, particularly among people of color who are disproportionately affected by educational disparities.
Empowering Working Women
Increasing the new mexico minimum wage is particularly crucial for working women, who already face a gender pay gap. It is especially important for women who are heads of households and primary caregivers. In New Mexico, a significant majority of families living in poverty are headed by single parents, and overwhelmingly, these are single mothers. A minimum wage increase would disproportionately benefit women, as more women than men in New Mexico are low-wage workers. While more women would be affected, men might see slightly larger average annual wage increases due to existing gender pay disparities and occupational segregation.
Industry-Specific Impacts
A notable percentage of low-wage workers in New Mexico are employed in female-dominated industries like education and healthcare. Despite the presence of high-paying positions within these sectors, many essential workers, such as preschool teachers and caregivers for the elderly and disabled, earn very low wages. The human services sector often experiences a cyclical effect where low wages paid to caregivers are linked to the limited financial capacity of families needing care. Raising the new mexico minimum wage overall could improve wages for caregivers and early childhood educators, enhance the quality of care provided, and offer greater financial flexibility for families needing care services. As healthcare is a rapidly growing sector in New Mexico, it is crucial to address poverty-level wages within this industry. Other low-wage industries in the state include retail, food service, and hospitality.
Occupational Distribution of Impact
Service occupations encompass the largest share of low-wage jobs in New Mexico, and workers in these roles would significantly benefit from a minimum wage increase. This category includes food servers, retail clerks, and home health aides. A substantial portion of low-wage workers are also employed in sales and office administration roles.
Hours Worked by Low-Wage Earners
The vast majority of low-wage workers in New Mexico work substantial hours per week, with a significant percentage working full-time and another considerable portion working mid-time hours. This data underscores the necessity for many low-wage workers, including parents, to work long hours to make ends meet. The prevalence of workers working over 20 hours a week suggests that individuals seek stable employment with consistent hours rather than relying on multiple part-time jobs.
Education Levels of Low-Wage Workers
While workers without a high school diploma are more likely to be in low-wage jobs, a significant majority of low-wage workers in New Mexico have completed high school and have some college education. The fact that so many workers with education beyond high school are still in low-wage jobs highlights the inadequacy of the current new mexico minimum wage and the state of the economy. Raising the minimum wage could empower more workers to afford training and credentials in high-growth industries, enabling them to access higher-paying jobs and strengthen the state’s workforce.
Impact Across Ownership Types
The majority of low-wage workers in New Mexico are employed in the for-profit sector. A smaller but still significant percentage work in the government sector. Contrary to common perceptions, government jobs are not always high-paying, and pay levels in the public sector, as in other sectors, are often determined by education and tenure.
Economic Benefits for New Mexico Businesses and Local Economies
Contrary to some concerns, research consistently demonstrates that minimum wage increases can be beneficial for local economies and small businesses. Numerous economic studies examining the effects of wage increases in both urban and rural areas have shown positive outcomes. These studies indicate that raising the minimum wage can actually improve both employment and overall economic activity. Comparisons of contiguous counties across state borders have revealed strong positive earnings effects following minimum wage increases, without detectable job losses overall.
Businesses have various mechanisms to absorb increased operating costs associated with minimum wage increases. In many cases, these increases can actually reduce direct costs by decreasing employee turnover, leading to savings on recruitment and training expenses. Research also suggests that higher wages can boost employee productivity, morale, and reduce absenteeism, ultimately minimizing lost sales.
Studies of small businesses, such as restaurants, indicate that a modest minimum wage increase can often be absorbed by small price adjustments. This is particularly manageable as price increases tend to be industry-wide in affected areas. Moreover, minimum wage increases enhance the purchasing power of low-wage workers.
While higher-income earners may save a portion of their disposable income, low-wage workers typically spend their entire income on immediate necessities. Therefore, when low-wage workers receive pay raises, this additional income is quickly injected back into the local economy through spending. Research highlights that this effect is especially pronounced in rural economies, where consumer demand is often weaker.
Towards a Living Wage in New Mexico
While increasing the state-wide new mexico minimum wage to $12.00 per hour would provide much-needed economic security for many hardworking New Mexicans, it should be viewed as a step towards a broader goal: transforming the minimum wage into a living wage. The Economic Policy Institute’s Family Budget Calculator estimates that in Bernalillo County, a single adult without children needs to earn a significantly higher hourly wage to achieve a modest but adequate standard of living without public assistance. As the minimum wage progresses towards a living wage, more New Mexican workers and families will be empowered to escape poverty. As economic security improves for individuals and families, local economies will thrive, and New Mexico will become a more attractive place to live, work, and raise a family.
Policy Recommendations for a Stronger New Mexico
New Mexico’s persistently low rankings in measures of family, worker, and child well-being underscore the urgent need for policy improvements. However, this situation 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 a new administration and legislative session, there is a critical window to enact policies that promote economic security.
To effectively address the challenges and build a more prosperous future, the following policy recommendations should be considered:
- Increase the Minimum Wage: Legislation should be enacted to raise the new mexico minimum wage to at least $10.00 per hour, with incremental increases to reach $12.00 per hour or higher by a specific year. Fiscal impact analyses for such increases should be carefully considered.
- Index to Inflation: To prevent the erosion of purchasing power over time, the state minimum wage should be indexed to inflation. This would ensure that the minimum wage keeps pace with rising prices for goods and services.
- Prevent Preemption: Policies that preempt local governments from enacting higher minimum wage policies should be rejected. Given the significant variations in the cost of living across different counties in New Mexico, local governments need the flexibility to implement minimum wage policies that best meet the needs of their communities.
- Prohibit Training Wages: Legislation should prohibit training wages, which allow employers to pay new employees a lower wage during their initial training period. Training wages can be exploitative and undermine the purpose of minimum wage laws.
By implementing these policy recommendations, New Mexico can take meaningful strides towards ensuring a living wage for its workers, reducing poverty, strengthening families, and fostering a more vibrant and equitable economy for all.
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/
Download this report with appendix (Aug. 2018; 16 pages; pdf)
A Working Poor Families Project report. This report is made possible by grants from the Working Poor Families Project, Annie E. Casey Foundation, the McCune Charitable Foundation, and the W.K. Kellogg Foundation.
