Suspect Minimum Wage Law Weakened Job Growth

It seems the utopians in Santa Fe, New Mexico, may have some 'splainin' to do. In the middle of a robust U.S. economy, the city is in the doldrums, particularly in the area of job growth. For the 12-month period ending June 2006, Santa Fe added only 300 jobs, an increase of less than one-half of one percent.

Some people believe that the mandated minimum wage increases are to blame. As a reminder, Santa Fe jacked up the minimum wage from $5.15 per hour to $8.50 per hour in June 2004 and followed with another increase to $9.50 per hour in January of this year. It's thought that the increased labor costs have produced a chilling effect on business growth and, as a consequence, few jobs have been created.

To be fair, though, opinions differ with two recent studies producing contrasting conclusions. In one, the University of New Mexico studied the period between June 2003 and June 2005 and concluded that "the city of Santa Fe's minimum-wage law hasn't hurt job growth."

On the other hand, the New Mexico Department of Labor studied job data from June 2005 to June 2006 and announced that Santa Fe County had the lowest job growth in four years. Also, the industries most affected by minimum wage legislation, tourism/hospitality, manufacturing, and retail, actually lost jobs according to the Department of Labor.

So, the jury is still undecided about whether the weak job numbers can be attributed to mandated minimum wage increases, but a reconciliation of the data is promised in the near future. Of course, elementary school arithmetic tells us that any company forced by government to use its resources for social welfare will not devote those resources to growing the business and creating jobs.

Companion post at The Dread Pundit Bluto.