News for the Hospitality Executive
|By John T. Huddy, Albuquerque Journal, N.M.
Knight Ridder/Tribune Business News
Mar. 10, 2004 - SANTA FE, N.M. -- A University of New Mexico study of Santa Fe's economy shows restaurants, bars, hotels and motels -- and their employees -- will feel the most impact when, or if, the city's "living wage" ordinance ever takes effect.
The report also says that 423 Santa Fe businesses have enough workers -- 25 -- to fall under the local minimum wage ordinance, out of more than 4,200 businesses in town.
While representing only 10 percent of all firms in Santa Fe, the larger businesses employ a clear majority -- more than 23,000 workers -- of the about 40,000 people who work for private enterprise in Santa Fe.
If the controversial and groundbreaking "living wage" law withstands a court challenge, the minimum wage in Santa Fe for businesses with 25 or more workers would go to $8.50 an hour, up from the federal rate of $5.15 an hour, with a $10.50 an hour minimum wage phased in by 2008.
The report, prepared over the past year for the City Council by UNM's Bureau of Business and Economic Research, found that huge percentages among employees of Santa Fe's hospitality industry -- hotels and restaurants -- aren't making $8.50 an hour now, even with tips factored in.
"Perhaps as many as 50 percent of the workers in the accommodations industry," including virtually all maids and housekeeping workers and almost half the desk clerks, make less than $8.50 an hour, the report says.
The bureau also found that in 2002, 87 percent of restaurant and bar employees in Santa Fe made less than $17,680 a year -- the annual earnings of someone working full-time at $8.50 an hour -- although the report notes that many employees work only part time.
By business owners' own estimates, according to a bureau survey, 45 percent of restaurant and bar workers and 43 percent of "leisure/hospitality" employees make less than $8.50 an hour, when both full-time and part-time workers are considered.
According to a survey of 751 business owners, 22 percent of private sector employees in Santa Fe make $8.50 an hour or less.
The City Council hired the UNM bureau in April to conduct the study, in which both business owners and employees were questioned, to provide baseline economic information that could be used to assess the impact of the "living wage" law.
The 111-page report indicates that business owners say that the "prevailing" minimum wage in Santa Fe is $7 an hour.
Restaurants and hotel owners have been the most critical of Santa Fe's "living wage" law, which is being challenged in state District Court in Santa Fe and U.S. District Court in Albuquerque by business groups and individual business owners. A trial is scheduled for April for the state-court case.
According to the surveys and focus groups conducted for the UNM study, Santa Fe business owners were concerned about the ripple effects of the "living wage" law on unemployment rates, wage "compaction" among different categories of wage earners and job turnover.
"Some opined that businesses may be forced to kick people out of the bottom rung of the labor force and will find other ways to get tasks done," the report says.
Also, surveyed business owners "were concerned that implementation of the living wage ordinance may force some firms to lay off workers or to shut down their Santa Fe operations, perhaps moving operations elsewhere."
The report said the "ordinance could mean less hours for people in low-wage jobs, but the fact that it is only on employers with 25 or more employees could provide incentives for more full-time work or for providing schedules with more hours to a smaller group of employees," the report states.
Employees who were questioned in focus groups, meanwhile, "believed that higher wages under a living wage would result in greater job attachment and less turnover" and also "hoped that higher wages would mean that they would be valued as people and employees."
The "living wage" campaign is a national effort that climaxed in Santa Fe in February 2003 when the City Council approved its minimum wage law.
Proponents argued that Santa Fe's cost of living continues to be high, while pay rates are often below the norm.
The report touches on these arguments, saying Santa Fe's cost of living is 13 percent above the national average -- mainly because of high housing costs -- while wages are 80 percent of the national average.
But while pay rates for hotel and restaurant workers in Santa Fe are low, the report says, the rates compare favorably with the earnings of similar workers in nearby states such as Colorado and Arizona.
The UNM bureau cited an earlier study that found that "a large percentage of Santa Fe households lack sufficient income for a bare bones budget," calculated to be $37,376 for a two-adult, two-child household. That income takes $18-an-hour full-time job for one person or two wage-earners making $9 an hour.
REPORT DETAILS: Here are some of the key findings in a report on Santa Fe's economy and potential impacts of the "living wage" law prepared by the University of New Mexico's Bureau of Business and Economic Research:
Large percentages of employees in Santa Fe's hotel and restaurants sectors make less than the $8.50-an-hour minimum wage called for under the "living wage" law. Surveyed business owners said 43 percent of hotel workers and 45 percent of restaurant and bar workers make less than the $8.50 rate.
Also, an analysis of state labor statistics indicates that 78 percent of Santa Fe hotel employees and 87 percent of restaurant/bar workers make less than $17,680 annually -- which translates to $8.50 an hour or less over a full year at a full-time job.
Only 10 percent of Santa Fe businesses -- 423 out of 4,200 firms -- meet the 25-employee threshold to fall under the "living wage" law, but these bigger firms employed 23,700 out of about 40,000 people who worked for Santa Fe businesses in 2002. There are 105 "accommodations and food service" businesses and 73 retail establishments with 25 or more workers, far more than any other types of business.
The cost of living in Santa Fe exceeds the national average by 13 percent, with housing the big factor -- home ownership costs are 44 percent above the national average and rental housing costs 17 percent more than the U.S. average.
Health care costs in Santa Fe are 21 percent above the national average, but utility costs are below the nationwide norms.
Wages are at 80 percent of the national average, although per capita income is slightly better in Santa Fe than in the country as a whole, with more income generated in Santa Fe by dividends, interest and rent than is typical elsewhere. Santa Fe "had relatively more high-income households and the distribution of income is more unequal," the report says. The median household income -- with as many households above as below the median -- was $40,392 in 1999, less than the national average.
The housing stock in Santa Fe grew by 5,825 units, or 24 percent, during the 1990s, or by more than two times the population growth. There were 30,533 housing units in 2000. But only 58 percent of Santa Fe's housing units were owner-occupied, compared to 70 percent in New Mexico as a whole and 66 percent nationwide.
Asked to assess current business conditions, the majority of business owners surveyed from restaurants, retail, hotels and manufacturing said sales have been down in the last year. More upbeat responses were made by owners of construction companies and those in real estate, finances and information, education, health or social services.
Government accounts for 29 percent of employment in Santa Fe, retail employs 14 percent of the work force, "accommodations and food service" employ 13 percent, 10 percent work in health or social assistance and 7 percent work in construction or "natural resources." Other categories account for smaller parts of the work force.
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(c) 2004, Albuquerque Journal. Distributed by Knight Ridder/Tribune Business News.