BY PAUL GESSING
President
Rio Grande Foundation

According to news reports Los Alamos County Council will soon consider adopting a local minimum wage of $15.00 with a minimum wage for tipped workers of $3.75 an hour and a minimum wage for student workers of $13.50 an hour. If adopted the new wage rates would become effective on July 1, 2025, and would be adjusted upward based on the consumer price index into the future.

New Mexico’s minimum wage is currently set at $12 an hour under a law passed by the Legislature and signed by Gov. Lujan Grisham in 2019. But, the real minimum wage is whatever a willing employer and a willing employee can agree to (as long as it is at or above the legal limit). This has and always will be the case in anything resembling a free market. 

Will this proposal have serious, negative impacts in the immediate future? It will be hard to see them on a widespread basis because Los Alamos is such a unique economy within New Mexico. The isolated nature of Los Alamos and the fact that so much money and so many resources are pumped into it via the federal government mean that it differs radically from broader economic conditions, especially those in rural New Mexico (including those nearby).

And that’s the fundamental issue with government regulating wage rates in the first place. If employees don’t like the wages and work available at one job they can and will go find something better. If they can’t find anything better, they are stuck with a lower-wage or less desirable job. 

In recent years and despite an aggressive statewide wage increase New Mexico’s labor market remains tight. Partially, this is a direct result of high inflation. When more dollars are printed to accommodate for massive federal spending and prices go up quickly, workers demand and usually receive higher wages. Unfortunately, those wages are eaten up through higher costs thanks to inflation.

Also, there has been a big shift in our workforce especially post-COVID as our workforce participation rate remains among the lowest in the nation and declined further in the wake of COVID. So, while our unemployment rate statewide and especially in Los Alamos are quite low, there are numerous workers on the sidelines.  

The relatively high wages being offered by employers to lure those workers to take available jobs haven’t had a noticeable impact to date. 

Of course, the economy is constantly in flux. The current tight labor market may not last forever. Perhaps the most concerning aspect of the proposal is that it locks in future wage hikes regardless of economic conditions or a future price deflation that would cause a need for prices to go down. 

While it won’t necessarily be felt immediately in the Los Alamos economy if passed, this minimum wage increase (like all such increases) represents unnecessary government meddling in a functional labor market.

Paul Gessing is president of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility