Higher Minimum Wages in New Mexico Putting Local Businesses in a Pinch

By Sarah Snyder
NewsWest 9

A raise is on the way for workers in New Mexico. In three days, the minimum wage is going up big time, an extra dollar an hour. It paints a rosey picture for the state, but local business owners are hurting.

"It's huge," Business Owner Tom Ryan, said. "It's pretty tough to absorb."

It's been a popular restaurant for over thirty years in Hobbs, but a recent change in the minimum wage requirements is eating up profits here in New Mexico.

"I think it affects folks in the hospitality industry more than others," Ryan said.

During the last session, the New Mexico state legislature increased the minimum wage in 2009 by a dollar from $6.50 to $7.50 per hour, beating the federal rate of $7.25.

"This one here is over 15 percent," Ryan said.

In the next 6 months to a year, Big Cheese Pizza plans to raise the price just to keep up.

"It's a fairly thin margin business that we are involved in," Ryan said. "Now, it's simply going to make it a bit thinner."

And for many shops, it will mean longer hours for workers.

"We will tighten up," Ryan said. "We will try to get a higher level of productivity out of our existing people."

But while many shop owners are facing a pinch in January, the Economic Development office says it's not all bad news.

"Particularly those who are at minimum wage level, they are going to be better prepared to make ends meet, build wealth, do more, and I think it will be an overall boost for our economy," Grant Taylor with Hobbs Economic Development, said.

So Hobbs is targeting workers in states that are hurting during the economic downturn, and bringing them to the Basin.

"We will be moving from the bottom five among states to the top ten even after the federally mandated wage increase," Taylor said.

The business owners NewsWest 9 spoke with say that extra dollar for each employee means a big slice out of their profits.

"So we're just going to have to eat the increases," Ryan said. "And we're already a thin margin business, so it's going to be kind of difficult."