February 13, 2019

Minimum wage hike passes House with phased-in raise for tipped workers

The New Mexico House of Representatives voted Wednesday night to raise the statewide minimum wage to $10 an hour in July and increase it annually starting next year. But amid heavy opposition from the restaurant industry, lawmakers backed off immediately abolishing the lower minimum wage for tipped workers and instead elected to phase it out over the next few years.

Democrats made boosting the minimum wage a central promise of last year’s campaign and argue House Bill 31 will amount to a raise for about 150,000 workers across the state. With a bigger Democratic majority in the House this year, legislation proposing an increase of several dollars per hour was bound to pass the chamber.

But HB 31 is still likely to meet opposition in the state Senate, even from some Democrats, spurring what will likely be a round of negotiations over just how high legislators on both sides of the Capitol can agree to raise the minimum wage.

Still, backers touted the vote 44-26 vote Wednesday night as a victory.

“As this bill moved through the House, we listened to the input of our communities and have created a bill that gives New Mexico workers the opportunity to earn a fair wage while ensuring that restaurant owners can adjust to the changes proposed in this legislation,” said state Rep. Miguel Garcia, a Democrat from Albuquerque and one of the bill’s sponsors.

Republicans argued that the measure would hit small businesses hard and put low-paid workers with fewer skills at a particular disadvantage in the workforce.

“Most of these businesses do not have the bankroll” for this increase, said House Minority Leader Jim Townsend, R-Artesia. “… They will reduce employees.”

Under HB 31, the minimum wage would increase from $7.50 to $10 an hour in July 2019 and then rise to $11 an hour in 2020 and to $12 an hour in 2021. Starting in 2022, state officials would adjust the wage annually based on inflation.

That change would not immediately affect workers in Santa Fe, which already has a higher minimum wage of $11.40 an hour that is set to increase another 40 cents March 1. Beyond cities and counties that have adopted higher rates, the state’s minimum wage has not changed in about a decade and is a quarter above the federal rate of $7.25.

Proponents of HB 31 have pointed out that neighboring Arizona and Colorado already have higher minimum wages.

A separate section of the law would have scrapped the lower minimum wage for tipped workers, such as restaurant servers.

Current law says tipped workers can be paid $2.13 an hour as long as they get at least $7.50 an hour when tips are included.

Eight states do not have a lower minimum wage for tipped workers. New Mexico’s rate, $2.13, is the federal minimum, used by 17 states, according to the left-leaning Economic Policy Institute.

Democrats argued that eliminating the lower tipped wage is only fair and the only way to give a meaningful raise to workers in every industry.

But the provision is key for the restaurant industry, which campaigned against the proposal to eliminate it.

Workers at some restaurants got flyers warning that the legislation could lead to more automation at full-service eateries or an end to tipping, or force businesses to close.

“This really hurts the restaurant business,” said Rep. James Strickler, R-Farmington.

Even some Democrats raised concerns about the proposal to eliminate the lower tipped wage as the bill wound through legislative committees.

So, when Garcia took to the House floor Wednesday night to present the bill to the full chamber, he proposed a change in wording to keep the lower minimum wage for tipped workers in place for now but phase it out by 2022.

Democrats went along with the idea. And under the version of the bill approved by the House, the minimum wage for tipped workers would go to $5 an hour in July then to $7.50 one year later and $10 in 2021. In mid-2022, the rate for tipped workers would rise to match the statewide minimum wage.

Garcia said the change was “an honest attempt to take into consideration some of the concerns raised in the hearing process.”

But it might not assuage the concerns of the restaurant industry, and Republicans still argued it would hit the industry hard.

Two Democrats — Reps. Raymundo Lara of Chamberino and Candie Sweetser of Deming — voted against the bill. All Republican House members opposed it, too.

The lower minimum wage for tipped workers is likely to remain a point of contention in the state Senate, where conservative Democrats hold sway.

And one influential senator has proposed a different bill with a small increase in the minimum wage and a lower rate specifically for high school students. House Bill 437, filed by Sen. Clemente Sanchez, D-Grants, would also keep the lower minimum wage in place for tipped employees.

While Gov. Michelle Lujan Grisham has not backed any particular bill, the newly elected Democratic governor has said she wants an increase in the minimum wage for workers in every industry.

“It is clear that the restaurant and related businesses are concerned about tipped wages in particular. I’ve even heard from some hotel staff. So, I expect that debate will continue,” the governor told reporters last week when asked about wages for tipped workers.

“It’s an important discussion and debate to have,” she said. “But it hasn’t changed my mind about raising the minimum wage for every single worker in the state of New Mexico.”