HB 25 Minimum Wage Increase & Indexing

Why New Mexico Needs HB 25 Minimum Wage Increase & Indexing

Summary: HB 25 raises the minimum wage from $12 an hour to $16 beginning January 1, 2024, and beginning in 2025 indexes rises in the minimum wage to rises in the federal Consumer Price Index (CPI). The minimum wage for tipped workers (currently $3/hr.) will also be indexed. If the CPI decreases, the minimum wage does not decrease.

History: The minimum wage in New Mexico rose slowly from $4.25 in 1993 to $7.50 in 2009 and then did not change again for a decade. A law passed in 2019 provided for a four-step increase raising the level gradually to $12, the current level. The 2019 bill originally called for the minimum wage to be indexed to inflation and for the new minimum wage to apply to tipped workers as well as others, but both of these provisions were stripped out as the bill made its way through the legislature.

For comparison: as of January 1, 2023, the minimum wage in Arizona is $13.85, in Colorado $13.65, both indexed to the CPI.  In Texas the minimum wage is $7.25, the same as the current federal minimum wage.

Why This Bill Is Good for NM

  • The current NM minimum wage of $12 is not a living wage. $16 will be close to a living wage for childless single adults — but not for families.
  • Economists estimate that for a single childless adult, a living wage in New Mexico is $16.25 an hour; for a family of four, it is $22.43 if both adults work ($36.61 if there is only one earner).
  • The federal Bureau of Labor Statistics estimates the median hourly wage in NM at $18.18. So, about half of New Mexicans earn the current minimum wage, or close to it.  (For comparison, a living wage for a family of four with both adults working is estimated at $22.43.)
  • It’s not just teenagers working at fast-food restaurants who would benefit: nationwide, over half of those working at or below the federal minimum wage are over 24.
  • A quarter of NM children live in poverty. Healthy, stress-free, well-fed children with parents who aren’t working two or three jobs are more likely to grow into productive adults.
  • NM will gain more income taxes, according to a Fiscal Impact Report on the 2017 version of the bill.

Myth: Unemployment will increase. Truth: Multiple studies show that the effects of wage increases in both urban and rural counties are good for local economies and small businesses. Increasing the minimum wage improves both employment and economic activity and does not increase the unemployment rate.

Thank-you to Retake volunteer Michael Sperberg-McQueen for updating this fact sheet.

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