By John Q. Hosedrinker 
Santa Fe, known for its unique culture, is implementing a pioneering ordinance to combat a housing affordability crisis by directly linking wages to both consumer prices and fair market rent. This groundbreaking approach, which will raise the minimum wage to $17.50 by 2027, aims to help approximately 9,000 workers, or about 20% of the city’s workforce, afford to live in Santa Fe. City officials are also pursuing additional strategies like increased housing permits and a mansion tax to ensure the city’s diverse population can continue to thrive. Ultimately, this effort represents a critical step in preserving Santa Fe’s identity as “The City Different”.
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Santa Fe tackles rental rates with first-in-US minimum wage approach, and it’s a really intriguing move. It’s the first city in the country to directly link wages to housing affordability. The idea is to combat high rents by tying minimum wage increases to the Consumer Price Index (CPI), which reflects inflation, and also to fair market rental prices. It’s a bold approach, and it’s sparking some serious discussion.
Now, the knee-jerk reaction might be, “Will this actually *work*?” It’s a valid question. The comments I’ve seen suggest a mixed bag of opinions. Some are optimistic, viewing it as a long-needed intervention, even suggesting it might be replicated in places like New York City. The government, actually *helping* people? It’s a concept that often gets a lot of pushback, but on a county-by-county basis, it just might make sense. People are definitely watching New Mexico, a state that’s showing a willingness to be progressive in ways that are actually practical.
The concerns, though, are real. A common fear is that businesses will have to raise prices to cover increased labor costs. Landlords could then raise rents to compensate, potentially setting off a cycle that makes Santa Fe a very expensive place to live. Some worry that by increasing labor costs, some businesses that rely on low-wage employees may be forced to close. Others worry about the potential for driving away small businesses in favor of more tourist-oriented establishments. This could change the city’s character. However, others suggest that it’s not an inherently bad thing.
However, some see a different picture. Some believe that the focus should be on increasing housing supply to bring down costs. Competition among builders and an increased housing stock, they argue, are better solutions. However, it’s worth noting that housing construction is happening at a rapid pace in Santa Fe, which suggests the city is trying to address the supply issue. It appears Santa Fe is working on multiple fronts.
Another point that often gets overlooked is that the CPI *does* account for housing costs. While the specifics of how the CPI is calculated can be debated, it’s important to understand that the index already considers housing.
The politics of this are pretty interesting. New Mexico is often viewed as a progressive state, and Santa Fe especially so. The state has already moved forward with universal childcare and is known for its openness to unconventional ideas. New Mexico’s policies, like the new minimum wage approach, could become a beacon for similar actions in other states.
And it’s worth taking a look at the bigger picture. There’s a whole political philosophy behind this kind of approach, sometimes referred to as “social democracy.” It involves a capitalist economy but with strong democratic institutions and significant social welfare programs funded by taxes. It’s about blending democracy and capitalism, providing universal healthcare, offering free or cheap education, implementing strong worker protections, and employing progressive taxation, with the government regulating the market to ensure fairness. It’s an approach where governments can promote equality and overall population happiness. It’s not a radical idea in the grand scheme of things, and it certainly doesn’t mean the end of capitalism. It’s a more targeted way of using capitalism.
It’s also important to remember that New Mexico has a unique character, including a strong Native American presence. Its not always as wealthy as some of the “blue states,” so it may be uniquely positioned to test out these kinds of policies.
I’ve also seen a lot of discussion about the pay gap and how the minimum wage stacks up against rising costs. Minimum wage was originally designed to provide a single-income household with enough to afford housing, transportation, and other basic needs. If minimum wage had kept pace with inflation, some suggest it would be significantly higher than it is today. When the difference is this vast, the “American Dream” doesn’t seem obtainable for the average American.
Ultimately, Santa Fe’s approach to rental rates is a bold experiment. It’s a testament to the city’s commitment to tackling real-world problems in innovative ways. It is a work in progress, and the results remain to be seen, but it’s a conversation that’s worth having.