Trendpills
The city of Santa Fe, New Mexico, has adopted a pioneering approach to its minimum wage, becoming the first municipality in the U.S. to directly tie future wage increases to the cost of rental housing. The City Council approved the measure with an 8-1 vote, aiming to address the widening gap between wages and the high cost of living in the popular tourist destination.
The new ordinance establishes an "affordability threshold," mandating that a full-time minimum wage earner should not have to spend more than 30% of their gross income on rent for an average one-bedroom apartment. This innovative formula will be used to calculate annual wage adjustments beginning in 2027. Ahead of that, the city will institute phased increases, including a scheduled rise to $17.50 per hour by 2027. The city's current living wage is $15.00 per hour, already higher than the New Mexico state minimum of $12.00.
This legislative change acknowledges the severe housing affordability challenges confronting a city known for its vibrant arts scene and historic architecture. For years, Santa Fe has adjusted its living wage based on the Consumer Price Index (CPI), but advocates argued this was insufficient to keep pace with soaring local rents. The new wage ordinance targets the housing crisis by creating a direct link between worker pay and a primary cost-of-living driver.
Labor and worker advocacy groups, such as Somos Un Pueblo Unido, have praised the ordinance as a crucial step toward ensuring that people who work in Santa Fe can also afford to live there. However, some business organizations, including the Santa Fe Chamber of Commerce, have voiced concerns. They worry that linking wages directly to volatile rental markets could lead to large, unpredictable increases that are difficult for small businesses to absorb. Following the city's long-standing policy, the living wage ordinance is designed to support a sustainable economy and promote fairness for its lowest-paid workers.
