SANTA FE – New Mexico’s minimum wage is set to jump to $12 per hour starting in January – up from $11.50 per hour currently – under the final step-up mandated by a 2019 law that gradually phased in a higher wage level for all state workers.

But many businesses have already been paying higher wages in an attempt to attract employees in a labor market upended by the COVID-19 pandemic, complicating the debate over whether an additional minimum wage hike should be approved.

“We’ve already surpassed the minimum wage in the market,” said Sen. George Muñoz, D-Gallup, a small-business owner who pointed out many fast-food restaurants are advertising starting pay rates of $16 or $17 per hour for new hires.

“They can try to raise it (again), but I don’t think it will make a difference,” Muñoz added.

The 2019 bill that has increased New Mexico’s minimum wage from $7.50 per hour to $12 per hour, as of next month, was one of Gov. Michelle Lujan Grisham’s top initiatives and represented the state’s first minimum wage increase in more than a decade.

While the law gradually raised the minimum wage for most employees, it allows for a lower training wage – $8.50 an hour – for high school-age workers, and maintains a lower wage for tipped employees if they collect enough tips to reach at least the regular minimum wage.

The lower minimum wage for tipped employees will increase to $3 per hour on Jan. 1 – up from $2.80 an hour currently.

However, the 2019 law did not tie future minimum wage increases to inflation, meaning the looming 50-cent increase to $12 per hour is the last one that will be required by the legislation.

A Lujan Grisham spokeswoman did not specifically say this week whether the Democratic governor would push for additional minimum wage hikes, but said her agenda for the upcoming 60-day legislative session would balance supporting New Mexico workers with fostering a “business-friendly climate.”

“Gov. Lujan Grisham was distinctly proud to negotiate and enact the legislation in 2019 that delivered this multi-year increase in the minimum wage, including what was the first increase in a decade,” the governor’s spokeswoman, Nora Meyers Sackett, told the Journal.

She also cited other laws signed by Lujan Grisham over the last several years, including a statewide paid sick leave mandate for private sector employers, an increase in the Working Families Tax Credit and pay raises for state employees.

Meanwhile, the latest and last planned minimum wage increase will not affect New Mexico cities and counties that have already enacted higher local minimum wages.

For instance, Santa Fe currently has a minimum wage of $12.95 an hour – the state’s highest base wage rate – that could increase even higher in March.

The looming minimum wage increase comes after wages and salaries in New Mexico increased by 10 percent over the 2022 budget year, according to Legislative Finance Committee data. They are also projected to continue increasing in the coming years, although at a slower rate.

At the same time, the state has one of the nation’s lowest labor participation rates, with only about 56 percent of working-age adults currently holding jobs.

Sen. William Sharer, R-Farmington, said he expects new proposals to be filed increasing the minimum wage, likely during the 60-day legislative session that starts next month, though he said such legislation is not necessary.

“I think the market sets the minimum wage,” Sharer told the Journal. “And right now it’s set at $15 an hour.”

Dan Boyd, Albuquerque Journal Capitol Bureau Chief