San Juan County business scene has its reservations about upcoming minimum wage increase

FARMINGTON — Already impacted by the economic toll of the COVID-19 pandemic, San Juan County’s business scene has its reservations about the upcoming minimum wage increase.

Effective on New Year's Day, the state's minimum wage for 2021 will increase from $9 per hour to $10.50 per hour. The state's minimum wage for tipped workers for 2021 will increase from $2.35 per hour to $2.55 per hour.

Between Jan. 1, 2009 and Dec. 31, 2019, the state's minimum wage was $7.50 per hour. The 2020 minimum wage of $9 per hour went into effect on Jan. 1, 2020.

This latest minimum wage increase is the second phase geared toward reaching a minimum wage of $12 an hour that will take effect in 2023.

“It’s a slippery slope,” said Farmington City Council member Linda Rodgers, who’s also PESCO’s chief financial officer. “It’s more complicated than just saying ‘pay people more money.’ "

Locally-owned establishments struggled to maintain employees and stay afloat in 2020 amid the restrictions the state placed on businesses. 

Farmington Chamber of Commerce President Jamie Church said it would have been better for the state to wait until at least June 2021 to look at a possible minimum wage increase time to give local businesses more time to recover from COVID-19’s aftermath.

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“I think it could lead to hardships for businesses,” Church said, adding they now may have to either cut back on staff or hold off on hiring new people for now. “It’s based on money coming in and money coming out… they might have to be somewhat conservative with any plans to expand.”

Rodgers said some businesses would have to increase prices to make up for labor costs associated with the wage increase.

Although his business won’t be impacted by the 2021 minimum wage increase, Vanilla Moose owner and incoming state representative Ryan Lane said he eventually have to address the 2023 minimum wage plan. Lane said his establishment would have to choose between increasing prices and potentially reducing staff at that time.

“It’s a hard position to be in,” Lane said. “Costs tend to increase with inflation, too. They’re not just stagnant.”

Rodgers said PESCO employees won’t be affected come 2021 because they already make more than minimum wage, but added the increased minimum wage will help individuals struggling to make ends meet.

Rodgers said the positives of the increased minimum wage include people being able to start coming out of poverty.

And with higher prices for things like rent and groceries, she said the new minimum wage is a needed increase to help individuals meet their financial obligations.

“Higher earnings improve the standard of living for people,” Rodgers said.

Still, Rodgers said she’s not sure how much of that increased hourly wage will actually go into one’s pocket in the long term, citing the increased wage would also lead to increased taxes.

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“I think there’s a trickle-down effect that’s difficult to quantify,” Rodgers said. “It’s just a balancing act, constantly… It’s a tough deal.”

Church said local businesses will have to wait and see how the new minimum wage impacts them as the first quarter of 2021 progresses.

Church also said San Juan County could very well be in the green tier, which would allow for businesses to open at far-greater capacities come March. That would allow businesses to bring back more employees.

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The state has a tiered county-by-county reopening plan to address the COVID-19 pandemic. Counties with a lower rate of tests coming back positive for COVID-19 or with fewer than eight cases of COVID-19 per 100,000 residents can move into less restrictive tiers. The green tier is the least restrictive tier.

Matt Hollinshead covers sports for the Daily Times. He can be reached at 505-564-4577, mhollinshead@daily-times.com and on Twitter at @MattH_717.

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