Officials in Santa Fe are launching a groundbreaking initiative that ties minimum wage increases to both consumer prices and fair market rental rates, aiming to help residents priced out of the city and to prevent cultural erosion, according to an AP report. The program makes Santa Fe the first city in the country to directly link wages to housing affordability.
“The purpose is to make a serious difference in assuring that people who work here can live here,” said Santa Fe Mayor Alan Webber. “Santa Fe’s history and culture is really reflected in the diversity of our people. It’s that diversity that we’re trying to preserve.”
Santa Fe first adopted a living wage ordinance in 2002 and has gradually expanded it over the years. Historically, annual increases were tied solely to consumer prices. Under the new initiative, a blended formula will be used: 50% of the increase will reflect changes in the Consumer Price Index, and 50% will be based on fair market rent data. The ordinance calls for the city’s minimum wage to rise to $17.50 by 2027, with a 5% cap to prevent sudden spikes in case of extreme inflation. If consumer prices or rents decline in a given year, the minimum wage will not be reduced.
Mayor Webber said crafting the ordinance required balancing the needs of workers with the economic realities faced by local businesses, particularly the mom-and-pop shops that form the backbone of Santa Fe’s economy. Once implemented, roughly 9,000 workers or about 20% of the city’s workforce, will see their wages increase.
Experts note that while raising the minimum wage is an important step, it does not fully address affordability for all vulnerable groups. Dan Emmanuel, a senior researcher with the National Low Income Housing Coalition, pointed out that seniors and residents with disabilities, many of whom are low-income renters, will not directly benefit from the wage increase.
The initiative also does not tackle another major factor driving housing costs: a persistent shortage of homes and apartments. Santa Fe officials say they are working to permit more residential units to address this structural issue. To further support affordable housing projects, the city plans to draw revenue from a so-called mansion tax, which applies to home sales exceeding $1 million, creating a trust fund dedicated to affordable housing development.
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