The New Mexico Legislature is considering a resolution (HJR 28) that would place before the voters this fall a constitutional amendment to prevent the mandated state minimum wage from being eroded by inflation.

New Mexico's minimum wage has no cost-of-living adjustment; and inflation has already taken its toll. The $7.50 minimum wage buys less today than $7 would have bought in 2007 when the current law was enacted. HJR 28 is not an increase in the real value of the minimum wage; it will stop its further decline due to inflation.

It is a measure that all New Mexicans should support.

Letting inflation erode the minimum wage is bad for the New Mexico economy. Everyone wants a fair economy, but I am writing about productive workplaces. It is no secret that you do not get the best from an employee whose wage is rock bottom and declining in real value due to inflation. Economists have a term for this: "efficiency wages." The idea initially came from very poor countries, where protecting workers from lower wages meant better nutrition and stronger workers. But the idea that lower wages are the enemy of efficiency is true in all economies, rich and poor, because whether a job is well done really depends on the person doing it. Like all organizations, businesses deploy both carrots and sticks to ensure that the job gets done well. But for most jobs, carrots work better. And letting inflation erode the minimum wage will mean less carrot and more stick.

Opponents of the cost-of-living adjustment say that the minimum wage reduces employment opportunities, and that New Mexicans should therefore welcome its being undermined by inflation. My generation of economists was taught what was then thought to be a truism: Minimum wages are bad for jobs. But over the last 25 years studies by some of the leading American economists have discovered that like so many truisms, that one, far from being self-evident, is not even true.

Let me explain just why experts in this field have changed their minds, and how they changed mine.

A typical research design is the following: Take every county in the U.S. that is next to another county that at some point in the past had a different minimum wage (because it was in a different state or municipality). Then ask if the places with the higher minimum wage had fewer jobs, or if when the minimum wage rose in one, did jobs fall? The answer is no. In some cases the researchers compared restaurants or retail outlets literally on opposite sides of a street that formed a boundary between states (there are 24 metropolitan areas in the U.S. that straddle state borders). San Francisco's minimum wage (which rivals Santa Fe's) was studied in this way, and establishments on the San Francisco side showed no job loss, either by comparison with the restaurants on the other side of the street, or by comparison with their job level before the San Francisco minimum-wage hike.

In 1914, a virtually unknown mechanic turned automobile producer shocked his colleagues and competitors by announcing that he would pay his workforce a minimum of $5 for an eight-hour day, at once shortening the work day and more than doubling the hourly rate of pay for the vast majority of his employees. Doubters said it would bankrupt the company. We know what really happened: The name Henry Ford became a household expression because he built good cars cheaper than his low-wage competitors.

Today's doubters say that preventing a decline in the minimum wage by enacting this cost-of-living adjustment is bad for business. Ford would say that HJR 28 is good economics for New Mexicans. It will contribute to more productive workplaces, benefiting both businesses and employees, and it will halt the decline in the real value of the minimum wage that was enacted in 2007.

Samuel Bowles taught economics at Harvard and the University of Massachusetts and is now at the Santa Fe Institute.