Our state House representatives in Santa Fe are debating proposed legislation that will increase the minimum wage to $15 per hour — House Bill 110, Phased Minimum Wage Increase — in the midst of a phased minimum wage increase to $12 per hour by 2023. The existing and proposed increases will damage our state’s favorite industry, the New Mexico chile industry.
Chile production is a very labor-intensive process.
There is limited technology available to farmers to reduce the amount of labor needed to hoe and harvest chile fields. Chile processors and manufactures are also limited to the amount of technology available to replace human labor.
Our state’s chile industry is already struggling.
New Mexico’s chile producers are battling increased foreign competition, increased regulatory costs, lack of labor, drought and decreased sales (restaurant restrictions have resulted in a 40 percent sales decline).
Our chile and food processors in the state have spent millions throughout the pandemic to keep their employees safe. There are multiple stories of processors losing contracts, distributors closing their doors for good and farmers decreasing the amount of chile they are growing next year.
Since 1992, New Mexico chile acreage has decreased from 34,000 acres harvested to around 8,000 acres harvested now. In contrast, neighboring Chihuahua, Mexico, has increased its acreage to 10 times what we produce in New Mexico. This shift in the market is a direct result of lower regulation and lower wages in Mexico. Regulation drives jobs to lower-cost areas; the decline in our coveted chile industry proves it.
New Mexico’s agriculture and food industries are not financially stable enough for another phased minimum wage increase. Our agriculture producers are price takers, meaning they cannot increase the price of the goods they sell. Most of these farmers are already operating at a loss. An increase to their labor cost will force many to either decrease the amount of crops they produce or force them to grow a less labor-intensive crop than chile.
Some of our major food manufacturers are already looking at moving to another state or Mexico just to make ends meet. These short-term fixes will become long-term solutions, damaging the state’s economy and costing many New Mexicans their jobs.
With food prices remaining artificially low, an increase in the minimum wage will force our chile production to the point where it is cheaper to buy from Mexico. This should be scary for consumers because there is no Environmental Protection Agency in foreign countries, and specific pesticide labeling for crops is unregulated and ignored.
The New Mexico chile industry contributes around $450 million to the state’s economy and provides thousands of jobs through farms, processors and associated businesses created by the industry. This minimum wage increase will force many business owners to lay off hardworking New Mexicans to keep their doors open. Now is not the right time to add financial stress to our chile producers and food-manufacturing companies.