Santa Fe Becomes First US City to Tie Minimum Wage to Housing Costs

Santa Fe, long known as "The City Different" for its distinct cultural atmosphere, has pioneered a groundbreaking approach to addressing the affordability crisis by becoming the first U.S. city to tie minimum wage increases to housing costs. The Santa Fe City Council approved Ordinance 2025-21 in a 5-2 vote on November 12, 2025, after more than an hour of discussion, with the implementation designed to counter high rents and prevent the cultural erosion caused by residents being priced out of their homes.

Under the new ordinance, Santa Fe's minimum wage will increase from the current $15 per hour to $17.50 per hour starting January 1, 2027 for private-sector workers. City employees will see the same rate take effect one year earlier, on January 1, 2026. This represents a $2.50 increase that would provide full-time employees approximately $5,200 more per year in earnings. Beginning in March 2028, the living wage will adjust annually based on a new blended formula that marks a significant departure from previous practice.

The annual wage adjustment formula represents the ordinance's most innovative feature. Historically, Santa Fe's living wage increases have been tied solely to the Consumer Price Index (CPI) for the Western Region for Urban Wage Earners and Clerical Workers—a practice in place since 2007. Under the new system, annual increases will be calculated using the CPI for one half and Department of Housing and Urban Development Fair Market Rent data for the other half. This dual-factor approach directly addresses the reality that housing costs have outpaced general inflation in Santa Fe's market. The ordinance includes a 5 percent cap on annual increases in case costs skyrocket, and critically, includes a provision that the minimum wage will not be reduced if consumer prices or rents decline in any particular year.

The urgency for this policy change stems from Santa Fe's severe affordability crisis. The city has median housing prices of $600,000 and has experienced double-digit rent increases since the pandemic. These costs are far above any other major market in New Mexico. University of New Mexico finance professor Reilly White presented the city with 25 years of data showing that workers earning minimum wage were falling behind as fair market rents and consumer prices diverged. Under projected scenarios, the new formula would likely boost Santa Fe's minimum wage to approximately $21.49 by 2035.

Key Points

• Santa Fe City Council approved Ordinance 2025-21 in 5-2 vote on November 12, 2025, after hour-long discussion
• First city in United States to directly link minimum wage to housing affordability
• Living wage will increase to $17.50/hour for private sector workers effective January 1, 2027
• City employees will receive $17.50/hour one year earlier, effective January 1, 2026
• Current living wage is $15/hour (increased from $14.60/hour in March 2025)
• New annual adjustment formula: 50% Consumer Price Index + 50% HUD Fair Market Rent data
• Replaces previous formula based solely on CPI for Western Region Urban Wage Earners and Clerical Workers
• Annual increases capped at 5% to prevent dramatic cost spikes
• Wage will not be reduced if consumer prices or rents decline
• Full-time workers will earn approximately $5,200 more annually at $17.50/hour
• Projected wage could reach $21.49/hour by 2035 under new formula
• Santa Fe first adopted living wage ordinance in 2002, expanded over years
• Living wage applies to full-time city employees, businesses licensed/registered with city, nonprofits, contractors/subcontractors, businesses receiving city grants/subsidies
• Tips and commissions may count toward wage if they exceed $100/month
• Santa Fe median home price: $600,000
• Double-digit rent increases since pandemic
• Housing costs far above any other major New Mexico market
• University of New Mexico Professor Reilly White presented 25 years of data showing minimum wage workers falling behind
• Mayor Alan Webber views ordinance as tool to prevent "cultural erosion" from residents priced out
• State of New Mexico minimum wage: $12/hour
• Federal minimum wage: $7.25/hour (unchanged since 2009)
• Some city councilors expressed concerns about impact on small businesses
• Others questioned year-long delay, saying workers need help sooner
• Delay added largely because employers requested time to plan for increase
• City consulted with Santa Fe Chamber of Commerce, hospitality leaders, hospitals, nonprofits, unions in developing proposal

Author: Susan Montoya Bryan / Associated Press
Source: Washington Times / Associated Press
Link: https://www.washingtontimes.com/news/2025/nov/27/santa-fe-tackles-rental-rates-first-us-minimum-wage-approach/