SANTA FE, N.M. - In a city that feels like a Neiman Marcus vision of the American West - there's a bar that sells a $42 margarita and stores where cowboy boots run in the four figures - the raging issue is a group of hourly employees whose wages are so low they would have to work the bulk of a day for that drink or more than a month for such footwear.
A living-wage law that was supposed to take effect on New Year's Day would have raised the minimum pay here to one of the highest in the nation - $8.50 an hour. But business owners have blocked the law from going into effect, at least until their lawsuit against the city over the new law can be heard next month.
Santa Fe's living-wage law, among more than 100 that have been enacted in localities across the country since Baltimore passed the first in 1994, has become one of the most contentious issues in this normally laid-back city of art galleries, adobe-chic architecture and breathtaking mountain vistas. Underneath that glossy surface, though, is a starkly different economic reality - New Mexico has the highest percentage of working poor in the country and is second only to Arkansas in poverty rates.
"Most people are a paycheck away from being homeless," said John Duke, who despite working as a restaurant bartender is living in a shelter until he can save enough for an apartment.
Duke, 35, said he usually makes more than $8.50 an hour with tips. But with the tourist traffic slowing down with the onset of the winter off-season, his wages started dropping.
"One night, I had not one single customer," Duke said.
As his income dropped, Duke, who also occasionally works as a comedian and juggler, had a dispute with his landlord and moved out of his apartment. But he couldn't find another place that he could afford in this city of pricey real estate, and ended up several weeks ago at St. Elizabeth's Shelter on the city's southwest side.
It's not an entirely uncommon story at the shelter - it doesn't take much more than a sudden illness, a relapse into substance abuse or an unexpected expense to land someone already at the bottom of the pay scale into even more dire straits.
Living-wage advocates estimate that about 4,300 workers - the city's population is about 62,000 - work for less than the minimum required by the now-stalled law. They say that with Santa Fe's higher-than-average cost of living, such workers need higher pay to make ends meet.
But business owners fighting the law argue that the new minimum wage could backfire and end up hurting the very workers it seeks to help. The added expense of higher salaries could force companies to lay off staff or go out of business - which ultimately helps no one, business owners said.
"People making a living wage - no one is against that," said Jim Weyhrauch, CEO of the Santa Fe-based Nambe, which makes designer metal, crystal and porcelain giftware. "But there are better ways of doing that, like spurring economic development in the city.
"With this law, Santa Fe is saying, `This is not a business-friendly city,'" he said.
Since the City Council passed the living-wage law last February, at least one restaurant chain has abandoned its plans to open a local branch.
"While I truly wanted to open ... in Santa Fe, the huge labor cost hikes would force me to jack up prices to such unreasonable levels that I decided to stay out of town," wrote Ed Tinsley, CEO of the 26-restaurant chain K-Bob's Steakhouses, in the urban-policy quarterly, City Journal, last year.
Local restaurateurs - including celebrity chef Mark Miller, whose Coyote Cafe made nouveau Southwestern cuisine trendy across the country - have led the fight against the living-wage law. Joined by the Chamber of Commerce, they sued the city over the new law and will go to trial Feb. 17. The restaurant owners say the law will not just raise the salaries of the lowest-paid workers in town, but will elevate the entire pay scale for everyone.
Opponents of the living-wage law say salaries are already competitive in Santa Fe because unemployment is so low - less than 4 percent.
"Not many people work at the minimum wage of $5.15 - the real minimum here is $7 to $8," said Richard Post, who owns Pranzo Italian Grill. "That's the way the market works. What we're saying is, allow it to work.
"If entry level is $8.50 for a student with no experience, then everyone above him will expect a raise, too," said Post, one of the lead plaintiffs in the suit against the city. "So it affects everyone."
Post said he can't just pass higher salary costs onto his customers - increasing menu prices would put Pranzo in a more expensive category of restaurants and lead to a loss of some clientele.