Santa Fe has unveiled its newest “creative” economic fix—tying minimum wage increases to housing costs. According to the city, this first-in-the-nation experiment will help preserve its culture, help workers stay local, and magically make the city affordable again. Mind you, this is Santa Fe, NM, where most of employment is working in the government building and the second largest employer – jewelry flee market in downtown Santa Fe on the weekend. As a UNM student, I’ve been to Santa Fe many times, restaurants are great, but beside food, arts and jewelry galleries, there is nothing else to do.
This fascinating idea is another perfect example of bureaucrats treating symptoms while ignoring the actual core disease. And, as usual, the disease is… the bureaucrats themselves.
As someone who spent six years living and working in New Mexico, let me say this plainly: New Mexico’s bureaucracy is every bit as heavy-handed and economically confused as California’s—just without Pacific Ocean and Silicon Valley’s economic engine to soften the blow. When bad policy meets limited economic potential, the results don’t just look misguided—they look downright self-destructive.
And Santa Fe’s new policy is exactly that.
The Fantasy: “If Housing Costs More, Wages Should Go Up Too.”
The logic goes something like this:
- Housing is too expensive.
- Therefore, wages should rise.
- Therefore, housing will somehow become affordable.
This is the political version of chasing your own tail—except instead of going in circles harmlessly, you’re dragging an economy with you.
Santa Fe’s leaders are convinced that if you connect two spiralling indicators—wages and housing—you can achieve balance. But that’s not economics; that’s wishful thinking with legislative backing.
- Housing is expensive because supply is constrained.
- Supply is constrained because of government regulations, fees, red tape, and punitive approval processes.
- And now these same bureaucrats want to index wages to the very problem they created.
It’s like setting fire to your kitchen and then tying the cost of fire extinguishers to how bad the blaze is.
Housing Costs Are Not a Cause—They’re a Symptom
I said this in my previous op-ed on Argentina’s inflation spiral, and I’ll say it again because the comparison is painfully relevant:
You cannot fix affordability by manipulating prices or wages.
You fix affordability by removing barriers and letting the market breathe.
Argentina tried price controls, wage controls, rent freezes, and every other artificial lever. Nothing worked—because the underlying system was broken. They treated symptoms until the symptoms became the new normal.
Santa Fe is heading down the same philosophical path. California, too. And most “progressive” cities across the country. The pattern is always the same:
- Housing becomes too expensive.
- Instead of reducing regulation, governments add more.
- When that makes it worse, they raise taxes and fees to “fund affordability.”
- When that makes things even worse, they try to regulate wages.
- When that fails, they blame something else—tourism, investors, Airbnb, “the market,” greed, anything except their own policies.
The Real Core Problem: Government Trying to Fix the Problems It Created
Santa Fe’s bureaucrats want residents to believe this new wage formula will finally “solve” the affordability issue. But nothing in this program addresses the real cause of the crisis: a structural shortage of homes caused by government barriers to building them.
The city proudly notes that it will draw revenue from a “mansion tax” to create an affordable housing trust fund. Cute idea—if you ignore the fact that this, too, will discourage construction, discourage mobility, and ultimately limit supply further.
They also say they’re “working to permit more units.” Fantastic—how long will those permits take? How many agencies will review them? How many studies, community input sessions, environmental reviews, appeals, conditions, impact fees, and design revisions will developers be forced through? And all this to build what? A handful of units in a market that needs thousands?
New Mexico’s regulatory culture, just like California’s, is built on the concept that every housing project is guilty until proven innocent in 16 different hearings.
Wages Don’t Fix Supply Problems—Building Does
You cannot regulate your way into affordability.
You cannot wage-adjust your way into affordability.
And you cannot tax your way into affordability.
You fix affordability by:
- Making it easier to build.
- Reducing the layers of red tape.
- Cutting fees that can exceed six figures per unit.
- Streamlining approvals.
- Letting the market produce enough homes so wages and rents rebalance naturally.
When you allow supply to rise, affordability improves organically.
When affordability improves, wages don’t need to be artificially inflated.
When wages align naturally with cost of living, economic stability returns.
This is not radical. This is economics 101.
But bureaucrats, especially in places like New Mexico and California, tend to prefer complicated political formulas over simple economic solutions.
The Hard Truth
Santa Fe isn’t innovating. It’s improvising.
It’s trying to fix a structural shortage of housing with a wage-control mechanism that fundamentally misguides the public about what drives prices.
It’s a policy designed to look compassionate and politically appealing to the masses while avoiding the uncomfortable, politically inconvenient work of real reform.
Linking wages to rent is not bold. It’s a bureaucratic theatre—another attempt to manipulate symptoms instead of addressing causes.
Until Santa Fe (and many other cities) stop treating housing like a revenue source and start treating it like essential infrastructure, no wage calculation or “mansion tax” will save them. You can’t ignore the balance of supply and demand, pretend that the basic market economics doesn’t work in your city.
And you can’t fix the housing crisis by pretending government isn’t the main reason you have one.
By Alex Lisnevsky
CA Developer, Builder, and Recovering New Mexico Resident