New Mexico's minimum wage will increase to $8.50 an hour under Senate-passed legislation.
The wage has been $7.50 an hour since 2009.
Democratic Sen. Richard Martinez of Espanola said Monday an increase is needed because inflation has eroded the buying power of workers.
The proposed increase won't apply to businesses with fewer than 11 workers, which account for at least three-fourths of employers.
The measure passed the Senate on a 25-17 party-line vote. Republicans opposed the proposal, which goes to the House.
Opponents said the increase will boost prices for consumers and cause businesses to shift some workers into part-time jobs.
The federal minimum wage is $7.25 an hour. Employers must pay the higher rate when there is a difference between the federal wage and state or local requirements.