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Legislators pursue minimum wage hike to counter ‘insane socialism’

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Arizona lawmakers want voters to strip counties, cities and towns of the ability to set their own minimum wage and their explicit right to adopt employee benefits of their own liking.

Meanwhile, advocates of a minimum wage that could be as high as $15 an hour are staffing up and planning to kick off a campaign for a ballot measure within the next two weeks.

Republican senators, who advanced the resolution with a partisan vote in a March 22 committee hearing, were not shy in acknowledging their effort is at least in part an alternative to the higher minimum wage proposal. Sen. Don Shooter, who granted HCR2014 a hearing in the Senate Appropriations Committee, called it “kind of a counterbalance to the insane socialism that we have here in some other quarters.”

Sen. John Kavanagh called a minimum wage as high as $15 an hour a “joke.”

The separate efforts could leave voters with a confusing choice on ballots come November. Both measures claim to increase the minimum wage.

HCR2014, would increase the statewide minimum wage from $8.05 to $8.41 beginning Jan. 1, 2017, and would incrementally increase each following year, up to $9.50 in 2020. After that, Arizona’s minimum wage would increase annually to account for cost of living adjustments.

However, the resolution changes how cost-of-living adjustments are accounted for. Rather than calculate the adjustment based on data from the immediately preceding year, cost of living would be adjusted based on two-year-old data from the U.S. Bureau of Labor Statistics – a change that hurts employees trying to keep up with the cost of living.

Service industry workers would see their wages cut under the proposal, which was crafted by the Arizona Restaurant and Hospitality Association. For employees who regularly receive tips, their employers could pay them 40 percent less than the minimum wage, according to the amendment, a bigger hit on an employee’s base wage than current statute allows. Arizona employers in the service industry can now pay $3 less than the minimum wage.

Applied to the current $8.05 minimum wage, a 40 percent reduction is greater than the $3 reduction now applied to tipped workers’ base wage. And a reduction of 40 percent will only continue to grow as the minimum wage increases.

The resolution asks voters to undo what they voted for in 2006, when Arizonans approved a ballot measure to raise the minimum wage and allow counties and municipalities to adopt their own minimum wage and employee benefits laws.

As approved by voters, the minimum wage is adjusted annually for inflation, which has been so low that the raises have been small. For example, the minimum wage increased by 15 cents this year, from $7.90 in 2015.

Counties, cities and towns would also no longer have the explicit right to adopt their own benefit policies. But they likely would still be able to do so, as the new language proposed in the amendment declares only that a uniform minimum wage is a matter of statewide concern. It makes no mention of benefits.

First step for Ducey

Yet the change in statute may be only a first step for Gov. Doug Ducey, who vowed in his January State of the State address to “put the brakes on ill-advised plans to create a patchwork of different wage and employment laws.” Ducey and some Republican lawmakers have spoken out against efforts by some Arizona localities for trying to provide mandatory paid sick leave, parental leave, and other benefits to employees.

Chianne Hewer, lobbyist for the restaurant association, asserted that the resolution struck a fair balance between gradually increasing the minimum wage while incorporating pro-business measures that promote stability and won’t overwhelm small business payrolls. Using two-year-old CPI data to adjust the minimum wage would give businesses an easier time adjusting their annual payroll projections, rather than the three months owners now have to adjust their payroll to account for the most recent CPI data, Hewer said.

“We believe this is a fair balance to protect both the Arizona small businesses who pay these minimum wages while giving Arizona employees an improved rate that is known ahead of time for our small businesses,” Hewer said.

Farrell Quinlan, Arizona state director for the National Federation of Independent Business, echoed Hewer’s argument that a patchwork of minimum wage laws across Arizona would be detrimental to businesses.

Quinlan also argued that it would be “cruel” to the poor to raise the minimum wage, because small businesses would no longer be able to afford to hire them.

“It does increase the cost of hiring the least-attractive workers,” Quinlan said of employees with little to no work experience.

Punishing cities

Bill Scheel, a Democratic campaign consultant working on the ballot initiative to raise the minimum wage to as much as $15, called HCR2014 “completely unacceptable.”

Scheel said he believes HCR2014 was at least partially intended to compete with the initiative being planned by the Fair Wages and Healthy Families committee. But he said its primary purpose is to punish cities such as Tempe and Tucson that are considering their own minimum wages or other employment policies.

“I think it’s more about that than about our thing specifically, though it seems like that’s what it will turn into,” Scheel said.

The provisions in HCR2014 that would create mild increases in the minimum wage are a “smoke screen” intended to entice voters to support it, Scheel said.

The Fair Wages and Healthy Families committee has yet to decide exactly how high to set the proposed minimum wage. Scheel said polling shows strong support for a minimum wage in the $14 to $15 range, and that the measure is likely to include “strong provisions for other potential benefits for workers.”

In voting for the Arizona Restaurant and Hospitality Association’s alternative proposal, GOP lawmakers blasted the government’s involvement in setting a minimum wage at all.

“Minimum wage laws are well-meaning but disastrous,” said Kavanagh, R-Fountain Hills. “They increase the price of goods and services. They reduce jobs overall. They increase teenage unemployment. To its absurdity, a $15 minimum wage would allow a married couple who are both high school dropouts to make $62,000 a year. What a joke. If you want to destroy the U.S. economy, do that. Unbelievable.”

Amendments rejected

Democrats who ultimately voted against the resolution first tried to make it more palatable for their party, offering amendments to raise the minimum wage higher than the Arizona Restaurant and Hospitality Association had proposed and undo changes to tipped workers’ wages.

But each proposal was rejected by GOP lawmakers, who expressed regret that government would set a minimum wage at all. Given the political reality, HCR2014 is the best option, some argued.

“These things are fallacious,” Shooter said early on during debate on HCR2014. “They look good, they feel good, but they’re not real. The government can try to intrude on the free market, but every time it does, it gets run over.”

But the Yuma Republican added: “If we’re going to do this, we should give small businesses some predictability, though I think this is all silliness.”

Maricopa County Supervisor Steve Chucri, president of the restaurant association, downplayed the resolution as a response to other minimum wage efforts, and said his organization has been considering a legislative proposal well before a ballot initiative was organized.

While lawmakers need to approve the resolution in the full Senate and House, the Fair Wages and Healthy Families committee needs to collect 150,642 valid signatures of registered voters by July 7 to get onto the November ballot.

Scheel, the Democratic consultant, estimated that the campaign will need to collect between 225,000 and 240,000 signatures to give itself a sizeable cushion to account for invalid signatures. Nonetheless, he expressed confidence that it could be done. He said the campaign has significant funding commitments from national individuals and labor organizations, and expects to run a multimillion-dollar campaign.

Tomas Robles, executive director of the progressive advocacy group Living United for Change in Arizona (LUCHA), which is a key member of the coalition, is listed as the committee’s chairman.

Scheel said he’s glad so many GOP lawmakers commented in committee about how the minimum wage shouldn’t go up or how there shouldn’t be a minimum wage at all.

“I’m glad we got these folks on the record,” Scheel said.

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