Arizonans at the bottom end of the income scale are going to be getting a bit more in their paychecks this coming week.
As of Monday, the new state minimum wage will be $10.50 an hour for most private sector employees. That’s 50 cents more than the current figure – or a bit more than $1,000 a year, before taxes.
It also will now be $2.45 an hour more than in 2016, the year voters approved a multi-step plan to eventually get the state’s minimum wage up to $12 an hour by 2020.
How many of the state’s 2.8 million workers will be affected remains unclear. The Arizona Office of Economic Opportunity has no figures of the number of workers currently earning less than $10.50.
But doing some extrapolation of 2016 data, state economists said that, theoretically speaking, slightly more than 500,000 workers should be affected by the January 1 change, a number they admit is “probably an overestimate.”
There’s also the fact that any bump to the bottom likely pushes up the wages of those who are making $10.50 or more as employers must provide an incentive for existing workers to stay.
What is clear is that the first step, implemented at the beginning of 2017, did have an impact, particularly in the leisure and hospitality industry, which, generally speaking, pays the least among all segments of the Arizona economy.
Last month, the average hourly earnings for those in this sector was $15.06. That compares with $14.36 a year earlier, a 4.9 percent increase.
By contrast, average wages among both manufacturers and financial services employers are up just 1.7 percent in the past year.
There are, however, some exceptions to that. Wages paid in the state’s professional and business services are up year-over-year by 7.8 percent.
What also is clear is that employment in bars and restaurants, the segment of the economy with the largest share of lower-wage workers, continues to increase.
An analysis by Capitol Media Services finds that the number of people working last month in bars and restaurants was 241,900.
That’s 5.3 percent higher than a year earlier. It also far exceeds the 1.9 percent year-over-year increase in all private sector employment.
But Steve Chucri, president of the Arizona Restaurant Association, argued that the higher wages have had an effect – and that the health of the industry overall does not reflect what’s happening to individual establishments.
“Don’t mistake that because more restaurants are opening, and hiring might be up that that means everything’s good and fine,” he said.
He pointed to the announcement last week by Corner Bakery that it was closing three of its Phoenix-area locations and firing all the workers. Jim Long, CEO of parent company Blue Mountain Cafes, said in a prepared statement that higher minimum wages in Arizona were a contributing factor.
But a fourth cafe in downtown Phoenix remains open, as does one in Tucson. And Chucri conceded that there may be other factors that have led to some restaurants closing their doors.
“Competition is fierce in this industry,” he said. “It always has been, it always will be.”
Chucri insisted that the higher wages are “having a negative impact on the bottom line.”
Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, acknowledged that employment in the state continues to grow, even with the higher minimum wage his organization opposed.
But Hamer said even with an increase in the overall number of people working, he, like Chucri, remains convinced that the change has had an effect and that some people have lost their jobs as a result.
For example, he said the garage where he parks no longer has any attendants.
“Those jobs have been automated out of existence,” Hamer said. “I can’t say for a fact it’s because of the minimum wage. But I would imagine it’s a contributing factor.”
Chucri said the same thing is happening in his industry, pointing to fast-food and similar restaurants that have automated the ordering process, with patrons making their selections on computer screens – and even being able to pay – before picking up their meals at the counter. He said that’s likely to spread to the “back of the house,” where there’s no reason that a machine can’t make french fries.
Having lost the battle with voters over a state minimum wage, Hamer said his organization is hoping to get legislators to make a change to the other provision in the 2016 measure: a requirement for employers to provide at least three days of paid time off each year – five days for companies with 15 or more workers. Hamer said companies need more flexibility to work around employee requests during times of the highest demand.
What’s significant is that Hamer is prepared to offer some concessions to workers to get what he wants.
The reason is politics: It takes a three-fourths vote in both the House and Senate to alter anything that has been approved at the ballot. And there simply aren’t enough Republicans to do that without Democrat support.
Does that mean boosting the number of mandated days off?
“I’m not going to give you any specifics,” he said.
“But we’d be willing in some way to sweeten what’s available to employees in exchange for flexibility,” Hamer continued. “We understand there is no other way to address this.”
**Latest hourly earnings by sector**
Total private – $25.57
Construction – $25.65
Manufacturing – $24.14
Trade, transportation, utilities – $24.53
Financial activities – $29,59
Professional and business services – $28.02
Private education and health services – $27.06
Leisure and hospitality – $15.06
Other services – $23.60
Cochise County – $18.11
Coconino County – $17.63
Maricopa County – $27.04
Mohave County – $23.23
Pima County – $22.21
Yavapai County – $20.07
Yuma County – $19.55
Source: Arizona Office of Economic Opportunity