What would you do with an extra $1,000 a year?
That’s the happy question that faces those full-time workers at the very bottom of the wage scale who will find more cash in their paychecks after the first of the year.
The move represents the third step of a four-year plan approved by voters in 2016 to eventually get the minimum wage up to $12 an hour by 2020. This latest change takes it from the current $10.50 an hour to $11.
But it’s not just those at the very bottom who are likely to see an effect. The move to make the basic salary $11 should push up wages for those who already are above that figure.
Some people may still be paid less. That’s because the law also give employers a $3 “tip credit” for wages paid to those workers who can get up to the $11 minimum when what they actually earn in tips is factored in.
The latest increase comes years after business interests rallied against the measure, arguing that forcing employers to pay more, particularly to newly hired workers, would make their operations financially uncompetitive. There also were claims that many businesses dependent on minimum wage workers would simply choose to hire fewer people.
University of Arizona economist George Hammond said that accurate wage data for the past few years is still being compiled.
“But what we’re seeing macroeconomically is that the state’s still growing rapidly,” he said.
“Overall wage growth accelerated last year, as you might expect with a minimum wage increase,” Hammond said, and wages per worker.
And there’s little indication that there has been a slowdown in hiring by those companies most affected by having to shell out more.
In the past year total private sector employment in Arizona has gone up 3.6 percent according to the state Office of Economic Opportunity. But employment among restaurants and bars, traditionally at the low-end of the wage scale, is up by 5.6 percent.
Hammond said there is some indication that inflation — the cost of buying things — has increased in the Phoenix metro area where it is measured, up from 1.6 percent in 2016 to 2.5 percent last year. But Hammond said it’s impossible to say at this point how much of that is due to higher wages forcing up prices.
But Garrick Taylor, spokesman for the Arizona Chamber of Commerce, said it’s only logical that the higher costs are being passed along. And at some point, he said, the increases can’t be sustained.
“There’s only so much someone will pay for a sandwich or a cup of coffee,” he said.
The chamber was so opposed to the 2016 measure that it not only spent money to convince voters to kill it but then went to court in a bid to block its implementation. Both efforts failed.
Taylor said his organization’s opposition is not strictly financial.
“We believe that mandating wage policies via the ballot box is a poor way to carry out public policy, especially in the area of wages,” he said.
He acknowledged that the increase — the minimum as of Jan. 1 will be 37 percent higher than it was in 2016 — has not caused financial ruin.
“This economy is quite healthy right now,” Taylor said. “But that doesn’t mean that there is not somebody who is looking to get into the labor market who has been priced out by higher mandated wages.”
But Hammond pointed out that employment in that low-wage sector of leisure and hospitality continued to increase, faster than the private sector as a whole, even as the average hourly wage of all workers in that industry also has gone up.
While opposed to setting wages at the ballot, Taylor acknowledged that the chamber and other members of the business community had not been proactive or proposed to lawmakers their own minimum wage hike. So where was the chamber before the measure got on the ballot?
“Look, we were not engaged at that level of policy making,” he said. But Taylor also said that advocates of higher minimum wages had not approached the business community with their own proposals either.
But he also conceded there was no reason for the supporters of higher wages to reach out.
“Minimum wage increases that have appeared on the ballot around the country have passed,” Taylor said. “The advocates understand the popularity of them.”
The 2016 initiative was actually the second time that voters had decided that workers should be paid more than Arizona lawmakers want.
A 2006 ballot measure created the state’s first minimum wage, setting it at $6.75 an hour when Arizona employers needed only comply with the federal minimum of $5.15. That initiative also set in place a process for automatic increases linked to inflation.
That, however, got the state’s minimum up to just $8.05 an hour in 2016 when advocates got voters to approve on a 3-2 margin the four-step jump to $12 by 2020. That same measure also requires employers to provide at least three days off for sick or personal leave.
Under the terms of the initiative, , increases after 2020 will again be linked to inflation.
Editor’s note: The headline to this story has been corrected to reflect the accurate amount of the minimum wage increase.