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Tag: Arizona Restaurant Association

Arizona minimum wage set to rise to $15.15 an hour in January

Key Points:
  • Arizona’s minimum wage will rise to $15.15 an hour on January 1
  • The increase is due to annual adjustments for inflation, as required by state laws
  • Arizona’s inflation rate through August hit 2.9%, the highest since 2021

Arizona will soon require workers to be paid at least $15.15 an hour.

New figures Thursday from the Bureau of Labor Statistics show that year-over-year inflation through August hit 2.9%.

What makes that significant is that laws approved in Arizona by voters in 2006 and again in 2016 require the state’s minimum wage to be adjusted annually to match the change in the Consumer Price Index. That means the current floor of $14.70 will go up by 45 cents on January 1, a figure by law that is rounded to the nearest nickel.

People working in Tucson and Flagstaff will see an even higher minimum.

In Tucson, the minimum already is $15 an hour. It, too, will increase by 45 cents, to $15.45.

And in Flagstaff, the $17.85 minimum will hit $18.35 in January.

Meanwhile, the federal minimum wage remains at $7.25 an hour, a figure last adjusted in 2009. And that remains the law in 20 states. 

Many Arizonans will be affected by the latest boost.

The state Office of Economic Opportunity estimates there are about 230,000 individuals in Arizona who earn no more than $15 an hour. And that doesn’t count those who were already earning more than the old minimum, who may also get a pay bump to keep them above the new minimum.

But a proponent for what has been an ongoing fight for nearly two decades says that’s hardly a victory given how much costs have gone up since that $15 aspirational goal was announced.

Alejandra Gomez, executive director of Living United for Change in Arizona, said her group is now looking at ways to raise that to $20 an hour.

“Most Arizonans are suffering from the rising cost of housing,” said Gomez, whose organization was behind the successful 2016 initiative that took the then-current figure of $8.05 an hour up to $12 by 2020, with inflationary adjustments ever since.

“They are suffering from the rising cost of utilities,” she said.

The situation is quite different at the other end of the income spectrum, Gomez said, where wages of corporate executives are multiple times those of their employees.

Gov. Katie Hobbs said she could not say what would be an appropriate figure.

“I know that Arizonans are struggling,” she told Capitol Media Services, saying it is her job to “address that struggle.”

But the governor said it is legitimate to have a public discussion of how much people need to be paid.

“I think a living wage is where somebody can afford to keep a safe roof over their heads, that has functioning utilities and water and they can put food on the table to feed their families,” she said. “That is different for everyone.”

And what about supporting an initiative for a significant increase in the minimum wage?

“I cannot speak to language and a ballot measure I have not seen,” she said.

A ballot measure, if it proceeds, would pave the way for yet another high-profile battle with the business community which fought — and failed to defeat — both the 2006 and 2016 initiatives. And leading that opposition has been the Arizona Restaurant Association.

Steve Chucri, president of that group, is preparing his arguments. And one of them comes down to a simple question: Where does it end?

First, he said, was the fight to get wages up to $15 an hour.

“So we’re there,” Chucri said. “We’ve always stated in the past that it’s always going to be ‘Fight for $15,’ then ‘Fight for $20,’ then ‘Fight for $25.’ ”

He believes the public has had enough.

Consider, he said, the decision by California voters last year to reject Proposition 32, a proposal that would have raised the minimum hourly wage in the state to $18.

Chucri also said that an effort in Arizona to add an extra dollar to the state minimum wage — above and beyond the scheduled annual inflationary increases — failed here last year. That same measure also would have scrapped existing law that allows businesses to pay their tipped workers $3 an hour less as long as their tips reach the minimum wage requirement.

In fact, though, it wasn’t because Arizona voters rejected the measure. The failure was with the ability of proponents to get sufficient signatures to put the issue on the 2024 ballot.

Conversely, a measure offered by Churci’s organization to alter how the tip credit is calculated — and in a way that would have saved money for restaurant owners — did make the ballot. And voters rejected what the restaurants wanted by a 3-1 margin.

Gomez, for her part, said history is on her side.

Prior to the 2006 ballot measure, Arizona had no minimum wage of its own. Instead, employers were required to comply only with federal law and its $5.15-an-hour floor.

That measure, which provided for an immediate $1.65-an-hour boost and future increases linked to inflation, was approved by a margin of 2-1 despite objections from the Restaurant Association and other business groups.

The 2016 measure — the one that went to voters when the minimum hit $8.05 — also was approved handily by more than 58% of voters. Here, too, the restaurants and businesses financed the opposition.

It is that law which is now in effect, with the mandated annual inflation indexing bringing current wages to $14.70 — and $15.15 beginning next year.

Chucri said if and when a new ballot measure emerges, it will be his job to convince voters that there will be no adverse effects felt by consumers and workers.

It starts, he said, with the price tag. Chucri said the industry has reached the point where the cost of labor now is greater than the cost of the food being prepared. And to deal with that, he said restaurants are buying equipment to do what used to be done by staffers.

Chucri specifically cited a move by Chipotle, which has been using Autocado, a machine that can cut, core and peel avocados before they can be mashed into guacamole, the last part of that process the chain says, is done by hand.

“These entry-level spots in the restaurant industry that some of the workers depend on, you’re going to see replaced by technology,” he said. “They’re looking to automate more and more, given the cost of labor.”

Regardless of what the future holds, whether at the ballot box or due to inflation, that still leaves the new annual inflation figure of 2.9%, the highest since Trump took office.

But all prices are not up by the same margin.

BLS reports grocery prices were up 2.7% while the cost of eating out rose 3.9%.

Electricity prices are up 6.2% over the same time last year. But the agency figures that gasoline costs actually are 6.6% lower.

Prices on new cars rose just 0.7%, versus a 6.0% increase in purchasing used wheels.

And the cost of shelter — rent and equivalent costs for homeowners — is up 3.6%.

History of Arizona and federal minimum wage
Year / State / Federal
2006 / $5.15 / $5.15
2007 / $6.75 / $5.85
2008 / $6.90 / $6.55
2009 / $7.25 / $7.25
2010 / $7.25 / $7.25
2011 / $7.35 / $7.25
2012 / $7.65 / $7.25
2013 / $7.80 / $7.25
2014 / $7.90 / $7.25
2015 / $8.05 / $7.25
2016 / $8.05 / $7.25
2017 / $10.00 / $7.25
2018 / $10.50 / $7.25
2019 / $11.00 / $7.25
2020 / $12.00 / $7.25
2021 / $12.15 / $7.25
2022 / $12.80 / $7.25
2023 / $13.85 / $7.25
2024 / $14.35 / $7.25
2025 / $14.70 / $7.25
2026 / $15.15 / $7.25

Foes argue ballot measure doesn’t protect tipped workers

A bid by the Arizona Restaurant Association to convince voters to let them pay their workers less is so misleading that it should not be allowed on the ballot, according to an attorney for foes.

James Barton is telling the Arizona Supreme Court they should block Proposition 138 from going to voters. And the key, he said in new legal filings, is that it is being sold as the “Tipped Workers Protection Act,” the title proposed by restaurant owners and incorporated into the measure by the state lawmakers who agreed to put it on the ballot for them.

Only thing is, said Barton, if it is approved it actually would mean restaurants could pay their tipped workers even less than they do now. And that, he said, is sufficient reason for the justices to stop it now, before it ever gets to voters.

“The court has the power to intercede on the people’s behalf when a fraud on the electorate is being perpetrated,” Barton said.

He actually made the same arguments before, only to be rebuffed by Maricopa County Superior Court Judge Peter Thompson, an appointee of the former Gov. Jan Brewer, who ruled there is nothing inherently misleading about the measure. And the trial judge said that it could be construed that it does protect tipped workers, as providing financial relief to restaurants actually could allow them to keep more of them on the job.

Barton, however, told the justices that they need to stay focused on not some economic theory but instead what the measure actually would do.

Under current law, workers are paid $14.35 an hour, a figure that increases annually to account for inflation. But it also permits employers to pay their tipped workers as little as $11.35 – $3 an hour less – as long as their total pay, with tips, hits the minimum.

What Prop. 138 would do is increase that credit to 25% of the minimum wage. So, at the current $14.35 an hour, that reduces the cost to the restaurant at just $10.76.

Steve Chucri, president of the Arizona Restaurant Association, said no one will take home less than they do now. He pointed out that the 25% allowance for owners is available only if a worker brings in tips equal to at least $5.59 an hour, bringing him or her up to $2 an hour above the minimum, or $16.35.

But what that also means, Barton said, is if the worker brings less than the $5.59 in tips he or she gets the current $11.35 – leaving the worker no better off than now.

Barton said he is not arguing that the title of Tipped Workers Protection Act implies that there is some sort of promise that there would be an increase in the minimum wage.

“But it implies or promises that it will provide protection to tipped workers,” he said, something he said it does not do.

The challenge by Barton is being brought by Raise the Wage AZ. That is the group that collected signatures asking voters to hike the minimum wage by $1 an hour this coming January and another $1 in January 2026.

It also would have phased out that $3-an-hour tip credit.

The Arizona Restaurant Association sued. And proponents of what would have been Proposition 212 conceded that it probably did not have enough valid signatures. That ended that fight.

But the restaurants also went on the offensive, convincing their GOP allies in the Legislature to put Prop. 138 on the ballot, the one with the 25% tip credit. That led to Raise the Wage filing its own lawsuit over what Barton says is that misleading title.

Barton lost the first round earlier this month when Thompson threw out the case. And at least part of that was based on the question of what, in fact, is the “title.”

The judge said the official title actually is “Amending Article XVIII by adding Section 11, Constitution of Arizona.”

The Legislature itself also added an official descriptive title: Permits employer to pay up to 25% less than the minimum hourly wage for employees whose compensation includes tips or gratuities from patrons, but only if the employer can establish that the employee ultimately received the minimum wage plus $2 for every hour worked.

Barton called all of that irrelevant, saying the fight isn’t over whatever is the “official title.”

The key, he said, is that the lawmakers, at the behest of the Restaurant Association, added verbiage to the measure, saying “This act may be cited as the ‘Tipped Workers Protection Act,’ ” making it an integral part of Prop. 138. And Barton said that while lawmakers have the right to create unofficial titles, “it cannot be done in a deceptive manner.”

But that still leaves that economic argument by restaurants that Barton and Raise the Wage AZ will have to face.

The Arizona Restaurant Association, in seeking to keep Prop. 138 on the ballot, argued there actually is a way of reading it to support their contention that decreasing what they have to pay tipped workers actually would be good for those workers – that lower labor costs would create what the industry called an “economically sustainable minimum wage requirement for employers.” And that, the association says, will “prevent elimination of tipped workers’ jobs because of additional, statutory-imposed business costs.”

Thompson said that was enough of an argument to allow the issue to go to voters.

“The political views of whether the goal of tipped worker protection is best accomplished by adopting or rejecting the proposed amendment should not be conflated with rejection of the proposed amendment before it even appears on the ballot,” the judge wrote.

The Supreme Court is likely to decide whether the measure remains on the ballot soon.

 

Group folds effort to raise minimum wage

Arizonans won’t get a chance to vote in November to raise the state minimum wage.

One Fair Wage, the sponsoring group of what would have been Proposition 212, said Thursday it is withdrawing the signatures submitted in July to put the measure on the ballot. Instead, it will most immediately focus on electing sympathetic candidates to the Legislature.

The longer-term goal, however, is to approach the issue not on a statewide basis but instead by trying to get individual counties, cities and towns to adopt their own minimum wage at a level that is higher than what is now required by state law.

The decision, though, was not entirely voluntary.

Raise the Wage Arizona, the local operation of One Fair Wage, submitted 354,278 signatures.

But the Arizona Restaurant Association, in a lawsuit filed in Maricopa County Superior Court, contends there are a series of problems.

For example, state law requires that anyone who is a paid circulator or from out of state must first register with the Secretary of State’s Office. Attorney Kory Langhofer told Judge Scott Blaney many of those who collected signatures did not comply.

Langhofer also contends there are other violations of state laws regulating petition circulators. And if circulators were acting illegally, all the signatures they collected cannot be counted.

All total, he said that once those invalid signatures are eliminated, the petition drive no longer has the legally required 255,949 names.

A hearing had been set for next week. Now, with the withdrawal, that is no longer necessary.

Saru Jayaraman, president of One Fair Wage, said it is possible the measure still could have survived the legal challenge. But she admitted that was not a sure thing.

“We didn’t want to just keep spending money on that when the chances were getting harder and harder, given the process,” Jayaraman said. “That’s why we decided to pivot to legislation and local initiatives.”

More immediately, what she also wants to do is focus on killing Proposition 138.

That measure, put on the ballot by the Republican-controlled Legislature at the behest of the Arizona Restaurant Association, would allow its members to pay its tipped workers 25% less than the minimum wage as long as what they make, with tips, is at least $2 an hour above the minimum wage. The current tip credit is $3 an hour.

There is no question but that change would financially benefit the restaurants.

In the case of the current $14.35 minimum, the tip credit can reduce the restaurant’s cost to $11.35 an hour. But bumping that up to 25% would drop that to $10.76.

But the focus, beyond defeating Proposition 138, is trying to do on a community-by-community basis what Proposition 212 would have done statewide: Hike the minimum wage.

That local option is allowed under versions of changes to the state minimum wage laws previously approved by voters.

Voters in Tucson and Flagstaff already have enacted their own minimum wage ordinances. Jayaraman says she believes residents of other communities would be amenable to the idea.

Arizona had no minimum wage before 2006, with employers required to pay only what the federal government required – $5.15 an hour at that time.

That year, over the objections of restaurants and some other businesses, voters approved creation of the state’s first minimum by a margin of 2-1. That hiked it immediately to $6.75 with a mandate to make annual changes to account for inflation, adjustments that brought it to $8.05 an hour in 2016.

A new successful initiative at that time, approved by 58% of those who voted, brought it immediately to $10 in 2017 and automatically to $12 by 2020. Subsequent inflation adjustments now have it at $14.35.

By contrast, the federal minimum remains at $7.25.

Proposition 212 would have added a dollar an hour to the state minimum this coming January, with another dollar at the beginning of 2026, all on top of the regularly scheduled inflation hikes.

But what particularly alarmed the Restaurant Association was that the initiative would have phased out the tip credit. That would have forced employers to pay at least the minimum wage, regardless of how much the workers made in tips.

Now Prop 212 and that risk are gone. But Steve Chucri, president of the Arizona Restaurant Association, said the effort to get voters to approve Prop 138 and its 25% tip credit will continue.

He said that a larger tip credit does not mean workers would take home less. Chucri pointed out that restaurants could claim the credit and reduce their own costs only if an employee actually made $2 an hour over the minimum when tips were included.

“This isn’t saving big corporate giants like they’re suggesting,” he said. “This is the mom-and-pops who need this tip credit to keep people employed and to keep their restaurants operating.”

And while the restaurants lost the minimum wage ballot battles in 2006 and 2016, Chucri said he believes the results will be different this time and voters will approve the increased tip credit in Prop 138.

“What we are seeing and what people and our guests are understanding is that it’s getting more and more expensive to dine out,” he said.

But State Rep. Mariana Sandoval, who has been working with One Fair Wage, said in a written statement there is no reason to have a tip credit at all.

“We should not feel obligated or the social pressure to tip because we know folks are not making a living wage,” said the Goodyear Democrats. “And we should definitely not be subsidizing anyone’s payroll.”

Chucri also argued that efforts to increase wages at the ballot and get rid of the tip credit are being pushed by “outside interests” and not restaurant employees who he said “get paid very well.”

“And if they didn’t, they wouldn’t be staying at these restaurants for decades,” he said.

And what of the $14.35 minimum wage that can be paid to workers who don’t get tips?

Chucri said that, at least in the fast-food industry, that is a starting wage. And he said that most have to pay more just to get and keep workers.

“They’re letting the market dictate that,” Chucri said.

The future of Proposition 138 aside, that still leaves One Fair Wage with the local option.

On one level, the same hurdle remains: Putting a measure on a ballot requires valid signatures which generally need to equal 15% of those who voted in the last local election. But  Jayaraman said that focusing the resources on just a few communities at the time versus a statewide contest could prove more effective, saying it could take as few as 1,000 signatures in some cities to qualify for the ballot.

That local option is already playing out in Glendale where a group known as Worker Power has submitted enough signatures to raise the minimum wage for hotel and event center workers to $20 an hour. The same measure has other provisions, including how many rooms attendants can clean in an eight-hour workday before their pay is doubled.

 

 

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