The Common Sense Institute of Arizona (CSI) released a report Wednesday which outlines the implications and economic impact of the City of Glendale’s far-reaching “Hotel and Event Center Minimum Wage Protection Act” (Prop 499). The act is set to be considered by voters on November 5.
The initiative, launched by the non-profit organization “Worker Power Political Action Committee,” has been challenged by the City of Glendale on the basis that it violates the State of Arizona’s “Single Subject Rule” limiting initiatives to act upon a single issue, The case is now headed to the State Supreme Court according to AZ Central.
The report from CSI Arizona details that the initiative, if it becomes law, would mandate that hotel and event center employers pay their staff a minimum of $20 per hour, and places narrow restrictions on the duties they may perform and the duration for which they may perform them. As Brunner explains, “For example, it prescribes how many square feet can be cleaned in a hotel before the employer is required to pay twice the room attendants’ regular rate of pay for each hour worked during that workday, and establishes new requirements on how Hotel and Accommodation firms treat certain revenues and records.”
The act would furthermore require the City of Glendale to create an entirely new enforcement division in order to enforce the mandate and hire staff to conduct investigations. It would also price non-union labor out of the market per the report.
The CSI found that the new law, if enacted, would, “reduce Gross Domestic Product (GDP) in Glendale by between $120 million and $1.9 billion.” Given that the city’s event and accommodation industries account for approximately 8.2% of Glendale’s entire economy, the blow to the city’s tax base could be severe.
“Depending on how the industry responds to the new policies, between 1,700 and 32,000 Glendale jobs could be impacted. Impacts will range from the elimination of existing jobs subject to the new rules, to reduced work hours, to the movement of jobs outside the city. How much of each and when will determine where things fall in this range.”
In a post to X, the CSI explained, “The Minimum Wage Act would impose significant costs on the city of Glendale, requiring the creation of a new Department of Labor Standards to enforce the Act’s provisions. CSI estimates the city would need to spend $995,000 to $1.9 million annually to manage these new requirements.”
The Minimum Wage Act would impose significant costs on the city of Glendale, requiring the creation of a new Department of Labor Standards to enforce the Act’s provisions. CSI estimates the city would need to spend $995,000 to $1.9 million annually to manage these new… pic.twitter.com/rcKG0S2L9h
Compellingly, the CSI report referecnces similar policies put in place around the country as “instructive examples,” of the likely ramifications of enacting the restrictive law.
“This year California instituted a $20 per hour minimum wage for fast food workers leading restaurant owners to reduce staff hours, lay off part-time staffers, and limit overtime pay. Also this year, Long Beach, CA passed a ballot initiative instituting a $23 per hour minimum wage for hotel workers. On the consideration of increasing hotel and airport workers’ minimum wage to $25 per hour, the President of the Valley Industry and Commerce Association said ‘increasing the hourly wage by $6 or $7 this year alone could cost an employer about $14,000 more per worker.’ For Arizona to pass a $20 minimum wage for hotel and event center workers in Glendale, it could cost employers up to $10,756 per affected worker -through a combination of either direct increased wage costs or efficiency losses as employers mitigate the impacts by reducing staff, cutting hours, or moving business activity. Much of this cost will likely be passed onto consumers in the form of higher prices and increased fees (as has been the case in California). This may further incentivize both customers and operators to seek alternatives outside the city.”
With Glendale and the city’s businesses banking heavily on the much ballyhooed Mattel Adventure Park at the VAI Resort set to open in late 2024, according to a park representative, and the growing impact of the Westgate Entertainment District and State Farm Arena on the local economy, the impacts of this measure could be devastating.
Minimum wage in Arizona will rise to over $14 an hour in the new year, a 50-cent increase from the previous amount of over $13.
At $14.35, that will make Arizona the state with the ninth-highest minimum wage in the country. Only eight Democratic-led states — California, Washington, New York, Connecticut, New Jersey, Maryland, Massachusetts, and Colorado — outrank Arizona in their minimum wages offered.
Arizona was one of 22 states to receive a minimum wage increase.
The state’s minimum wage adjustment originated with Proposition 206 — referred to as the Fair Wages and Healthy Families Act — passed by voters in 2016 under former Gov. Doug Ducey. At the time of the act’s passage, the minimum wage was about $8 an hour. The act initiated an incremental increase in the minimum wage from $8 in 2016 to $12 an hour in 2020, with all subsequent annual changes based on cost of living increases.
The act exempts individuals employed by parents or siblings, babysitters, state or federal government employees, and small businesses that gross less than $500,000 annually and don’t have to pay a minimum wage per federal law.
Since 2006, municipalities have been allowed to set a local minimum wage higher than the state.
Flagstaff and Tucson both have their own minimum wage ordinances; Flagstaff requires its wage to be at least $2 higher than the state, while Tucson currently has an incremental increase to reach $15 by 2025.
2024 marks the first year Flagstaff will adjust its minimum wage based on cost of living. Tucson will adopt the same schedule after 2025.
According to those parameters, Flagstaff’s minimum wage will rise to $17.40 come January. Tucson was set to reach a $14.25 minimum wage this year according to its schedule, but according to the law will match the state raise to $14.35.
In recent years, Flagstaff has battled with the state in court over its minimum wage schedule. The Arizona Court of Appeals ruled in February that the city would have to pay the state over $1.1 million for its minimum wage ordinance, per a 2019 law requiring annual assessments of municipalities with a minimum wage exceeding that imposed by the state. These assessments review estimated state agencies’ costs attributable to the higher minimum wage.
The federal minimum wage remains at $7.25 an hour, unchanged since 2009. Democrats in the House and Senate are looking to change that with proposed legislation to increase the minimum wage to $17 by 2028.
According to an Economic Policy Institute analysis, the raise would result in an estimated $86 billion annually in wages for over 27.8 million workers, averaging out to about $3,000 more per worker annually. Those millions affected make up about 19 percent of the national workforce.
In Arizona, the proposed federal minimum wage raise would impact roughly 629,000 workers with an average annual increase of over $900.
The Congressional Budget Office (CBO) issued a review of similar legislation which proposed a minimum wage increase of $15 an hour by 2027. CBO estimated that earnings would raise for some, but overall there would be a decrease in employment.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
Arizona’s minimum wage was $13.85 in 2023, up from $12.80 per hour in 2022. On January 1, 2024, minimum wage in State 48 will be raised another 50 cents to $14.35 per hour. This increase will happen despite the fact that Arizona’s inflation rate in 2023 was lower than the national average. That’s because Arizona is a state that raises minimum wage following the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI). This means that our state follows the inflation rate of the entire country instead of the localized state-level inflation rate. But now, a new group is pushing to ensure that Arizona’s minimum wage grows astronomically higher.
Back on November 7, 2022, a group named Raise the Wage AZ introduced a measure called The One Fair Wage Act. This state-initiated statute, which could be on the ballot in 2024, proposes raising the minimum wage to a staggering $18 per hour. Within this act, it explicitly states, “The One Fair Wage Act raises the minimum wage by $1 over cost of living increases in 2025 and 2026 and leaves cost of living increases in place thereafter.” By 2025 and 2026, the cost of living in Arizona could very well be one of the highest in the nation because of the Phoenix metro area.
Another part of the act is something that will leave many small business owners feeling extremely concerned. It states: “The Act gradually reduces the amount of the employer’s offset due to tips until the employer is required to pay the full minimum wage and employees keep all of their tips on top of that wage.” This will diminish profit margins directly for small businesses and therefore increase product costs to consumers.
It’s bad enough that small businesses have been left behind for the past three years because of mismanagement of fiscal policy and ignorance at the highest level within the federal government. They shouldn’t be expected to face another dramatic increase in minimum wage. Our state cannot fall into the same trap that California and New York fell into, letting large cities dominate secondary cities and smaller towns.
On top of this, the Biden Administration’s neglect of the southern border and immigration policy will leave people that are crossing illegally even more dependent on taxpayer-funded programs—pushing overall costs at a local level even higher. Now is not the time to raise minimum wage by such an extreme margin. This is an unfortunate initiative, because it fails to address any of these other concerns that will end up affecting Arizonans.
The reality is that The One Fair Wage Act is bad for Arizona. If this ballot initiative passes, rural Arizona will be left behind as prices increase dramatically. Small businesses will go dormant. Phoenix will become the Los Angeles of the desert. And the bar of entry to start a business in Arizona will continue to grow higher for everyday Arizonans.
Carson Carpenter is a student at Arizona State University, majoring in Political Science. He is the Vice President of ASU College Republicans and has interned for Reps. Gosar and Crane. You can follow him on Twitter here.
The City of Flagstaff can be forced to pay the State of Arizona more than $1.1 million for enacting a minimum wage that is significantly higher than the state wage, according to an Arizona Court of Appeals opinion released Tuesday.
But whether the State gets to keep the money will be determined once a Maricopa County judge conducts a trial on the matter.
Back in 2006, Arizona voters approved Proposition 202 which allows cities and towns to set their local minimum wage, as long as it is not below the state level. Flagstaff did just that in 2016 with the passage of a local voter initiative.
The Arizona Legislature passed a new law in 2019 which allows the State to collect yearly assessments from any municipality with a minimum wage that exceeds the State’s. The assessment entails a detailed process involving state agencies estimating their costs “attributable” to the higher minimum wage.
Each assessment must be approved annually by another act of the legislature, after which the Arizona Department of Administration (ADOA) is required to issue an assessment to the municipality by July 31.
Any impacted municipality then has until the end of the calendar year to remit payment or the Arizona Treasurer must withhold the amount with applicable interest from the municipality’s share of tax revenues.
In the Flagstaff case, the state agencies were asked by the Legislature in 2019 to calculate their “projected costs attributable to Flagstaff’s higher minimum wage” in their 2021 budget estimates. That amount was calculated at $1,110,992, based on Flagstaff’s $15 per hour minimum wage effective Jan.1, 2021.
The Arizona hourly minimum at the time was only $12.15.
The $1.1 million Flagstaff assessment was approved by the Legislature via Senate Bill 1827 on June 30, 2021 and signed the same day by then-Gov. Doug Ducey. ADOA then advised city officials the assessment would be formally issued 90 days later, well after the July 31 deadline.
In the meantime, city officials filed a lawsuit, challenging the 2019 statute as well as the 2021 Senate Bill, arguing both were unconstitutional under the Voter Protection Act (VPA). The effective date of the assessment also plays a big role in the lawsuit.
Without opining on Flagstaff’s constitutional arguments, a Maricopa County trial judge quickly issued a preliminary injunction to prevent the State from enforcing the assessment while the lawsuit is being litigated.
The judge primarily relied on the belief at the time that the June 2021 assessment did not take effect the day it was signed into law, thus making ADOA’s plan to collect the money 90 days later untimely.
The trial judge also briefly noted he was granting the preliminary injunction “out of an abundance of caution” as Flagstaff officials had argued about the “possibility of irreparable harm” with funding critical services if forced to pay the $1.1 million.
The Arizona Attorney General’s Office appealed the preliminary injunction order, arguing on behalf of ADOA and Treasurer Kimberly Yee that the Maricopa County judge made multiple errors to support issuing it. And in a Feb. 21 opinion, the Court of Appeals agreed.
The opinion authored by Acting Presiding Judge Randall M. Howe noted the trial court erred in considering Flagstaff’s irreparable harm argument under the set of facts as they are in the case. Howe added that the city had sufficient funds to cover the assessment, and could have gotten the fund back if the State lost the lawsuit.
As a result, Howe was joined by Judge D. Steven Williams and Vice Chief Judge David B. Gass in overturning the preliminary injunction and sending the case back to the Maricopa County Superior Court “for a trial on the merits.”
The opinion also strongly suggests the trial judge consider a 2022 ruling by the Arizona Supreme Court (Ariz. Free Enter. Club v. Hobbs) in which the justices clarified that revenue laws proving “for the support and maintenance” of “existing state departments or state institutions” are valid upon enactment instead of taking effect at a later date.
If applied to SB1827, that would have allowed ADOA to issue the assessment to Flagstaff in plenty of time to meet the July 31 deadline.
The Court of Appeals also unanimously declined a request from the parties for the judges to weigh in on some other key legal issues with the case, including whether the 2019 statute allowing for assessments of costs to cities like Flagstaff “impliedly amend the VPA, violating Arizona’s constitution.”
Howe wrote that the court of appeals “sits as a court of review, not of first view,” and would not decide the merits of the case without the benefit of having a fully developed record from the trial court.
“While the parties are understandably eager to resolve this case as quickly as possible, quickness must not eclipse thoroughness,” Howe wrote. “We respect the role of the trial court and trust in its competence to resolve all legal and factual matters before it in the first instance.”
The opinion does not take effect for at least 30 days, giving both sides time to petition for review by the Arizona Supreme Court.
As of Jan. 1, 2023, Flagstaff’s minimum is to $16.80 per hour ($14.80 tipped) while the state minimum rose to $13.85.
Terri Jo Neff is a reporter for AZ Free News. Follow her latest on Twitter, or send her news tips here.
The city factors minimum wage based on cost of living in addition to inflation. In 2016, Flagstaff voters approved Proposition 414, a measure raising the minimum wage to $15 an hour last year and ensuring annual adjustments for inflation and cost of living every year thereafter. The city’s minimum wage must be at least $2 above the state’s minimum wage.
Prop 414 also ensures that hourly tipped minimum wage will be the same as hourly minimum wage by 2026.
It’s anticipated that the state will increase minimum wage to $13.85 an hour, just over a $1 increase from the current $12.80 minimum wage.
Despite criticism that the minimum wage would exacerbate unemployment, Deasy shared in March that unemployment rates have halved since 2016.
Flagstaff’s Minimum wage and Unemployment rate
Dec. 2016: $8.05 / 6.4% Dec. 2021: $15 / 3.7%
When exactly was min wage going to kill jobs again?
— Flagstaff Mayor Paul Deasy (@MayorDeasy) March 8, 2022
Those unemployment rates may reflect the hiring and growth of big box and chain stores, in turn masking the suffering of small businesses.
Several small businesses were vocal about experiencing the brunt of Flagstaff’s minimum wage increases. About a month before the pandemic occurred, small business owners reported that they’d resorted to reducing their number of employees and their hours of operation.
The Flagstaff City Council has also considered a minimum wage increase for its city employees. They haven’t voted on an increase yet.
Pending Council’s vote, Flagstaff’s minimum wage for city employees will be $16.60/hr starting in July.
Come work with us cool kids 😊
— Flagstaff Mayor Paul Deasy (@MayorDeasy) April 22, 2022
Deasy has petitioned the council to increase city employees’ minimum wage, initially asking for $17 an hour but settling for slightly less, $16.60 an hour.
I asked staff to assess the financial impact of a $17 minimum wage for City of Flagstaff employees at today’s budget retreat.
