A Republican measure that would ask voters to let businesses pay employees who work for tips 25% less than the minimum wage advanced on Tuesday.
The legislation would amend the Arizona Constitution to include language that would allow business owners to cut the pay of their tipped employees.
The strike-everything amendment to Senate Concurrent Resolution 1040 passed out of the House Commerce Committee along party lines. Those who spoke in favor of the measure said it is in direct response to a ballot initiative currently gathering signatures that would increase the minimum wage for all workers to $18 an hour.
Under current Arizona law, businesses can pay tipped workers $3 less than the current minimum wage. If the proposed constitutional amendment were in place today, businesses could pay workers $3.58 less than the current minimum wage of $14.35.
The legislation, known as the “Tipped Workers Protection Act,” is backed by restaurant owners and other business groups. Proponents, including restaurant industry lobbyists and some servers, told the committee that the measure would ensure tipped workers remain employed and can continue making tips.
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The initiative that is trying to qualify for the ballot, known as Raise the Wage AZ, does not remove tipping.
Jim Barton, an attorney for the Raise the Wage AZ initiative, said that restaurant lobbying groups are resorting to “extreme violence” by asking voters to change the state’s constitution to say that “certain workers cannot make a certain amount of money.”
“The idea to put it in the constitution is just horrendous,” Barton said. “Raising their wage a little bit is not going to cause anyone to pay more for a hamburger.”
A lengthy debate
Lawmakers heard from a variety of people Tuesday during nearly two hours of testimony.
Among them were lobbyists representing the Arizona Restaurant Association who argued that paying tipped workers less than the minimum wage would actually increase their wages and that workers are always made whole on their wages.
One server, Jaime Sarli, told the committee that, every time Arizona voters have increased the minimum wage — most recently in 2016 — she has seen staff cuts and menu prices increase. A server of 12 years, Sarli said that she makes “great money.”
Two other servers who testified echoed Sarli’s sentiments, saying that the job allows them to be flexible and they were concerned that an increase in minimum wage could harm that, as employers would look for places to cut costs.
But other servers told lawmakers that current wages in Arizona for tipped workers are unlivable.
Tracy Gunderson, a server at a restaurant in the international terminal at Phoenix Sky Harbor International Airport, said that many of her customers don’t tip, as a high number of those customers come from countries where tipping is not be customary.
Gunderson, a leukemia survivor, said that the bulk of her pay goes to state, federal and local taxes, as well as paying for her health care. She said she survives mostly off tips.
“All my hourly goes to taxes,” Gunderson told the committee.
Another server, Holly Pablo, spoke about how she often sells tamales on the side in order to make ends meet. Pablo said that, when she worked in Alaska, employers had to pay minimum wage and workers were allowed to take tips, which led to financial stability.
But Dan Bogert, CEO of the Arizona Restaurant Association, said that Gunderson’s testimony should be ignored because the airport is its “own ecosystem” and not representative of the larger restaurant industry.
Sky Harbor airport food workers have been striking over wages, pensions and benefits. Most airport workers make less than $25 an hour, according to the union representing them, and the estimated cost to afford a two-bedroom apartment in the Greater Phoenix area is approximately $33.46 an hour, according to the National Low-Income Housing Coalition.
“I think that is a little offensive to the workers who took time out of their day to be here,” Rep. Analise Ortiz, D-Phoenix, said to the suggestion that airport workers testimony should not be considered.
Advocates of the measure pointed to Washington, D.C., as an example of how a change in minimum wage could impact restaurants. In 2022, the district passed a measure that guaranteed tipped workers the minimum wage.
The area saw an astroturfed campaign against the change led by a conservative group that pushed op-eds and quotes to mainstream media outlets, often from local servers. Restaurants in the area also began adding surcharges related to the increase, despite it not being in effect at the time.
Advocates for the measure argued that increasing the minimum wage would see more places moving to using tablets or other technology instead of servers.
‘I live in an office’
A number of the lawmakers on the panel, including the measure’s sponsor, spoke about working as servers at one point in time in their lives.
Rep. Lorena Austin, D-Mesa, said she worked two server jobs at the same time before she became a lawmaker.
“I’ve always worked in the service industry before this,” Austin said while explaining her no vote. “I never had health care, that was never an option for me ’cause I didn’t make enough.”
Austin also said that she is still struggling to make ends meet on her $24,000 legislative salary.
“I don’t make enough money right now to have an apartment. I live in an office,” Austin admitted to the committee, adding that the legislation will ultimately harm tipped workers. “So, please know that it is very personal to me when I talk about tipped workers.”
Republican lawmakers said they did not find the testimony from airport workers “compelling” and instead said that the unions representing those workers should have gotten them better wages. Others said that workers can always find a different employer if they are unsatisfied.
“You don’t have to keep doing what you’re doing, kids,” House Commerce Committee Chairman Justin Wilmeth said.
The bill passed along party lines and will head next to the full House for a vote. If it wins approval from the House, it would go to the Senate for a final vote before being approved for the November ballot.
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