Flagstaff small businesses have problems with fuel concerns due to steep pay hikes

Arizona companies already grappling with a pandemic-induced downturn and multi-year wage hikes that have grown incrementally over the past four years are closely watching the debate on Capitol Hill over raising the federal minimum wage to $ 15 an hour.

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On January 1, the state minimum wage rose to $ 12.15 an hour. That’s higher than many other higher cost of living states, according to proponents of the economy.

Amber Smith

“Arizona ranks 30th on affordability indices and 24th on cost of living, but we have the fourth highest minimum wage in the country,” said Amber Smith, president and CEO of the Tucson Metro Chamber of Commerce, recently. “The three largest states with the highest minimum wages have higher cost of living than the national average, yet Arizona is three percentage points below the national average.”

That hurts cities like Tucson that are trying to compete for both employers and workers, Smith said.

The small town of Flagstaff has the highest minimum wage in the state

Few business communities are harder hit than Flagstaff, northern Arizona. The city experiences firsthand the effects of steep wage increases.

Weatherford Hotel. (Photo by Discover Flagstaff)

It currently has the highest minimum wage in the state at $ 15 an hour.

As a result of a voter-approved measure changed by the city council, the city’s minimum wage will rise to $ 17 an hour if Congress approves a proposal to raise the national minimum wage to $ 15.

“This has been going on for several years and now we have the biggest differences,” said Joe Galli, vice president of government affairs for the Greater Flagstaff Chamber of Commerce. “The industries with the lowest profit margins are hardest hit, including restaurants, bars and tourism.

“Our business owners keep telling us that when they are told they have to pay a higher wage, they respond by streamlining whether it’s automating, cutting hours or reducing the total number of employees. They pay the higher wage, but they pay it to fewer people and they pay it for fewer hours. “

Increase the wage law stalled for the time being

Now is not the time for high wage mandates that chambers of commerce and corporate advocacy groups are reporting to Congress.

Earlier this month, the US House passed the 2021 Wage Increase Act. The bill calls for the minimum wage to more than double over the next four years, from $ 7.25 to $ 15 an hour.

On Tuesday, Senate Republicans countered a plan to raise the federal minimum wage to $ 10 an hour. According to their plan, companies would have to electronically screen their employees electronically to prevent the hiring of undocumented workers. Arizona is one of about 11 states that are already required to use the E-Verify system.

With some members of Congress demanding higher wages, lawmakers must find solutions to get the lowest incomes without hurting job creation, according to proponents of the economy.

A recent report from the Congressional Budget Office said a minimum wage of $ 15 would result in the loss of an estimated 1.4 million jobs and increase the country’s debt to $ 54 billion over the next decade.

Lose competitive advantage

In Arizona, restaurants, gyms, and other industries still operate with limited capacity requirements. You must have the opportunity to fully recover, business officials said.

In Flagstaff, which is heavily reliant on tourism, employers have seen business costs accelerate “at an unprecedented rate” for both employers and employees as part of wage increases, Galli said. It’s not just small businesses. Some larger employers also report that they have lost hundreds of thousands of dollars in their bottom line.

Galli cited the example of an employee whose childcare costs increased by $ 1,000 a year, forcing individuals to change jobs. A local business owner said they would have to cut their working hours from 250 to 200.

Mark Harris, general manager at Terry Marxen Chevrolet Cadillac in Flagstaff, told the Arizona Daily Sun earlier this year that January’s recent wage increase to $ 15 will add about $ 65,000 to the dealer’s labor costs, excluding overtime or otherwise Increases.

Raising vehicle prices to cover costs is not an option, he said. This would only further affect its ability to compete with other dealers across the state.

“I’m anything to anyone who earns $ 15 an hour. What I am not asking is that Flagstaff be the only one to do this because it puts us at a competitive disadvantage. If the entire state was $ 15, that’s a breeze, ”Harris said. “I’ll be spending nearly $ 200,000 more on labor in 2021 for the same number of hours worked than my closest competitors, and that puts us at a competitive disadvantage. This is my main concern. “

Higher wage mandates penalize Arizona

With Arizona’s minimum wage surpassing other states, employers here are less able to offer benefits like tuition waivers and stock options for employees, said Smith of the Tucson Metro Chamber.

This puts Arizona at a disadvantage when employers and employees are looking for new locations to set up a business.

“Even though we have one of the highest minimum wages and our cost of living is below the national average, we are still only 30th in 50 states’ affordability, while losing the competitive advantages of local businesses that contribute significantly to our local Economy. “

Minimum wage increases in Arizona

January 1, 2018 $ 10.50

January 1, 2019 $ 11.00

January 1, 2020 $ 12.00

January 1, 2021 $ 12.15

Minimum wage increases in Flagstaff

2018 $ 11

2019 $ 12

2020 $ 13

2021 $ 15

2022 $ 15.50

This story was originally published on Chamber Business News.

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