Arizona minimum wage to rise 10 cents to $7.90 an hour come January - East Valley Tribune: Business

Arizona minimum wage to rise 10 cents to $7.90 an hour come January

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Posted: Wednesday, October 16, 2013 6:09 pm

Come January, Arizona's minimum wage workers will be able to afford an extra Big Mac a week.

But not if they want fries and a drink with it.

The state Industrial Commission voted Wednesday for a 10-cent-an-hour hike in the state minimum wage. That will bring the figure to $7.90 an hour.

By contrast, the federal minimum wage remains at $7.25 an hour, a figure it has been stuck at since 2009.

While the commission vote was unanimous, it's not like the members really had any choice.

A 2006 voter-approved law established a state minimum wage of $6.75 an hour, $1.60 higher than what federal law required at the time. More to the point, that law requires the commission to adjust the figure annually based on inflation, as measured as the change in the Consumer Price Index for all urban areas.

That figure for this year was 1.5 percent, which computes out to an 11.7 cent hike.

But Karen Axsom, director of the agency's labor department, said the law also requires all figures to be rounded to the nearest nickel. Hence the extra dime, starting January 1.

That translates out to $4 a week for a full-time worker, at least before the government gets its share. For the record, that Big Mac is running $3.59, plus tax.

Axsom said her agency has no figures of how many workers are at the $7.80 level now and will be directly affected.

The closest comparison comes from the federal Bureau of Labor Statistics.

Its 2012 report, the most recent available, had 17,000 working at the $7.25-an-hour federal minimum wage -- and another 51,000 paid less than that. But the agency cautions that includes those whose jobs are exempt and does not mean employers are violating federal law.

That 17,000 figure of minimum wage workers is bound to be higher at Arizona's $7.80-an-hour rate.

It's not just those at the bottom who will feel the effects.

"It's a 'rising tide raises all boats,' '' said Steve Chucri, president of the Arizona Restaurant Association, whose industry employs about 260,000 in the state. "So then the sous chef and some of the other salaried folks also want to get raises as well.''

With that in mind, Churcri's organization is weighing whether to ask voters to reconsider the 2006 initiative.

"It's against my fundamental belief, and that of many in my industry, that these folks get raises regardless of job performance,'' said Steve Chucri, the organization's president.

"They get raises based on the CPI,'' he continued. "And I think that chokes the free enterprise philosophy that we all do well when we all perform well.''

He said all workers, good and bad, will get that increase.

Chucri does not dispute that, as the consumer price index shows, these same workers are paying more for the things they need to buy, including food, gasoline and clothing. So keeping their wages the same even as inflation boosts the cost of everything else amounts to an effective pay cut, as their paychecks will buy less.

"But I would also say that, in the private sector ... not even salaried people get raises every year,'' he said. "I don't see that as a reason to justify automatic minimum wage increases.''

Chucri said business owners recognize the value of their "team members'' who get up every day and go to work.

"The idea isn't how can we cheat these people,'' he said. "The idea is how can we pay them what we can afford to pay them and not have that Big Mac go up, not have menu prices go up.''

If the public won't accept higher prices, Chucri said the result will be that restaurants have to do more with less. So rather than having four busboys, Chucri said an establishment might have only two and tell servers they need to help clean off tables.

He said the cost of labor runs as low as perhaps 22 percent at fast-food restaurants, where there's no need to hire anyone to do the dishes, to 30 percent at more upscale establishments.

The Arizona law has a major exception: Companies whose workers earn tips get a $3 "credit'' toward the wages. That means even with the hike, those workers still could be paid as little as $4.90 an hour.

Axsom noted, though, that requires proof that the employees are, in fact, bringing in at least $3 an hour in tips.

Chucri said his association may forego seeking repeal of the Arizona law to joint with affiliates elsewhere to battle a potentially bigger problem: President Obama has said he wants to boost the federal minimum wage to $9 an hour and, like Arizona, include automatic cost-of-living increases.

History of Arizona's 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

-- Sources: Industrial Commission of Arizona, U.S. Department of Labor

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