AZ minimum wage bumps to $8.05 per hour on Jan. 1

PHOENIX -- What would you buy with an extra $6 a week?

Two gallons of milk?

A Big Mac meal?

A venti half-caf sugar-free latte?

That's how much more those at the bottom of the pay scale will be making come Jan. 1 when the minimum wage in Arizona goes to $8.05 an hour.

Before taxes.

It's not that businesses necessarily want to pay their workers more. It's that Arizona voters in 2006 mandated that the state have its own minimum wage not tied to the federal figure.

More significant, that law requires annual automatic adjustments tied to inflation. The federal minimum wage goes up only when Congress approves, something that last happened in 2009.

Why $8.05?

It all goes back to that 2006 initiative. It established a state minimum wage of $6.75 an hour, $1.60 higher than what federal law required at the time.

But that law also requires the Industrial Commission to adjust the figure annually based on inflation, as measured as the change in the Consumer Price Index for all urban areas.

So the commission took the current $7.90 an hour minimum wage and multiplied it by the 1.7 percent increase in inflation.

That computes out to about 13.4 cents. But since the law requires rounding to the nearest nickel, the enacted change is 15 cents.

How many workers are affected is unclear, as the state does not maintain such data.

The most recent report from the U.S. Bureau of Labor Statistics shows 17,000 Arizonans 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.

Glenn Hamer, president of the Arizona Chamber of Commerce and Industry, which unsuccessfully opposed the 2006 initiative, said his organization remains convinced that a state minimum wage higher than the federal figure is bad not only for business but for those looking for work.

"It's just another expense that makes it more difficult to hire workers,' he said. Most hard hit, he said are small businesses, particularly in the food service industry.

It is only an 80-cent-an-hour difference from the federal figure. But Hamer said looking at it from an annual basis -- $312 a year -- multiplied by the number of minimum-wage workers "clearly puts downward pressure on employment.' All that, he said is these small businesses hire fewer workers.

Steve Chucri, president of the Arizona Restaurant Association, said he has seen in his industry.

"It's hard to find bus boys anymore,' he said, as restaurants, seeking to keep costs in line, make the wait staff more responsible to clear tables.

And for those establishments that can't cut staff more, particularly in the "quick-serve' segment, the only alternative is higher prices.

He said the differences between what consumers pay in Arizona versus other states which have no comparable state minimum wage may be subtle and barely noticeable. But he said those differences exist.

Chucri said it becomes very visible where the gap is large, relating how a San Francisco restaurant where he was dining said it was adding 3 percent to all bills for employer mandates. That includes that city's $10.74-an-hour minimum wage, one that proponents hope to hike to $15 an hour by 2018 through a ballot measure.

Hamer said the really troubling part is that annual inflationary increase, with higher wages forced on employers who may not be able to afford it.

He acknowledged that the adjustment is based on the change in the cost of goods and services during the prior year. And Hamer, who said he does the shopping for his family, said he has seen prices go up.

But he said that $7.90 an hour is better than nothing, which is what he said a higher minimum wage may mean to some.

Chucri has a somewhat different take on the issue, saying the wages should be set by the free market. He said if restaurants, diners and fast-food joints can't find people at what they're offering, that will raise wages.

Anyway, he said, that minimum wage is really a "training wage,' with most of those at that level in the 18-to-25 age group.

"We don't intend to have a single mother of three make the minimum wage and say it's fine,' he said. Chucri said anyone with experience can demand more.

As it turns out, many Arizona restaurants won't even have to pay that $8.05 figure.

The Arizona law has a major exception: Firms 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 $5.05 an hour.

But state officials say that requires proof that the employees are, in fact, bringing in at least $3 an hour in tips.


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