Arizona Chamber of Commerce: Warnings about Proposition 206 already coming true

Posted at 7:08 PM, Jan 02, 2017
and last updated 2017-01-03 12:12:31-05

Those making minimum wage just got a raise, courtesy of Arizona taxpayers.

The new minimum wage in Arizona is now $10 an hour. While that will mean fatter paychecks for some, those who campaigned against Proposition 206 say their warnings are already becoming a reality.

The Arizona Chamber of Commerce says the raise may not go as far as people are thinking, as many local businesses started increasing prices effective January 1.

"We know this is going to cost jobs, we know some businesses will go out, we know that wages will increase for some," said Glenn Hamer, President and CEO of the Arizona Chamber of Commerce.

Officials say they are already hearing stories from business owners who will be hard hit by the big rise in labor costs. In Flagstaff, an additional local ordinance will take the minimum wage up to $15 by July, an increase businesses there say will be a major shock.

Hamer said Arizona's minimum wage is now on par with many parts of New York state, where the cost of living is much higher. He blamed out of state lobbyists for spending a lot of money on the initiative without really caring about the bigger impact to the state.

Advocates for minimum wage workers called the law going into effect a big victory for families struggling to pay the bills. Michael Madrid, a minimum wage employee at a local record store, says he was excited about the raise but his enthusiasm has since cooled off.

"Initially I was like 'Hip-hip-hooray!' because I've got some more money in my pocket now, I can afford more things which is great," Madrid said. "Long term, I'm hearing some rumblings of job layoffs that do worry me."

Hamer worried that some small business owners might not be able to afford the sudden increase in labor costs.

"Let's remember, for small biz labor is number one cost. What are they going to do? Some are going to lay off workers, a lot are going to automate, some will close," said Hamer.

Chamber officials say they have been studying other cities that have had similar wage increase in recent years. Hamer said in Seattle the wage increase did not help the economy. Studies showed 1,000 fewer restaurant jobs posted a year after the wage increase.

While Prop 206 is already in effect, it's still facing a legal challenge. Chamber officials are hoping to block the measure, calling it unconstitutional as there is no revenue source attached.

Hamer said the state's surplus budget could be wiped out by having to pay higher wages for some state workers.

A judge is expected to rule on it in February.