Flagstaff companies are struggling to cope with the state's highest minimum wage, set in 2016 as voters pushed for a living wage to be set for workers.
The state minimum wage hit $ 12 an hour in January, a few years after voters approved a gradual approach to increasing wages. But Flagstaff has introduced even more aggressive wages, which are now at $ 13 an hour and will hit $ 15.50 an hour in two years – exceeding the current minimum wage in New York, according to the Department of Labor.
Voters approved the 2016 measure known as Proposition 414 to make Flagstaff more affordable for workers in a community where tourism is a large part of the economy. Some city and business leaders argue that higher minimum wages will attract highly skilled workers, while others argue that small business owners cannot afford to pay more workers without reducing working hours, and warn of unintended consequences.
The situation for the city is further complicated by a 2019 state law requiring cities with an hourly minimum of more than $ 12 to pay the state the difference. Flagstaff could be forced to repay more than $ 840,000.
The controversy continues to divide Flagstaff residents, some said.
"Splitting and pointing don't get us anywhere," said business owner and city council member Jamie Whelan. "It is important that we do not split up in our city and become solution-oriented."
"Band-Aid on Broken Arm"
Flagstaff's minimum wage rose to $ 13 on January 1, the day the state wage hit $ 12. But sports store employee Cullen Hamblen said his life hasn't changed much as the cost of rent and food increases along with wages.
"It's like putting a plaster on a broken arm – addressing something but not resolving it," said Hamblen.
Life in Flagstaff, home to nearly 72,000 people, can be costly compared to other US cities, as Whelan and co-entrepreneur Scott McPeak acknowledge.
"If you're from western Nebraska, where I do, yes," said McPeak, it is affordable to live on the minimum wage. "If you live in Flagstaff, Arizona, which is $ 300 a square foot for a house, no."
Whelan estimates that the living wage in Flagstaff is now $ 27 an hour, more than double the minimum wage.
However, the wage increase has brought about some changes.
Whelan, who owns Old Town Creperie in downtown Flagstaff, said she needed to cut the number of employees and cut their hours. It hurt her, she said, because her employees are like family.
The higher hourly wage was aimed at bigger companies like Walmart, but it was booming against small business owners, she said.
But McPeak, who runs the Olive the Best oil and vinegar business with his father, said paying a good salary brings more employees into the workforce and attracts higher quality employees. He said he trusted his two part-time workers to do business well.
"The staff manage themselves and that works for me," he said.
McPeak recognizes that this can be more difficult for food workers as restaurants require larger staff. McDonald & # 39; s and other fast food chains have introduced computer kiosks where customers can order, reducing the number of employees.
However, a higher minimum would create more competition for jobs and encourage employees to create better résumés and have stronger work ethics.
"People adapt," said McPeak.
Wage supporters win council battle
Several months after 54% of Flagstaff voters approved Proposition 414 in 2016, opponents tried to overturn the increase. After a controversial city council meeting, the city council voted 5-2 in favor of the voters' decision.
"We wanted to do what is right in the community," Mayor Coral Evans said during the 2017 meeting. Executives who tried to invalidate Prop 414 just months after it was adopted were doing the community a disservice, she said.
Flagstaff's wages are similar to California's, where companies with 26 or more employees pay $ 13 an hour. Washington State, the District of Columbia, and New York have higher minimum wages. Flagstaff's minimum hourly wage will reach $ 15.50 by 2022.
Arizona is one of 18 states where the minimum wage automatically adjusts to reflect increases in the cost of living, according to the Economic Policy Institute. State lawmakers tried to lower the minimum wage over the past year based on factors such as college attendance and the number of hours worked, but the move failed.
Whelan said Flagstaff's raise could have unintended consequences. While a minimum of $ 15.50 isn't that much – $ 32,240 a year – it could still prevent families from qualifying for some federal benefits, she said.
Parents who previously qualified for Head Start, which prepares young children for school, are now making too much to get the benefits, even though they still cannot afford to pay for subsidized school readiness programs.
"Your kids can't join a Head Start program because you're making $ 10 more a year or whatever a year," Whelan said.
And the Flagstaff administration will be punished, she said. The state will require Flagstaff to reimburse the state for the minimum wage gap – perhaps up to $ 840,000 over the next two years, according to the Arizona Daily Sun. Whelan said any city that increases its minimum wage will have to pay the difference to the state.
Whelan said the Flagstaff residents just wanted to take care of the workers, but that means defying the wage status quo in Arizona.
"At the moment we are not supported," she said.
Story by Dzevida Sadikovic, Cronkite News