Arizona law makes cities pay for increasing their minimum wage

ARIZONA - Arizona cities and counties that raise their minimum wage above that of the state could be forced to cover the extra associated costs under a new law that goes into effect Aug. 27.

Under the guidelines, part of House Bill 2756, officials will calculate how much money these local governments must reimburse the state. According to the Arizona Republic, when cities raise their minimum wage, the government ends up having to pay more for services in that area by increasing wages for government contractors.

For example, House Appropriations Committee Chairwoman Regina Cobb (R-Kingman) told the Arizona Republic that the state received a request to increase funding for organizations that provide services to people with developmental disabilities after the city of Flagstaff raised its minimum wage. Arizona pays for these services, so the workers' higher minimum wage increased the state's costs.

"We don't feel the taxpayers around the state should be forced to bear the burden of that additional cost," Cobb said.

In 2016, Arizona raised its minimum wage to $11 an hour in 2019 and $12 an hour in 2020 (under Proposition 206), while Flagstaff raised its minimum wage to $12 in 2019 and $15.50 in 2022. Under Flagstaff's law, the city's minimum wage must always be at least $2 more than that of the state, so an increase in the state's minimum wage would also mean an increase for the city.

Opponents of the new law argue that its designed to keep localities in check and discourage other cities from joining Flagstaff in raising their minimum wage.

"The message is: Other cities, you do this at your own peril," state Rep. Randall Friese (D-Tucson) told the Arizona Republic.

Minimum wage rates are a topic of contention in Arizona, but a recent study by the Grand Canyon Institute, an Arizona-based private think tank, found that the state's minimum wage increase has largely benefited food service workers.

Employees in the food service sector have seen higher wages (a 19% increase in hourly pay) and incomes (a 14% increase), the authors found. At the same time, they noted that there is no clear evidence of job losses.

"Certainly this is good news in the sense that people who are low-wage workers, many of whom struggle to make ends meet, are in a much better position in Arizona as a consequence of Prop 206 than they were before," Dave Wells, the Grand Canyon Institute's research director, told KTAR News.

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