Tucson voters will decide the outcome of a key initiative on Nov. 2 to gradually raise hourly wages for the city’s lowest earners.
If passed, the Tucson Minimum Wage Act, or Proposition 206, would first increase the minimum wage to $13 in April 2022 and eventually reach $15 in January 2025. After that, wages would increase based on the rate of inflation.
The Southern Arizona Prosperity Alliance, a coalition of Tucson-based nonprofit organizations, fought to get the measure on the November ballot for city residents to decide.
The proposed ordinance also calls for the city to set up an office to investigate complaints from employees who believe they haven’t been paid properly while giving jurisdiction to the City Court to hear civil cases alleging violation of the measure.
Arizona’s current minimum wage is $12.15 an hour, and the Prop. 206 group estimates about 85,000 city residents would get raises if the initiative passes.
National inflation rates are rising — as is the cost of housing in Tucson. To afford a one-bedroom home in the city, the National Low Income Housing Coalition estimates minimum-wage workers would need to work 46 hours a week.
“For most folks in Tucson, if they don't themselves make less than $15 an hour and are struggling, they have friends or family who are and recognize that,” said C.J. Boyd, the campaign manager for Tucson Fight for 15, the group behind the ballot initiative. “Especially with the rent that's gone up so much in Tucson in the last couple years. It's just really spiked; we need to keep up with that.”
But opponents say the statewide minimum wage is already keeping up with inflationary costs. Arizona voters approved a statewide initiative in 2016 that raises the minimum wage based on the cost of living.
According to Michael Guymon, the interim president and CEO of the Tucson Metro Chamber, that inflation-based state minimum wage is already in line with the wages proposed in Prop. 206. The ballot measure sets the citywide minimum wage at $13 in 2022, and the Industrial Commission of Arizona says 2022’s statewide minimum wage will be $12.80. But the statewide wages thereafter aren’t as certain as the ones laid out in Prop 206.
“We already have a statewide minimum wage law that has been passed by the voters. We don't need to set up additional structures where businesses in the same region are governed by different laws,” Guymon said. “Some of those businesses could be governed by different laws right across the street from one another.”
Unknown impact
Across many labor sectors, employers are seeing a shortage of workers. George Hammond, the director of the Economic and Business Research Center at the University of Arizona’s Eller College of Management, said Tucson is also experiencing this trend. But the effect raising the city’s minimum wage would have on employment is uncertain — especially considering the volatile economic impacts of the pandemic.
“We know from the academic research that's been done so far that increases in the minimum wage generally have a pretty small impact on overall employment. Some studies show small positives, some show small negatives,” he said. “What impact will it have if that minimum wage is increased during a pandemic is even harder to tell, just because the labor market is in such a state of flux at the moment.”
Proponents of raising the minimum wage say it’s the necessary step to take to keep up with the increasing costs of living. Hammond said costs are increasing, but so are wages.
“It's likely that wages are rising faster than they were before the pandemic began, partly in response to the shortages that we're seeing,” he said. “There's a lot going on — wages are rising rapidly even without the mandated increase in the minimum wage. It's not clear that that's the major reason to do it.”
Amy Smith, co-owner of Exo Roast Co. on North Sixth Avenue, says “$15 an hour is about the starting point where we all need to be.”
“I believe that all workers have the right to a dignified wage that helps them live their lives, pay for increasing costs of housing, food, gas, energy bills,” she said.
But Guymon argues the minimum wage adoption could make the city less competitive when attracting business to the region.
“One of (Tucson’s) key competitive factors has been low cost of living, low cost of labor,” he said. “If we start to ratchet that up, that could cause some negative effects on our ability to attract companies that are looking at our region.”
Hammond says firms respond to mandated wage increases in a variety of ways, and it’s impossible to know how major businesses in Tucson would react.
“(Firms) can adjust their hours, they can raise prices, they can accept lower profits — some of which might impact prices, some of which might not,” he said. “We don't really know what firms are going to decide to do, but it's likely that some of that would pass through, particularly for the kinds of firms that have the ability to raise prices.”
Tipped workers
Some of the key provisions in Prop. 206 would directly impact tipped workers. State law allows tipped workers to be paid $3 less than non-tipped workers, and the bill would maintain that difference by allowing tipped workers to earn $12 an hour when minimum wage reaches $15.
Grant Krueger, the owner of the dining plaza encompassing Union Public House, Reforma Modern Mexican and Proof Artisanal Pizza & Pasta in St. Philip’s Plaza, said this would take funds away from the lowest paid, non-tipped workers.
“The tipped wage going up actually hurts the full-service restaurant business because it takes away from our ability to pay larger wages to the back of house,” he said. “You're forcing the largest raise on the employees that are already the highest compensated.”
But Smith said the focus should be on paying fair wages to both tipped and non-tipped employees, regardless of the compression issues this may create.
“I don't see a difference between the life of a dishwasher and the life of a waitress or a waiter,” she said. “Both of those people deserve a dignified wage in order to live a dignified life.”
Another key point in the proposition drawing criticism from opponents is a requirement that workers scheduled for at least three hours who have their shift canceled with less than 24 hours' notice must be compensated for three hours’ worth of pay.
“In the service industry, there are a lot of things that happen suddenly that affect our business," Krueger said. "If we have outside patio servers and it rains, what do you do? We believe that's going to be a tremendously cumbersome expense on the industry for situations that are outside of the operator's control.”
Smith agrees the restaurant industry can be unpredictable, and that “especially during COVID, what was predictable three years ago is not predictable anymore.”
“However, I do feel like there has been a persistent problem within the restaurant industry of people getting cut from their shifts when they're expecting six- to seven-hour-long shifts, and then getting cut from it in order for the employer to save on labor costs,” she said.
Krueger’s restaurants are in unincorporated Pima County, and although the passing of Prop. 206 wouldn’t affect his bottom line, he says it would “create an unfair competitive advantage or disadvantage for businesses whether they're on one side of the county line or the other.”
However, Krueger says “the opposition from the restaurant business to Proposition 206 has very little to do with the wage because the wage was going to go up either way.”
Guymon expresses a similar sentiment, saying wages are already expected to increase based on 2016’s statewide initiative. His main concern is the “ancillary, negative aspects that this proposition has within it.”
Enforcement
provides 'teeth'
Prop. 206 not only increases the city’s minimum wage — it sets up specific enforcement mechanisms to ensure workers are earning it.
“Any legal protection that a law provides has to have an enforcement mechanism,” said Billy Peard, an attorney who co-authored Prop. 206. “If it does not have an enforcement mechanism, it's what we commonly refer to as toothless.”
The bill calls for the city to set up a Department of Labor Standards that would investigate complaints against employers paying workers below the bill’s set wages. City workers could access pay and time records, and if the employer is found in violation, could order them to pay back the employee and could even issue a civil penalty of $100.
For repeat violations, the city government could take measures to revoke or temporarily suspend the violator’s business license.
Guymon calls these provisions a “bureaucratic nightmare”
“Businesses will have to, in some time and in many ways, change how their books need to be put together, how their accounting needs to be put together,” he said. “There are a lot of problems from that perspective.”
Prop. 206 also allows employees to bring civil cases against employers in Tucson City Court for violating the ordinance. Advocacy groups and labor unions could also file complaints on behalf of workers.
Upon prevailing in the lawsuit, workers could earn back their court fees and double the amount of wages they proved they’re owed.
“Wage theft in America is massive, it is the largest kind of theft that exists,” Boyd, the campaign’s manager, said. “There was all around a pretty unanimous agreement that if we're going to have this be the law, you have to be able to enforce it.”
Suit provision
is questioned
In his legal analysis of the proposition, City Attorney Mike Rankin said the civil suit provision isn’t legally viable. He says the jurisdiction of the state’s courts is established by state law, and not “local codes.”
“I believe that these sections ultimately can have no legal effect,” Rankin wrote. “Under applicable Arizona statutes, only the city — and not a private party — is authorized to bring a civil action in Tucson City Court for the recovery of a penalty provided by a city ordinance ... the issue of jurisdiction would ultimately have to be resolved through the litigation of those lawsuits.”
Peard said he “forcefully" disagrees with Rankin’s analysis. He points to a provision in state statute that says municipal courts have “jurisdiction of all cases arising under the ordinances of the city or town.”
“The current city ordinance does not allow for it. But we are changing the city ordinance if the voters pass it,” he said.
Rankin also took issue with a part of the proposition that says employers can’t force workers to “receive minimum wage payments using a pay card, reloadable debit card, or similar method that requires the employee to possess a valid Social Security number.”
The city attorney said this is “in conflict with federal and state law,” which requires employees to have valid Social Security numbers.
Peard said that provision doesn’t have to do with requiring a Social Security number for employment, but for payment.
“That's a shorthand for making sure that unbanked persons have a way of receiving payment without having to get the deductions,” he said. “What this provision says is if an employee asks for a secondary form of payment, you have to offer them a secondary form of payment ... that does not require you to possess a Social Security number.”
Further complicating matters is ongoing litigation between the city of Flagstaff and the state. The state is imposing a $1.1 million monetary assessment on the city based on its $15 minimum wage, an initiative passed by Flagstaff's voters in 2016. The state’s assessment comes from a law the state Legislature passed in 2019 that allows the legislature to impose monetary assessments on local jurisdictions with minimum wages higher than the state's.
The lawsuit is ongoing in Maricopa County Superior Court, but Rankin says if Flagstaff loses that case, “it is virtually certain that the state will impose an annual ‘assessment’ against Tucson” — an impossible amount to determine because the state hasn’t established a formula or issued guidance on how those amounts are determined.
“I'm highly confident that that litigation will resolve in Flagstaff's favor, which will essentially be in Tucson's favor,” Peard said.
Voters in the city of Tucson will decide the issue on Nov. 2.
