New minimum wage takes Ariz. into unchartered territory

A decision by Arizona voters to raise the minimum wage to $12 an hour within the next few years is taking the state into uncharted territory. And how it will work out depends on who you ask.

The initiative, which will raise the minimum wage to $10 next year and then gradually increase it to $12 by 2020, was approved by nearly 60 percent of Arizona voters.

That seal of approval will go a long way in helping families most in need, said Tucsonan Phil Lopes, a former lawmaker and campaign volunteer for the initiative.

“The best program for poor people is to put money in their pockets,” Lopes said. “And it’s clear to people that $8.50 in Arizona simply is not enough money for people to live on.”

While Lea Marquez Peterson, president of the Tucson Hispanic Chamber of Commerce, doesn’t deny there is an economic need, she says wage hikes should be left to businesses that are expected to foot the bill.

“I believe most of our businesses want to pay higher wages, but when they are able to and their margin allows it,” said Marquez Peterson, who served as chair of the Prop. 206 opposition campaign.

Had the opposition campaign had more time and resources to educate voters on the consequences, Marquez Peterson said she believes the outcome of the election might have been different.

“Generally, people understood the devastating financial impact . . . when they learn about 206,” she said. “Without the funds to run television commercials, we simply weren’t able to speak to enough people.”

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The initiative, which also requires some employers to provide paid sick leave, will cut jobs and hurt small businesses and young workers, Marquez Peterson said.

Lopes counters that those predictions did not come true when a voter-approved minimum wage increase went into effect.

“It got absorbed quite easily and that was a 31 percent increase, this will be a 26 percent increase in the first year,” Lopes said.

The best evidence, however, of the effects of minimum wage increases comes from natural experiments where researchers are able to study policy changes that occur in one area but not another, said Jessamyn Schaller, an assistant professor in the University of Arizona’s department of economics.

“The issue is that now, we are in uncharted territory with this new wave of ‘high’ minimum wages – $12, $15 per hour,” she said. “We haven’t seen these kinds of changes before so we don’t have empirical evidence on what they will do.”

Arizona is not alone in its experiment with higher minimum wages.

Recent measures elswhere have been successful and pre-election polls showed most voters were in favor, Schaller said. Both presidential candidates also openly supported increasing the federal minimum wage.

“Many in this country support the idea of a ‘living wage,’ meaning that a worker who works full time should be able to support his or her family on their earnings,” Schaller said. “Because of inflation, real federal minimum wages have deteriorated substantially — from a high of around $10 in 1968 — so there is a push to bring it back in line with what it once was.”