Raising state's minimum wage may be Arizona's best option, Ducey says

PHOENIX — He doesn’t believe government should be in the business of telling companies how much they have to pay their workers.

But Gov. Doug Ducey finds himself in the position where he is leaning toward supporting a ballot measure that would boost the state minimum wage even higher than it is now.

It’s not that Ducey thinks mandating that companies pay $9.50 an hour by 2020 is a particularly good idea. Ducey said the measure, being pushed by the Arizona Restaurant and Hospitality Association, would preclude an even bigger evil: allowing Arizona communities to set their own minimum wages even higher.

In an interview with Capitol Media Services over issues of jobs, employment and the economy, the governor also:

• Said he believes requirements for overtime for some workers beyond 40 hours a week make no sense.
• Said health insurance should not be tied to employment, saying some people get stuck in jobs solely so they don’t lose their benefits.
• Questioned why prescription drugs cost so much more in the United States than elsewhere.

It is the question of what should be the state policy on wages that is the most immediate issue.

Prior to 2006 Arizona employers were subject only to federal wage laws, with its minimum $5.15 an hour.

That year, voters approved creating a state minimum wage of $6.75 an hour.

But the difference between Arizona and the feds does not stop there.

While it takes an act of Congress to boost the federal wage, the Arizona law requires annual increases tied to inflation. The result is that Arizona employers now have to pay at least $8.05 an hour; the federal wage is $7.25.

Of greater concern to some business groups is that the Arizona law specifically allows local communities to create their own “living wage” ordinances with even higher figures. And a group in Flagstaff already is seeking a vote to set the minimum wage there at $15 an hour by 2021.

The restaurant group is asking state lawmakers to put a measure on the ballot that would preempt such local options, essentially asking voters to override what they approved in 2006.

Recognizing the difficulty of that, they have added a sweetener: Wages would go to $9.50 an hour statewide by 2020. And the move would preserve the inflation indexing, albeit with a one-year delay.

How much more that $9.50 figure might reach — other than what otherwise will occur automatically — is hard to predict because it depends on inflation.

Assuming 2 percent year-over-year growth and a requirement to round to the nearest nickel, the current law would bring wages in Arizona up to about $8.70 by 2020.

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Tipped workers could do worse under the restaurant association proposal because of a change in how the industry wants to calculate its non-wage earnings.

As a ballot measure, Ducey would not have the option to sign or veto it. But his position could affect what voters do. And the governor acknowledged the difficulty of deciding a position.

“I always have concern when government is pricing a good, service or labor and locking it in,” he said. Ducey said the role of government is to “stay out of the way, to make sure citizens are protected where necessary, where consumers are protected, but not to try to overregulate the price of goods or services or labor.”

And he acknowledged that the restaurant proposal, which he wants to study further, would push up wages even higher than what they otherwise would be. But the governor said he worries about not preempting local options.

“What I’m opposed to is a patchwork of different wage laws around the state,” he said, saying it makes it difficult for companies with multiple outlets to operate in Arizona.

“I’ll give you an example: How do you tell the difference between Tempe and Mesa in terms of where one starts and the other begins?” he asked. “I think a proposal that would have a consistent policy across the state would be a positive one.”

Ducey brushed aside questions of whether local options make sense, given that it’s more expensive to live in some communities, like Flagstaff, than in others.

“What I want to see is everyone make more money than the minimum wage,” the governor said. And he said the problem of what companies have to pay should take care of itself.

“When you’re an employer and need employees, you’re going to have to pay what it takes to get that employee into your business to do the work that’s necessary,” he said. “So I always want to see employers have the flexibility that they’re able to access the labor that they need.”

Ducey said he sees current federal laws on a 40-hour work week and time-and-a-half pay for beyond that in the same light.

“I think it really depends on the job and the business,” he said.

The governor said there are many jobs that “aren’t so much punch-in and punch-out,” where greater flexibility should be allowed. And he said that works both in the interest of the employer and the workers.

“I think that we limit some people who want to take on more responsibility in organizations by saying, ‘You must leave at 5 p.m.’ or that there’s a mandatory payment that comes along with that,” Ducey said. Anyway, he said, in a growing economy “good people are traditionally able to go elsewhere if they’re being mistreated.”

Ducey’s comments come as the Obama administration pushes changes in labor rules that actually would require employers to pay overtime to more workers.

Right now, for example, someone who is a manager is ineligible for automatic overtime pay if he or she earns $23,660 or more. The new proposal would raise that figure to $52,000, a move than could affect 5 million workers.