As minimum wage is set to increase local business leaders are wary of bottom line

Scottsdale resident Pascal Choucair proudly displays his "I voted" sticker Tuesday, Nov. 8. (Independent Newsmedia/Melissa Fittro)

Scottsdale resident Pascal Choucair proudly displays his “I Voted Today” sticker Tuesday, Nov. 8. (Independent Newsmedia/Melissa Fittro)

Arizona voters have approved an increase to minimum wage statewide and ratified the creation of a worker’s right to paid sick time off from employment emboldened in Proposition 206.

Prop. 206 was approved with 644,729 “yes” votes or 58.99 percent of total votes cast, according to unofficial results available at the Maricopa County Recorder’s Office.

The measure is meant to evoke a minimum wage of $10 in calendar year 2017 while then incrementally increasing that amount to $12 by 2020, the proposition language states.

While many believe higher wages for entry-level employees is a good thing — proprietors and business advocates say some adverse impacts to both current employees and consumers will arise.

Mark Hiegel

Mark Hiegel

“We came out opposed to the increase in minimum wage,” said Scottsdale Area Chamber of Commerce President and CEO Mark Hiegel in a Nov. 9 phone interview.

“It was about 60 percent of our membership that were opposed to it. The common theme from our membership was people running their own businesses should be able to make those decisions on their own.”

Mr. Hiegel says government should not be mandating wages for employees.

“I understand people’s feelings that their rate of pay needs to be at a certain level but we think business owners can do that themselves. This is not something the government should control or tell how businesses should do it.”

Anna Siner, CEO and founder of My Sister’s Closet, says Prop. 206 is bad for business.

“Every time the government steps in and says what a business should do all they are doing is setting up more obstacles to success,” she said in a Nov. 9 phone interview. “While our prices are fixed in retail consignment, but what we will have to do is look at all of the benefits we offer our employees. I can’t give paid sick time off to entry-level hourly employees.”

My Sister’s Closet, which features recycled designer apparel, and its sister companies — My Sister’s Attic and Well Suited — features 14 locations here in Arizona with two brick-and-mortar locations in Scottsdale. Over the last seven years My Sister’s Closet has seen steady growth in central Phoenix and surround communities.

Ms. Siner says Prop. 206 is going to force her into difficult decisions.

“I am so bottom-line oriented that if I have to come from $9 an hour to $12 I will make that happen. But guess what? Some are not going to make the cut,” she said of a business owner’s perspective. “Quite frankly it is going to make me clean house, which is something I should do any way. This will push me along to do it.”

While Ms. Siner says minimum wage is a bit low in Arizona, she also says entry level employees at $12 an hour can be problematic.

“Minimum wage is low, I will give you that,” she quipped. “And, we don’t pay anyone that wage, most of our employees are at $10 an hour, but a lot of these entry-level positions are kids living at home — it gets them into the workforce.”

Kita Centella, owner and founder of Loose Leaf Tea Market in central Phoenix, says the impacts of prop. 206 will vary from business to business.

“It is going to be hard and the prices will go up,” she said in a Nov. 9 phone interview. “I do think it is good for humanity as long as humanity doesn’t get punished by all of the businesses raising prices and everything else.”

Ms. Centella says minimum wage has not increased as the cost of living continues to rise year after year.

“The cost of everything continues to rise where eventually it won’t even matter what the minimum wage is,” she said. “I just think the overall structure of basic needs is so expensive and being able to meet that is really the problem.”

Arizona’s minimum wage is at $8.05, and the federal minimum wage rate is $7.25. The pressure of living on minimum wage is something Scottsdale resident, Josh Salgado said he has experienced.

“I just think that it’s kind of realistic that minimum wage goes up,” he said after voting at Hohokam Traditional School on Nov. 8. “Things are getting expensive and for somebody to live off of $8 an hour, is something that’s not actually do-able. It’s do-able, but it’s really stressful at the time and I’ve been through that so I’m OK with the increase.”

Prior to the election, the Greater Phoenix Chamber of Commerce publicly opposed the proposition.

“While we wholeheartedly support hard-working, healthy families and fair wages, Prop. 206 is not an effective economic policy,” said Greater Phoenix Chamber of Commerce Vice President of Public Affairs Mike Huckins in a Nov. 9 prepared statement.

“In fact, this measure has the potential to eliminate more jobs than it would create. In addition, it does nothing to address local governments adopting a higher minimum wage above what this measure calls for, furthering the dangerous potential for a patchwork of wage and benefit policies across the state.”

The Phoenix chamber fears the proposition could:

  • Disproportionately affect small businesses by limiting their ability to grow and hire more employees;
  • Force employers to raise prices for goods and services to remain profitable; and
  • Cause business owners to have no other recourse other than to lay off employees or reduce their hours.

“The Greater Phoenix Chamber of Commerce is a pro-business, non-profit organization focused on being a catalyst for economic growth and job creation … policies such as this hinder only that effort, not help it. This measure would limit the ability of a small business to grow,” said Todd Sanders, president and CEO of the Greater Phoenix Chamber of Commerce, in a Nov. 9 prepared statement.

Editor’s note: North Valley News Editor can be reached at tthornton@newszap.com and Reporter Melissa Fittro can be reached at mfittro@newszap.com

Northeast Valley News Services Editor Melissa Rosequist can be e-mailed at mrosequist@newszap.com or can be followed on Twitter at twitter.com/mrosequist_.

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