Business Advocacy

Youth Employment Bill to Revive Student Starter Jobs By Victoria Harker Reprinted from Arizona Chamber Business News

A bill to boost part-time employment for students in Arizona is headed to the Senate this week, and the sponsor is hoping it will garner enough votes to go into effect by summer.

Under the legislation, employers would be allowed to pay student workers less than the state’s minimum wage under certain conditions. They must be full-time students, younger than 22 and work no more than 20 hours a week.

The bill, H.B. 2523, is needed to alleviate high youth unemployment that is inching close to 12 percent, said the sponsor of the bill, Rep. Travis Grantham of Gilbert.

“We need to stop the unintended consequences of the high minimum wage, which has effectively blocked young inexperienced part-time workers out of the workforce,” Grantham said. “I want those individuals to be given an opportunity to get a first job and build a resume. Not only is it important to the worker but it’s important to businesses that would like to hire them.”

Arizona voters approved multi-year wage hikes when they passed Proposition 206 in 2016. The initiative required that wages be increased incrementally every year for four years, from $8.05 an hour to $12 an hour by 2020. The law increased sick pay provisions, too.

Higher wages forcing out youth workers

Prop. 206 was intended to help raise incomes for working families. But it has ended up reducing much needed starter jobs for youth, Rep. Grantham said.

Since the multiyear increases started in 2017, restaurants, university food courts, hotels, manufacturers, group homes and other businesses have reported cutting back on hiring unskilled and low skilled young workers.

“We’ve targeted trying to eliminate those jobs,” said Bill Riddle, who owns the successful Valle Luna Mexican restaurant chain in the Phoenix area with his wife, Janie. “They make great future employees but to bring them in and train them and put a lot of money and effort into educating them on their first job is crazy because the money that it takes to underwrite them then is being taken away from the middle-class worker, the person who should be paid on performance.”

With more than 270 employees, Bill Riddle said their labor costs increased $401,678 the first year even though their employees earned more than minimum wage. When the final increase kicks in next year, it will have cost them $2.3 million in additional labor costs, he said.

Businesses failing under multi-year wage hikes

Many businesses that rely on minimum wage workers cannot afford a 50 percent increase in labor costs under Prop. 206.

Restaurants that rely heavily on unskilled youth, have been among those hardest hit.

Even established businesses like the longstanding Las Margaritas in Tucson are suffering. Owner Terry Morse announced in November she was closing the location because of the wage hikes, rising sick pay and other reasons. Another Tucson mainstay, Zivaz Mexican Bistro, cited the wage hikes when it announced it was closing in July.

In Flagstaff, jobs for youth are “fading away” because of the wage hikes, Chamber President Julie Pastrick said in a letter supporting H.B. 2523.

Kelly Hibbs, the owner of Cultured Yogurt in Flagstaff, closed her small shop last year after a potential buyer backed out after learning of Arizona’s minimum wage hikes, she told the Arizona Daily Sun newspaper.

“This is heartbreaking for us to have it end this way. We loved the people who worked for us and our customers,” Hibbs said. “It’s not that we didn’t want to pay our employees more. We just couldn’t afford to do it.”

Industry supports H.B. 2523

Industry leaders, chambers and trade associations support Grantham’s bill to help students and industry including the

Arizona Restaurant Association, the Arizona Chamber of Commerce and Industry, the Greater Phoenix Chamber, and the Greater Flagstaff Chamber of Commerce.

The bill would allow employers to hire students part-time for as low as the federal minimum wage, $7.25. Currently, minimum wage in Arizona is $11.

On Thursday, it is set to go before the Senate Commerce Committee. Its passage, however, is not certain.

Grantham said he pulled the bill from being heard by the committee on March 14 when the vice chair, Sen. Tyler Pace, expressed concerns including the law might cause the loss of jobs for higher paid employees.

Grantham said he has been working with Pace to find a resolution. Whatever Pace decides, his vote is needed for it to

Developmentally Disabled Emergency Funding Stalls in State House

By Joe Galli

The Arizona House of Representatives will hopefully soon take up Senator Sylvia Allen’s bill, SB 1225, which passed the Arizona Senate 24 – 6 with bipartisan support in February. The emergency funding bill has stalled in the state house because members of the state house see the funding as a bailout for Flagstaff disabled provider non-profits, due to the City of Flagstaff’s wage mandates.

Senior Advisor for Public Policy, Joe Galli, spoke directly with Representative Bob Thorpe about the situation in recent weeks. “Representative Thorpe is doing everything he can to get that emergency funding to our non-profit providers,” Galli stated. “Unfortunately, not everyone understands the funding predicament our local community non-profits face, as many of them have moved, and many more are looking at uprooting their services out of town,” Galli continued.

Senator Allen’s bi-partisan supported funding bill has stalled in the Arizona House because some state representatives believe the City of Flagstaff should have a financial burden to bear, as well, and that taxpayers in other parts of the state, should not be bailing out City of Flagstaff’s non-profits for bad policy adopted by City of Flagstaff voters (wage mandates).

Representative Thorpe is working on a way for the City of Flagstaff to be financially accountable to the community’s non-profits to help alleviate the need for state emergency funding.