The State of Arizona’s minimum wage requirements will increase by 15 cents on Jan. 1, 2013, raising hourly minimum wage from $7.65 to $7.80 – 55 cents above the federal hourly minimum wage requirement.
This increase was not arbitrary, but was approved by voters in the Raise the Minimum Wage for Working Arizonans Act in 2006. This Act not only established an Arizona minimum wage, but also provided annual increases based on cost of living increases. According to a press release by The Industrial Commission of Arizona, the U.S. Consumer Price Index increased by 1.7 percent from August 2011 to August 2012.
According to the approved resolution of Oct. 17, 2012, by the ICA, the 1.7 percent CPI increase will result in a 13-cent adjustment, raising the minimum wage from $7.65 to $7.78, which according to A.R.S. § 23-363(B) requires “the amount of the minimum wage increase rounded to the nearest multiple of five cents,” to $7.80.
A 15-cent increase can seem insignificant to generate more funds for the state, but according to the U.S. Bureau of Labor Statistics, 85,000 Arizonans made minimum wage in 2011. If the number holds the same for 2013, on an average 40-hour work week, minimum wage workers will receive roughly $2 million per month in payroll increase, which means the State of Arizona’s payroll tax will also benefit from the hourly minimum wage increase.
Regan Ross, owner of Schlotzsky’s, said that the increase will not be detrimental to her payroll. “My starting wage is $7.75, so I don’t think going up a nickel will affect my business,” she said.
Ross also stated that the combination of minimum wage increase, tax changes and cost of gas have already affected her business. “My vender’s are putting minimums for deliveries and decreasing their route frequencies,” Ross said. This will cause Ross to expend more money to maintain the same stock amounts, which can cause a cash flow problem.
Peter Noval, owner of Jersey’s Grill, doesn’t think that the increase will be felt at first. “I think it will hurt a little bit,” he said. Eventually there will be an increase in our expenses.”
What Noval is talking about is the trickle down effect, where any increase, whether gas, minimum wage or specialized taxes on a specific industry or product, will eventually see the consumer paying the bill.
Noval has a clear understanding how 15-cent increase in hourly minimum wage can affect other avenues of his business, but is determined not to let it affect how he runs his business.
“I am not going to change our product,” Noval said. “We’re still going to offer the best damn food in town for the same price.”
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