Will Arizona Raise Minimum Wage?
With major changes to minimum wage ahead, it’s a good time for small business owners to review their compensation management practices. This includes everything from base pay to benefits and paid time off.
Annual increases are based on the August-to-August change in the consumer price index for all urban consumers, excluding food and energy, rounded to the nearest 5 cents.
Why is the minimum wage so important?
In general, higher wages increase the economic viability of a company and improve worker satisfaction. This, in turn, helps increase productivity. However, this may also cause prices to rise for businesses as a whole.
Additionally, raising the minimum wage could lead to job losses for companies that are labor intensive. Furthermore, it may encourage job outsourcing to countries with lower labor costs.
In addition, higher wages help workers afford necessities like food, housing, transportation, and healthcare, which can keep them from falling into poverty. Additionally, increasing wages can lower debts for workers like credit card and student loan debt, which ultimately leads to greater purchasing power in the economy. Research spanning several decades shows that while the debate over raising the minimum wage remains inconclusive, overall it is beneficial to workers.
How is the minimum wage determined?
The federal minimum wage is $7.25 per hour and has not been increased since 2009. It is determined by the government based on a formula using a gauge called the Consumer Price Index.
The minimum wage is not the same in every state and is determined by local laws. In Arizona, the minimum wage is determined by a ballot measure statewide voters approved in 2016. Annual increases are based on the year-to-year change in the employment cost index for wages and salaries.
In addition, the city of Tucson has a separate minimum wage rate that is higher than the state rate. Tipped workers can be paid up to $3 less than the state rate as long as their total pay exceeds the minimum wage.
Businesses should keep track of all the rates and plan accordingly. Make sure to also display all state and federal required posters and stay up-to-date on employee rights updates, such as COVID-19.
How will the minimum wage be affected?
With these changes, some restaurants may find themselves struggling to pay their staff. In order to make sure that they can afford to continue paying their employees well, some businesses will have to cut costs or close altogether.
In addition, many tipped workers in the City of Tucson will see their wages increase. Tipped employees include workers like servers, bellhops and hairdressers. Currently, they can earn up to $3 less than the minimum wage, but the new law will require them to be paid at least the minimum wage.
The increase is due to a ballot measure that was passed by voters in 2016. Proposition 206 bumped up the city’s minimum wage in four steps, from $8.05 in late 2016 to $12 by Jan. 1, 2020. Increases will now be tied to the national Consumer Price Index for Urban Workers. It’s calculated from September through August each year, and adjustments take effect the following January.
What can you do to prepare for the minimum wage increase?
If you’re a small business owner, you need to prepare for minimum wage increases. You can begin by looking at your budgets and creating a conservative employee growth plan. This will help you stay within your company’s means and avoid hiring more employees than you can afford to pay.
You should also consider how a minimum wage increase will affect your restaurant’s prices and profitability. Labor costs typically account for a significant percentage of the cost of a meal, so raising the minimum wage will have a ripple effect on the entire industry.
Remember that the Arizona minimum wage is adjusted each year according to the Consumer Price Index. You will need to ensure that you are identifying all of your staff who will be affected by these annual adjustments and make sure that they appear on the “HR Medium” provisioning access report in UAccess Analytics. Employees who receive tips and some student workers are exempt from the regular minimum wage, so they can be paid $3 less per hour.