Arizona Small Businesses Raise Prices After Minimum Wage Law

Date: February 28, 2017

Some Arizona small businesses are responding to January’s minimum wage hike by cutting hours, laying off staff, or raising prices to meet the higher costs of doing business.

Proposition 206, which went into effect in January, raised minimum wage across the state from $8.05 to $10 per hour and required paid sick leave for employees.

A Tempe Chamber of Commerce survey reported 38 percent of Tempe small businesses had to increase prices by as much has 10 percent, and 32 percent will have to cut hours as a result of the new law, according to The Arizona Republic. Six percent said they would lay off employees. Almost half reported no change, but for the businesses that have had to make cutbacks, it’s tough on both the business owner and the employees.

“Proposition 206 is not stopping any new people from opening businesses,” Christopher Samuels, director of communication for the Tempe Chamber of Commerce, told the newspaper. “Instead it’s more becoming an obstacle for existing business owners.”

It’s not just Tempe—small businesses elsewhere in the state have also reported having to raise prices and cut staff.

Justin Oldaker, CEO of By Your Side Senior Care in Tucson, told the Arizona Daily Star he had to raise prices and has already lost 10 percent of his client base.

And the situation could get worse, with the state’s minimum wage set to rise to $10.50 in 2018, $11 in 2019, and $12 in 2020.

In Flagstaff, which voted for a $12 an hour minimum wage set to go into effect in July, the city council voted not to hold a special election in May on repealing the wage hike. Instead, voters will get to decide on the issue in November 2018. The city also might also consider amending the minimum wage hike.

Flagstaff’s wage is scheduled to rise to $15 an hour by 2021.

Meanwhile, the Arizona Supreme Court has agreed to hear a legal challenge to the new statewide minimum wage.

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