By Julio Espinoza, Staff Writer
The General Election ballots are finally arriving in our mailboxes, and they contain a proposition that will have an important impact on our economy. Proposition 206, the Minimum Wage and Paid Time Off Initiative, is on this November ballot as an Arizona estate statute. If approved, Prop 206 could raise the minimum wage to $10 in 2017, and then incrementally to $12 by 2020, and create a right to paid sick leave. But a “no” vote would keep the minimum wage at $8.05, and employers would not be obligated to offer paid time off, leaving the matter to their discretion. Supporters had raised $1.5 million as of October 10, 2016. Certain conservative, partisan, and controversial municipal Chambers of Commerce have launched an opposition campaign at an estimated cost of over $1 million. Most of the polls show that around 56% of Arizonans support Proposition 206. This is not a political or social justice aspiration by itself, but a legitimate business demand that needs to be addressed.
At the end of 2015 the Mayor and Council of Tucson started conversations with local constituencies about raising the minimum wage in that city. This year Flagstaff is voting on an additional minimum wage initiative, Proposition 414, which will incrementally raise the minimum wage in the city to $15 an hour in 2021. At the same time, Colorado, Maine and Washington are also voting on increasing their state minimum wages to between $12 and $13.5.
A minimum wage increase, along with improved ease of doing business, would have a positive impact in local economies; both workers and business owners will be thankful in the long term for the improvement to the economic foundations of small communities in Arizona that struggle with growth, let alone basic subsistence. Any macroeconomic adjustments only translate into development if policymakers find a way to match wage increases with tax credits, income redistribution measures, and more market deregulation.
If we expand the demand side of the economy (income), we will also see an increase in the supply side (goods and services), which translates into economic growth for everyone, whether blue collar or white collar. Along with a minimum wage increase comes more productivity and consumer satisfaction as well as higher inflation rates, which are inevitable with any economic growth cycle. Many of us have enough that we can afford paying extra for a product or service if that translates into reducing income inequality and providing better living conditions for workers on a minimum wage.
Increasing minimum wage does not necessarily translate into poverty alleviation itself as much as it does not necessarily represent imminent bankruptcies and unemployment. The more income households have, the more they are prone to spend per quarter due to the fact that families gain consumer confidence along with discretionary income. Raising the wages of the labor force leads to economic stimulus, lower employee turnover and training costs, a larger talent pool, increased productivity, and customer satisfaction. The net bonus of these conditions: a more competitive business environment. Working families, mostly minorities, are certainly not the only ones that will benefit from a minimum wage increase (economic stimulus), and that is why many cities around the country have been raising minimum wages in addition to courting investment in high wage industries.
In a highly competitive economy, cities want to retain strong communities and competitive economies because they are battling against other cities for local and foreign investments that diversify their economic sectors. For example, we can see transition into advanced industrial sectors in the Phoenix Metro Area where cities such as Mesa have been able to position themselves as operational hubs for big companies such as Apple and have achieved a significant expansion in household income over the last decade. This brings up the question of the kind of state economy we want in the future: an agribusiness based economy with poor infrastructure and lack of human resources or a vibrant and diversified economy where people can study, work, prosper and STAY in Arizona.
The dilemma for the Arizona private sector is to decide between keeping operation costs low (with a high human resources turnover and brain drain), or supporting a minimum wage increase that eventually translates into a vibrant and diversified economy that can host high wage job industries in all our major cities: Health, Education, Aerospace, Technology, and Tourism (HEATT). The dilemma for the general public is how to decide on the kind of information to trust and the leadership to follow. What the business leaders and the general public must do to help our local economy grow is to continue with the educated debate on increasing the income of our households and helping our businesses to be locally sustainable and globally competitive. Ideological opposition based on political party loyalty and old-fashion lobbying is not going to make Arizona more sustainable OR competitive in comparison to our neighbors (California and Texas).
As we need more voices to join the debate and more companies to prosper, our duty as economic and political agents is to make sure that we foster an inclusive dialogue based on macroeconomic theory and facts, not just political ideologies that damage our best business interests. I am very disappointed to see that some so-called business leaders in Arizona do not understand that for growing your “bottom line” you need to grow your “top line” as well. It is very sad to see that their main argument is cutting costs of operations when they should be more concerned on how to be more innovative and competitive in order to acquire and retain new customers and talent pools. They should be preaching about the creation of more value for customers instead of keeping low COGS.
Be informed, ask for facts and do your own research. Do not trust “business leaders” that have a political agenda instead of a business agenda because they do not represent the general interests of Arizona. If you are a business owner and want to know more about how to make your business grow, make an appointment with experts that can help you with a expansion plan, financing, and international trade opportunities. For instance, many T-Birds offer affordable business consultancy services in Arizona.
This November let’s give Arizona a raise. We all deserve it. Our children deserve it.