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Prop. 206

Study: Minimum wage bump would result in minimal job losses

The minimum-wage increase contained in Proposition 206 could mean the loss of as many as 26,000 jobs in 2020 if it's approved by voters, said the Grand Canyon Institute.

Or it could result in no jobs lost.

The group, a centrist Phoenix think tank, on Monday released a study that examined the impact of raising the state’s minimum wage from $8.05 per hour today to $12 by 2020, as spelled out in Prop. 206.

The minimum wage for tipped workers would rise from $5.05 per hour to $9 in 2020.

Prop. 206 is on the Nov. 8 general election ballot. Early ballots will be mailed beginning this week to those who requested them.

The institute analyzed three scenarios and concluded that the most likely outcome, using a Congressional Budget Office approach, is that the state would lose a minimal 13,000 jobs by 2020. Arizona now adds about 15,000 jobs at all pay levels every three months.

And those losses would be offset by the fact that 790,000 workers would get raises, have more to spend and boost the economy.

Opponents of Prop. 206 contend that hikes in government-mandated minimum wages result in higher prices, failed small businesses and job losses.

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"This initiative is bad for Arizona. If it passes, the very people the proposition’s organized labor supporters claim to want to help will be the most harmed," Glenn Hamer, the president of the Arizona Chamber of Commerce & Industry, said in July. "The poor, young people and those with few skills who would benefit most from an entry-level job will find themselves shut out of the job market as employers will have fewer dollars to devote to new hires."

The Grand Canyon Institute noted that higher minimum wages would likely raise overall  prices by 0.5 percent and 1.6 percent and that fast-food prices could rise by six percent by 2020.

But Suzanne Wilson, a spokeswoman for AZ Healthy Families, the main proponent of the proposition, said every time the federal minimum wage has been raised since it began in 1938, employment has risen.

"We can’t allow fear and speculation to hold people back from trying to cover their basic needs.," she said. "This study affirms the drive and support behind Prop. 206. It's about giving hardworking Arizonans the opportunity to keep pace with the cost of living and with more money to reinvest in our income. By voting yes to gradually raising the minimum wage and guaranteeing access to earned paid sick days, Arizona will take a major step toward putting more than three-quarters-of-a-million of our neighbors on a path to economic stability."

In addition to gradually increasing the minimum wage over the next four years, Prop. 206 would also require that employees accrue at least one hour of paid sick time for every 30 hours worked, up to a maximum of 24 hours for a calendar year.

The Grand Canyon Institute said the measure would increase the minimum wage to a level last seen in the late 1960s, when inflation is taken into account.

Workers most likely to benefit from the raises would be those 20 years or older and women, the institute said. Half the gains will go to families with incomes up to $40,000 per year, which is twice the poverty rate for a family of three.

Results would be mixed in rural areas, where wages tend to be lower. The raises would put more of a strain on rural  businesses than urban businesses, said the institute.

The group did not take a formal position on the initiative. Its board of directors includes a bi-partisan group of former state lawmakers, economists, community leaders and academicians.

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1 comment on this story

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Oct 13, 2016, 7:15 am
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It’s been 7 years since the minimum wage was raised.  It is unconscionable that full-time employees must work numerous jobs in order to feed and house their families, while the top 10% of the US population owns 75% of the nation’s wealth.  The arguments that the increase will cause huge job losses and will force small business to close is not substantiated by research.  In fact raising the minimum wage does just the opposite.  http://www.epi.org/publication/webfeatures_viewpoints_raising_minimum_wage_2004/

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