Following a ballot measure to raise Flagstaff’s minimum wage, the mandate for all employees hit $18.35 an hour this year. Federal employment data shows this has hurt the city’s restaurant industry.
Proposition 414 – passed in 2016 – ratcheted up the state’s minimum wage to $15 an hour by 2021. The law also eliminated the city’s tip credit as of January 2026.
High wages like this are opposed by a majority of economists – who say wage mandates like Flagstaff’s can reduce employment, trigger automation of employee tasks, and even make it harder for businesses to operate at all.
Federal quarterly jobs data shows full-service restaurants in Flagstaff have been hit hardest. The combination of rapidly-escalating minimum wage hikes plus elimination of the tip credit means the mandate for restaurant workers has spiked roughly 130% since Proposition 414 passed.
The latest available data show in March 2026, Coconino County (where Flagstaff is the largest city) had lost roughly 4.9% of its full-service restaurant jobs compared with the same period in 2022. By comparison, the county’s overall private employment grew more than 5.6% over the same period. Flagstaff accounts for roughly 60% of Coconino County’s total employees, according to the Bureau of Labor Statistics.
This trend is even more stark when looking at pre-COVID employment levels. Coconino County’s total private employment peaked in March 2019, and after recovering from COVID through 2020 and 2021, bounced back at even higher employment levels by 2022. For restaurants, this was not the case. Following the same COVID recovery period, full-service restaurant jobs were still down -6.3% from pre-COVID levels, and have declined since.
While other economic factors can contribute to employment trends, changes to Flagstaff’s minimum wage and tip credit between 2022 and today have made it harder for local restaurants to recover from the pandemic, and increase the volatility of operating in the Flagstaff market. For a city that thrives due to its robust hospitality industry, recent employment trends should be cause for concern.