Flagstaff considers a do-over on Fight for $15
Author: Michael Saltsman & Samantha Summers
Publication Date: November 2018
Newspaper: Washington Examiner
Topics: Living Wage
Following Amazon’s announcement that it was raising its starting pay rate to $15 an hour, Sen. Bernie Sanders, I-Vt., said Congress should mandate the same for the entire country. But one of the few U.S. locales to actually embrace a $15 minimum wage — Flagstaff, Ariz. — is currently having second thoughts about the merits of the policy and might soon undo it.
The story starts in 2016, when labor groups from in-state and out-of-state (as far away as New York) helped finance Flagstaff’s Proposition 414 to raise the city’s minimum wage by 93 percent to $15.50 and to raise the base wage for tipped employees by more than 200 percent. The ballot measure passed, and the negative consequences followed almost immediately. Country Host West restaurant and Cultured frozen yogurt were two of the first victims; one business owner explained the reason for the closure: “It’s not that we didn’t want to pay our employees more. We just couldn’t afford to do it.”
The damage was compounded by a concurrent increase in the state’s minimum wage; the ballot measure stipulated that Flagstaff’s minimum wage had to be $2 higher than the state rate, setting up what would have been a nearly $4 increase in less than a year.
The harms from Flagstaff’s wage experiment are best seen through the impact they had on service providers for the disabled. Armando Bernasconi, the CEO of a Flagstaff firm that specializes in job placements for providers, kept track of the damage, and presented the evidence in a recent post on Facebook. He reported that 30 percent of the Flagstaff provider network was forced to close or relocate; 45 disabled people lost jobs, and 68 direct-care positions were eliminated. Eight group homes were also relocated outside the city, and 26 disabled people were forced to move to Phoenix.
One relocated provider showed his disgust with a particularly blunt quote: “It’s almost like ethnic cleansing, only it’s disability cleansing … we are cleansing people with disabilities and indigent seniors out of our community.”
Proposition 414 created this problem, but voters are being offered a relief valve in the form of Proposition 418. This new measure will keep the city’s minimum wage above the state minimum wage (starting in 2021) but set the differential to a more-modest 50 cents. Proposition 418 will also preserve the current tipping system for restaurant servers, a policy that’s proved popular with tipped employees elsewhere in the country, who aren’t keen on seeing their restaurants adopt a less-lucrative compensation model.
Flagstaff isn’t the only locale that’s taken a second look at harmful ballot measures pushed by out-of-state interests. In Maine in 2017, Democrats and Republicans in the state legislature overturned part of a new mandate passed at the ballot box after they heard from thousands of employees about how it would harm them. More recently, the D.C. Council repealed an initiative financed almost entirely by the same New York-based labor group that helped support Proposition 414 in Flagstaff. The Council’s decision followed a similar outpouring of employee anger as the one legislators responded to in Maine.
Advocates for the Fight for $15 have pointed to Flagstaff as a success story as they’ve tried to expand their policy elsewhere. But Flagstaff is, in fact, a sobering snapshot of what we should expect in other small cities, should the fighters for $15 have their way. The city’s voters approved a $15 minimum wage without knowledge of these consequences; they should evaluate the evidence and take the do-over they’re now being offered.