A bill moving through the state legislature would address high youth unemployment and encourage employers to revive part-time positions for full-time students.
Currently, youth unemployment is over 12 percent and opportunities for starting workers are disappearing under the weight of multi-year minimum wage hikes, said the sponsor of the bill, Rep. Travis Grantham, R-Gilbert.
“Many businesses cannot afford to hire someone to work a five- or ten-hour a week shift after training them, doing all the administrative work to hire them, and then paying them at the higher mandated wage,” Grantham said. “I want to give businesses the option to be able afford to pay part-time workers who are students.”
Three years ago, Arizona voters approved Proposition 206, the Fair Wages & Healthy Families Act, that implements a minimum wage hike every year for four years. The hikes started in 2016, moving up to $8.05 an hour and will reach $12 in 2020. Currently, the minimum wage is $11.
Prop. 206 focused on full-time workers with families but it left out part-time opportunities for young unskilled labor, said Grantham, who worked as a lot attendant for 12 hours a week when he was in high school.
The bill, HB 2523, would allow employers to hire students at the federal minimum wage, $7.25. Under the new criteria, employees could work for less than $11 an hour but they must:
- Be a full-time student
- Be 22 years or younger
- Work 20 hours or less per week
Joe Galli, vice president of government affairs at the Greater Flagstaff Chamber of Commerce which supports the bill, said it is needed not only for students but businesses that rely on students in cities like Flagstaff, the home of Northern Arizona University.
In a prepared statement supporting the bill, Chamber President Julie Pastrick said that “job opportunities for young people are fading away from our small business family.”
Many industries are struggling and even shutting down, particularly restaurants, hotels and other sectors that rely on minimum wage workers, businesses are reporting.
Ash Patel, CEO of Southwest Hospitality Management, that has hotel assets in Arizona, California, Texas and New Mexico, said that minimum wage increases are forcing his operations to move away from hiring unskilled workers.
“If you think about wages going from $8 to $12, your labor is going up 50 percent. So if you have a $500,00 payroll, now all of a sudden your payroll is $750,000. Which small businesses have that kind of margin that they can absorb?”
There are other negative “trickle down” impacts, he said. Suppliers are charging more for everything from linen service to landscaping because they’re paying higher wages, too.
Employees are also revolting. A hotel or restaurant manager who’s been a loyal worker for three or four years to reach $14 to $15 an hour now sees unskilled workers with zero experience making almost the same wage, he said.
“In the past, we were willing to invest in students coming out of high school or students in college with zero experience,” Patel said. “Now we’re only banking on people with experience because we have to pay a higher mandated wage.”
Those jobs offered students to “learn the ropes,” help their families pay student bills, go out for the weekend, or pay for things families couldn’t afford, he said. Now, businesses are being forced to increase prices to consumers.
As Rep. Grantham moves the bill forward, he expects a fight. The bill jumped its first hurdle, passing 4-3 in the Regulatory Affairs Committee of which he is chairman.
Lawmakers voted along party lines, with Democrats voting against it, he said. Opponents see it as an attack on workers’ wages.
“That’s not what it is. They’re not looking at it from the perspective of, ‘Hey, there’s a lot of people right now who can’t get a job so let’s at least let those people work a little bit and be paid for that,’” Grantham said. “It’s really quite devastating when you think that a young student is not able to go out anymore and find that part-time job, whether it’s bagging groceries or working behind the counter.”