By Howard Fischer
Capitol Media Services
PHOENIX — Wondering why the voter-mandated increase in the minimum wage hasn’t culled jobs?
It’s because the overall state economy is doing so well, said Doug Walls, director of labor market information for the Office of Economic Opportunity.
Mr. Walls acknowledged that the cost to employers — the wage has gone from $8.05 an hour in 2016 to $11 now — has to be borne by someone. But he said it appears that affected employers are simply passing along the additional expense.
More to the point, it does not appear to be affecting the willingness of people to go out and eat, drink and stay in hotels, the industries with the traditionally lowest wage rates.
But Mr. Walls said Thursday he’s not prepared to say the same would hold true if Congress hikes the federal minimum wage to $15 by 2025, as the U.S. House voted to do earlier in the day.
“It’s a little bit more speculative, he said. “But what we’ve seen with Arizona’s minimum wage increases has been continued economic growth in a multitude of industries around the state.”
Mr. Walls also reported that Arizona continues to create new jobs almost as fast as the number of people who are moving here, no small feat given the state’s population growth is the fourth fastest in the nation.
But the other side of all that is that the state’s seasonally adjusted jobless rate for June remained at 4.9%, the same as in May — and two tenths of a point higher than a year ago. It also is more than a point higher than the national average of 3.7%.
Still, he said, that’s not bad news, seeing it as a showing of the state’s economic growth.
“We tend to think that when labor force levels increase, people are more optimistic about their opportunities to get jobs,” Mr. Walls said. “And they’ve been able to find those jobs within Arizona.”
Conversely, he said, the unemployment rate may be lower in other states due to “shifting demographics.”
What’s happening, said Mr. Walls, is that the workforce elsewhere is aging, with people retiring.
“While work is needed and there are jobs out there, overall they’re not seeing the participation into the labor force that Arizona is actually seeing,” he said.
Of course, the other side to that supply-and-demand issue relates to wages: When the number of workers available is less than the number companies need, they have to offer more money.
The result is that the average hourly wage in Arizona for last month was $26,13 versus $27.87 nationally. And that appears to be widening, with a 4.2% year-over-increase nationwide versus 2.6% in Arizona.
One area where wages in Arizona are more than keeping pace is in the category of “leisure and hospitality,” generally defined as bars, restaurants and lodging places. There, wages are up 9.4% year-over-year.
“When you do increase wages, the costs have to go someplace,” Mr. Walls said.
That can take three forms: Higher costs to consumers, employers “eating” the costs” or companies reducing employment. It’s that first scenario, he said, that appears to be controlling in Arizona.
“What we’re seeing is that employment growth continues to increase or growth has held steady in some of those lower-paying industries overall,” said Mr. Walls.
“The strong economic growth is definitely spurring it on,” he said.
And there’s another angle: As this sector of the economy grows, there are more opportunities for workers to look for other employment.
“Employers might have been forced to increase wages as it was anyway,” Mr. Walls said, even if the 2016 ballot measure did not impose a mandate. “But the economic activity that we’re seeing in Arizona does not appear to have been dampened by the increase in the minimum wage.”