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Question on minimum wage for tipped workers heads to Arizona ballot

early ballot
Justin Stabley/KJZZ
A 2018 Arizona ballot.

Republican lawmakers this week agreed send a host of measures to the November ballot, including a proposal to allow restaurants to pay their tipped workers 25% less than the minimum wage versus the current flat $3 "tip allowance.''

At current rates, that would save restaurants an additional 57 cents an hour.

The measure is a bid by the Arizona Restaurant Association to blunt an initiative effort to raise the minimum wage even higher than required under proposals approved -- twice -- by Arizona voters.

At the heart of the fight is the current law, which has the minimum wage increase annually to match inflation. That is currently $14.35 an hour.

But that law allows restaurants to pay their tipped workers $3 an hour less, provided that each worker's take-home still hits the minimum wage.

A national organization operating under the umbrella of "One Fair Wage'' is collecting signatures to ask voters to phase out that tip credit entirely by 2027. At the same time, it also would raise the overall minimum for everyone by an additional $2 an hour over the next two years, above and beyond the annual inflation adjustments.

That could easily bring the minimum wage to $18.

More to the point, those two provisions would mean restaurants have to pay that entire $18 -- or whatever is the figure -- regardless of how much a worker makes in tips, versus $11.35 under current law. And that alarmed Steve Chucri, president and CEO of the Arizona Restaurant Association.

His organization got lawmakers to adopt a proposal to allow restaurants to pay their workers 25% less than what is the minimum wage.

Assuming that $18 minimum wage, that's $13.50 an hour for tipped workers.

But there's a sweetener designed to gather support from the public and at least some restaurant workers: It guarantees that any worker would take home at least $2 more than whatever is the minimum wage.

So, assuming that $18 minimum wage if the initiative passes, that means $20.

On paper, that would increase staff wages. But Chucri is convinced that most wait staff would earn that $20 minimum with their tips -- saving money for his restaurants by leaving them responsible solely for just $13.50 of that.

Sen. J.D. Mesnard, R-Chandler, said the measure is also good for workers, and not just because of that $20 guaranteed minimum.

"Restaurants live right on the edge when you talk about their margins,'' he said, saying they have been struggling since voters approved the last hike in the minimum wage in 2016. "And this other effort that we're seeing out there would be on top of that.''

And Mesnard said if the newest increase takes place "they will not be able to continue to have their entire labor force'' without the protections in SCR 1040.

But Sen. Anna Hernandez, D-Phoenix, said that logic is flawed.

"For anybody to say that raising the minimum wage is the sole reason why businesses go out of business is factually incorrect,'' she said. "We have to account for inflation and the fact that there are expenses that go with that.''

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