Business owners raise prices to cover minimum wage hike
When Arizona’s minimum wage requirements changed on Jan. 1, Brent Schadler’s hourly wage jumped from $5.25 to $7.25.
He works at Richie’s Express Auto Wash along Sheldon Street in Prescott and receives tips, so the raise was in accordance with the state’s new minimum wage standards — at least $10 per hour for regular hourly employees and at least $7 for tipped employees.
“I think it’s great,” Shadler said. “My pay checks are substantially bigger.”
Soon after his pay increased, so did the prices of the car wash’s services almost across the board. The tiers of washes used to be $5, $7, $9 and $12. They’re now set at $5, $9, $13 and $18.
Kyal Marshall, the business’s Wash Manager, said they already had plans to make the price changes to align more closely with what their competitors were charging.
“Minimum wage kind of just kicked it a little more into high gear,” Marshall said.
Loren Rowling recently made a comparable adjustment to his business. He owns a laundromat called The Cleaning Machine on Gurley Street in Prescott.
Though he was already paying his employees $10 per hour, he decided to be proactive and bump their hourly wage to $10.50, knowing he will have to do so in 2018 anyway. Taking similar action as Richie’s Express Auto Wash, he simply passed the additional cost onto the consumer.
Rather than his dryers costing 25 cents every eight minutes, they are now 25 cents every five minutes. Washing also went up, increasing 50 cents per load.
“We have to survive,” Rowling said. “We’re here to make money. We’re not here to be a nice guy.”
However, like Marshall said about Richie’s, Rowling also said the service cost increase was something he has been intending to do for a while.
“When I bought this place in 1985, it was 25 cents to dry for 10 minutes, so we never really took the jump on it that we really should have,” he said. “So it was a due adjustment. It’s just easier to justify it with the wage increase.”
Some could say the minimum wage increase, called for by voter-approval of Proposition 206, was a due adjustment as well.
The federal minimum wage reached its highest real value in 1968. That year the minimum wage was raised to $1.60. When accounting for inflation, that equals $8.68 in 2016 dollars, according to the Pew Research Center.
Taking it even further, however, The Economist estimated in 2015 that, given how wealthy the United States is and the pattern among other advanced economies in the Organization for Economic Cooperation and Development, “one would expect America … to pay a minimum wage around $12 an hour.”
While the federal minimum wage remains $7.25, many states have been taking information like this seriously, with some with minimum wages currently as high as $11 or $11.50.
With such precedents, Rowling is not surprised Arizona’s minimum wage went up, he’s just not sure it should have adjusted so rapidly.
“It was inevitable to happen, but I think it was quite a jump all at once,” Rowling said.
Many businesses will also soon have to account for new mandatory paid time off obligations.
The following basic requirements will take effect July 1, 2017:
• Employers with 15 or more employees — employees accrue up to 40 hours of sick pay annually.
• Employers with 1 to 14 employees — employees accrue up to 24 hours of sick pay annually.
• Rate of accrual — 1 hour of sick pay for every 30 hours worked beginning with first day worked; exempt employees are assumed to work 40 hours per week.
• Employers can require employees to wait 90 days after hire to use sick pay.
• Time off may be taken in the smaller of hour increments or increments that the payroll system uses to account for time off.
For employers looking to better understand these upcoming changes, there will be a free seminar taking place at Yavapai College on Thursday, April 6, from 8 to 9:30 a.m.
Attorney and Human Resources Consultant Laura Hamblin will be leading the discussion. She can be reached at firstname.lastname@example.org or 928-308-8394.