A man-made disaster

  Glenn Hamer

  December 2nd, 2016               

The state and national teachers unions spent a combined $400,000 on the campaign to pass Proposition 206, the ballot initiative to dramatically raise the state minimum wage and institute a new paid leave mandate on employers.

Their efforts, along with those of other unions and groups affiliated with organized labor, will result in a 25 percent wage hike in January when the new law kicks in, and a fully phased-in nearly 50 percent increase by 2020 along with the complicated paid leave provision that all businesses will need to comply with.

What is Arizona getting for the millions of dollars the unions dumped into the pro-206 campaign?

For starters, small businesses ratcheting up prices; public schools struggling to pay support staff; pink slips for many workers in the holiday season; business closures; the state’s most vulnerable citizens going without care; and potentially a big new state budget obligation that will balloon over time.

I’ve written extensively about the negative consequences of minimum wage policies and how they hurt the very individuals they’re intended to help. Unfortunately, Proposition 206’s passage is already proving me right, and we’re just getting started.

Consider the restaurateurs in Tucson who are preparing for an over eight percent price increase in their menu items. Or the daycare center in Flagstaff that is raising its monthly rates by $35 per-child in order to cover the higher labor costs due to the state proposition and a local ballot initiative there with an even more dramatic wage hike. It’s lost on me how making restaurants and child daycare more expensive is helpful to the constituency the Proposition 206 proponents claim to represent.

And what about public district and charter schools? Schools aren’t exempted from the new law, which means they’re scrambling to find the resources to pay more for their aides, bus drivers and crossing guards. Is this the political agenda the teachers unions’ members want their dues to fund? And forgive me, but I must have missed the teachers unions’ contributions to aid the defeat of Proposition 205, which sought to legalize marijuana and would have been terribly destructive to school-aged kids and our education system had it passed in November.

Most recently we’re learning of the plight of agencies that contract with the state in order to provide care for individuals with developmental disabilities. The proponents of Proposition 206 failed to consider how those care providers will account for the new higher labor costs and how it will impact our state’s most vulnerable citizens when services are cut or when agencies close their doors. Even if additional funds are appropriated, the pressure on care providers will still be severe. Budgets are tight.

These are the costs of ballot box budgeting, when narrowly focused activists take lawmaking out of the hands of the Legislature and ignore the competing pressures of other state government priorities.

Predictably, some corners are calling for more money from the state budget to clean up the mess the labor unions and the rest of Proposition 206’s backers have inflicted.

But what about small business that cannot rely on government appropriations? Will the do-gooders who supported Proposition 206 support an income tax cut to help these job creators absorb their much higher labor costs?

Where would state government get the additional dollars? Some would suggest raising taxes on businesses that are already bearing the brunt of the damage of the initiative. First their payroll costs skyrocket, and then their taxes go up. Talk about a double whammy.

At each opportunity during the campaign to debate the initiative, Proposition 206’s proponents assured audiences that the Arizona Chamber of Commerce and Industry and other critics were painting an unrealistic and overly dire picture of the consequences of the measure’s passage. The proponents confidently predicted only positive outcomes for the state.

But for small businesses, public schools, and the loved ones of Arizonans with developmental and intellectual disabilities and those who care for them, Proposition 206 has proven only to be a negative. Unfortunately, its effects are just starting to be felt.

Glenn Hamer is the president and CEO of the Arizona Chamber of Commerce and Industry. 

The Arizona Chamber of Commerce and Industry is committed to advancing Arizona’s competitive position in the global economy by advocating free-market policies that stimulate economic growth and prosperity for all Arizonans. http://www.azchamber.com/.