The Arizona Community Action Association has received a $125,000 grant from St. Luke’s Health Initiative to design and implement “Raise Arizona,” a statewide living wage initiative to identify, recruit, certify and recognize employers that pay a living wage. Tom Jenney of Americans for Prosperity will discuss the concept of a living wage along with a representative from the Arizona Community Action Association.
TED SIMONS: The Arizona community action association is an organization working to end poverty. Recently the group received a grant from St. Luke's health initiative to design and implement a statewide living-wage initiative. Here to discuss the concept of a living wage is Kelly McGowan, deputy director of the Arizona community action association. And Tom Jenney of the Americans for prosperity, a grass roots organization that supports free markets. Good to have you both here. Thanks for joining us.
BOTH: Thank you.
TED SIMONS: What is raise Arizona?
KELLY MCGOWAN: Raise Arizona, if I can start by giving you a little context, currently in Arizona, one in four jobs is considered low-wage. We know that 40% of people are also considered working poor. And this means folks that are working often one, two jobs, more than 40 hours a week. And, so, raise Arizona is really intended to address that issue. We're calling it a community partnership for living wages. We want to recruit, certify, recognize and reward businesses who voluntarily choose to pay their employees a living wage. Want to ask consumers to support these businesses with their dollars. We feel in partnership with the business community and consumers across Arizona we can put a dent in some of the poverty figures.
TED SIMONS: This idea in general, your thoughts.
TOM JENNEY: As long as it is voluntary, I say go for it. My concern when they become mandatory and enforced by law. In many cases, minimum wage laws end up hurting the very people they are intending to help. It doesn't do you much good if you know there is a $15 wage out there if no employer is willing to hire you at that wage.
TED SIMONS: I want to get back to that in a second. Difference between living wage and minimum wage.
KELLY MCGOWAN: Living wage will vary from place to place. In New York, the living wage will be different than here in Phoenix. At the core, hourly rate that an individual needs to earn to afford basic expenses without relying on additional public assistance.
TED SIMONS: That would be difficult to implement, as far as the non-voluntary aspect.
KELLY MCGOWAN: Raise Arizona, intended to be voluntary. We want to encourage businesses who feel like it is the right model for them at this time to voluntarily pay their employees --
TED SIMONS: Minimum wage, living wage, smart ideas, higher wages give workers more to spend. How do you respond to that?
TOM JENNEY: Absolutely true. All things equal, if an employee is productive at a certain productivity level and if the employer and market -- absolutely. That is how the word gets better by rising raises. What we're concerned about is when governments step in and try to set a minimum wage. That is when you start to see economic damage. 96% of the hourly workers in Arizona are making above the minimum wage and that is a great thing.
TED SIMONS: Do you think the idea -- I don't want to get too much into minimum wage, but living wage is what you are talking about. The idea to force higher wages, higher wages in general when they don't come by way of the market lead to layoffs.
KELLY MCGOWAN: We want to work with employers who feel like it is the right model for them at this time. We would never advocate higher wage at the -- raise Arizona to work with businesses who feel like it is the right time for them to do this on behalf of their businesses and employees.
TED SIMONS: You mentioned different regions would probably have different living wages. How do you focus that? I mean, do you go rural, urban, state, county?
KELLY MCGOWAN: The method that we are using in raise Arizona is based off of fair market rental rates. You take the average rental rate in a locality, Maricopa County, $14.13 an hour. Commonly cited that you shouldn't spend more than 30% of income on housing costs. We look at the wage that someone would need to make to spend 30% on their housing and have an additional 70% for utilities, transportation, health care, child care, things of that nature. That fair market rental rate will vary based on where you live.
TED SIMONS: Again, does that make sense to you?
TOM JENNEY: Again, if it is voluntary, an experiment, go for it, try it. Employers, in fact, all of the time are experimenting with compensation levels for their employees trying to figure out if I give them a little more will they work harder? If I give them a little less, will they hang on? Will I lose them? This is happening all of the time. As long as it is voluntary and we are not talking about a government-imposed wage that lays people off unnecessarily, it doesn't sound like a bad thing.
TED SIMONS: Should different areas have different living wages. Does it get to --
TOM JENNEY: The world is incredibly complex. It will be trial and error. Every employer is out there trying to figure out, hey, is the compensation level I'm awarding right now adequate for people to keep me from losing these people?
TED SIMONS: That aspect of unpredictability, is that a factor, a concern?
KELLY MCGOWAN: In -- in terms -- can you ask the question again --
TED SIMONS: Basically, unpredictability, what the living wage will be next year, adjacent county, dealing with a company trying to work a deal with someone in a different state.
KELLY MCGOWAN: The living wage will not be a set rate. It will increase as cost of living increase. So, we believe, especially small businesses in Arizona understand what their workers are going through in the communities that they live. The difference in wages based on where you live, we don't really see as a problem.
TED SIMONS: But if there is nothing other than recognition and those sorts of things, how much will businesses really do?
KELLY MCGOWAN: Well, we hope that businesses will do a lot. What we see when we talk to small businesses is that their employees are part of their family. They want them to be successful. We really hope that and we're seeing at the national level that this model is starting to work for folks national with a footprint in Arizona. We have quicktrip, average annual salary $40,000 a year plus benefits. Aetna came out in January with a $16 across the board base rate of $16 an hour for folks. We think this national model that is gaining traction is something that is worth trying here in Arizona.
TOM JENNEY: And, Ted, I am a little bit concerned. Again, if it is voluntary and they want to experiment, let's go for it. But I am concerned a little bit because we have a lot of people in the hospitality industry, some of our service industries, and if you look at hospitality in Arizona, they are making about $14 an hour. And that's by the way the average wage in that industry. The median wage is quite a bit lower than that. This is voluntary. I don't think there is any harm in trying, but if this was a case of a mandatory government-imposed $15 wage in Arizona, I think you would see a big dislocation.
TED SIMONS: The idea --
TOM JENNEY: A lot of people thrown out of work.
TED SIMONS: Right. Idea of a minimum wage, getting back to the minimum wage because that is a little more concrete and something I think you're more against as opposed to the idea of recognizing businesses doing well by the way of living wage, minimum wage, should there be a minimum wage? Do you think there should be one?
TOM JENNEY: I think one of the great things right now is that the minimum wage is so low that it is not causing a lot of economic damage right now. Right now, as I point out before, only about 4% of Arizona hourly workers are at or below the minimum wage. And that's a very good thing that that population is quite small. Are there bad effects of that for that population or the people who can't get jobs? Is it bad for low-skilled workers who are trying to get jobs? I think you could make an argument that it is. I think most economists would look at that and say, yeah, probably at the margin, there are kids, young people, low-skilled workers who are not getting jobs who might want them.
TED SIMONS: I ask that, every time there is talk about raising the minimum wage whether a lot or a little, the same bunch of folks come out and say it is going to be disastrous. Yet we seem to always be raising the minimum wage and so far we are not under water - getting close to it every time we hear this, same negative arguments come up but we seem to make it okay.
TOM JENNEY: Right now the minimum wage is so low, it impacts, bureau of labor statistics right now, about 24,000 workers at the minimum wage in Arizona, and about 34,000 below. We have got about 1.4 million hourly employees in Arizona. So, at these levels, the minimum wage is not hurting a lot of people. I believe it's hurting people but not a lot of people. If we head up to 15 -- congressional budget office, $10.10 minimum wage -- if you go to $15, $20, start to go up, that damage is going to get quite a bit bigger.
TED SIMONS: Last thing we need to know about raise Arizona and living wage.
KELLY MCGOWAN: We believe that it is great for Arizona, for communities and businesses and if businesses are interested, we would love to hear from them.
TED SIMONS: Good to have you both here. Thank you for joining us.
KELLY MCGOWAN: Thank you.
TED SIMONS: Friday on "Arizona Horizon," it's the "Journalists' Roundtable." We'll discuss the firing of the state's chief economist And we look at the state delaying a controversial new abortion law. That's it for now. I'm Ted Simons. Thank you for joining us. You have a great evening.
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Tom Jenney : Americans for Prosperity
Kelly McGowan, deputy director of the Arizona community action association