Small Biz Owners Bracing for Impact of Upcoming Minimum Wage Increase

On January 1, 2024, Arizona will witness a change in wage dynamics, as the minimum wage rises from $14.35 to $14.70 per hour. This adjustment comes as part of the ongoing implementation of Proposition 206, which was approved by voters in 2016 and mandates annual increases in the minimum wage.

Local business owners remain optimistic about the impact of this change. Dave Karsten, who manages Karsten’s Maricopa Ace Hardware on John Wayne Parkway, expressed minimal concern regarding the wage hike. “Our average pay is well above minimum,” he stated, suggesting that only a few employees would see a direct effect. For him, pricing and operational adjustments are more closely tied to sales trends than labor costs.

Similarly, Alex Mejia from Vero Chicago Pizza echoed this sentiment. He indicated that the recent wage increase wouldn’t lead to higher prices for customers at his establishment, yet he noted the potential consequences of larger increases, referencing California’s $20 minimum wage hike that adversely affected many businesses. “I don’t need to pass that kind of cost onto the customer right now,” Mejia asserted.

Since the inception of Proposition 206, the minimum wage has seen increases between $0.50 and $2 annually, a pattern that has presented challenges for smaller businesses. Mejia recalled how initial wage hikes necessitated price adjustments not only on his pizza offerings but also for supplies. “When minimum wage went up, our suppliers started increasing the price of product, and that’s when we had to increase our menu items and prices,” he explained.

Despite these challenges, Mejia notes that the more recent increases, such as last year’s modest $0.50 bump, are more manageable. “Those worries are shrinking in the rear-view,” he reflected. Karsten also highlighted his commitment to maintaining a stable workforce, emphasizing that labor constitutes a significant expense but has not led to major layoffs within his company. Focus on culture and reducing turnover remains a vital strategy for both business owners amid changing wage landscapes.