Maricopa Native Grill & Wings owner Pat Kieny and Maricopa ACE owner Mike Richey are looking for ways to be creative to accommodate the new minimum wage increase.

In a monumental move, Arizonans voted in November to increase the state minimum wage to $10 an hour in 2017, leading to $12 an hour by 2020, a maneuver that has business owners reeling.

While some current minimum wage earners are a-tingle to see an almost 50 percent increase in pay upon full implementation, the initiative has business owners deeply concerned about its impact on their businesses and searching for remedies to offset the pay increases.

Native Grill & Wings proprietor Pat Kieny is one of those frustrated by the voter-approved measure, which he believes to be the worst economic event in recent Arizona history.

“It’s one of the most negatively impactful things the government has done in my 20 years of business,” Kieny said.

Kieny projects additional labor expenses in excess of $80,000 in the first year alone. He believes the company will have no choice but to reclaim those expenses from the consumer.

“If we just raise our prices and get a 15 percent increase in sales, that would cover most of the costs,” Kieny said. “But that isn’t how it always works.”

Maricopa Economic Development Director Denyse Airheart agrees the measure will impact local businesses and ultimately trickle down to the consumer.

“The largest impact will be on small businesses,” Airheart said. “They’re really going to feel the pinch, so they might have to decrease staff and do more for less.”

Maricopa ACE Hardware owner Mike Richey said the new mandate will not affect him immediately, as most of his employees currently earn more than minimum wage. However, he said, as the wage floor rises above some of his current employee’s wages, he too will need to cut hours, which will likely impact service.

“Our real competitive advantage is that customer service,” Richey said. “That means we’ll have to work harder with the people we have in order to maintain that level of customer service.”

Though Richey does not disagree with the increase over all, he does wish the increase was less gradual, something he claims would have made the measure more “palatable.” He also disagrees with the way he believes Proposition 206 came to fruition.

“The problem with the proposition is that it was driven by labor unions and not the Legislature,” Richey said. “So that’s a problem for me, that we have labor unions dictating salaries.”

Aside from price increases, Kieny is considering several other adjustments to make up for the labor costs at Native Grill. He plans to introduce additional charges for sides and extras that were previously free, and eventually phase in cheaper glass and dishware.

Kieny said the restaurant will also likely cut servers’ and bartenders’ hours.

“It will most likely cause a decrease [in the quality of] service,” Kieny said, “We’re not going to be able to afford as many people.”

Meanwhile, the Tucson Hispanic Chamber of Commerce and the Arizona Chamber of Commerce and Industry have joined forces with other groups and filed a lawsuit against the state to combat the new law, which they claim is unconstitutional.

Passing with nearly 59 percent voter-approval, Proposition 206 (The Fair Wages and Healthy Family Act), will gradually increase the state’s minimum wage over the course of the next three years. The first and largest adjustment will occur in 2017 with an increase from the current minimum of $8.05 to $10 per hour. Thereafter, the minimum will increase by 50 cents per year in 2018 ($10.50) and 2019 ($11), finally increasing by $1 in 2020 to the new standard of $12.

The law will put Arizona in the ranks of states like New York, California, Washington, Oregon and Illinois, which are all set to have minimum wages of $12 an hour or more by 2020.

This story appears in the January issue of InMaricopa.

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3 COMMENTS

  1. How sad that Mike RIchey and Pat Kieny don't want their employees to make at least $24000 a year by 2020. You see that's what $12 and hour earns you over the course of a year. I'd love to see them try and make a living on that amount. I love Mike's local Ace store but will no longer patronize it. You see for an owner who at one time was board chairman for the local Chamber of Commerce (there were always rumors he was trying to keep big box competition, i.e. Lowes, Home Depot etc., from coming into town), and now to state complete falsehoods about how Prop 206 got started he's lost my respect. In the above article he says Prop 206 was started by "labor unions and not the legislature". He leaves the false impression that if the legislature had proposed it, laugh here if you think the republican controlled AZ legislature would ever support anything positively affecting the poor among us, he might have gone along with it. It takes very little googling Mike, to see that the driver behind prop 206 was Living United for Change in Arizona, or LUCHA, a grassroots organization that's been trying to improve the light of lower paid employees for years. So no more ACE for me.

  2. If employers paid a fair wage to start with, there wouldn’t be a need for minimum wage. Instead, many employers pay the least they can get away with.

    Only menial jobs that require minimal skill should pay minimum wage. On top of that, many employers are now hiring two part time employees to do one full time job in order to avoid paying benefits. This has gone on for years to the point that people are finally tired of seeing the wholesale exploitation of the American worker. In Arizona, you can bet that voters who passed the new minimum wage law are not directly benefitting themselves – those individuals are making well above minimum wage, most are salaried management level employees.

    I am surprised that the worker that has the most impact on the business, the one who actually greets or serves the customer, is usually the one making the least amount of money. Restaurant servers are probably the most exploited of all having to rely on the generosity of customers to pay the majority of their wage.
    Every year the cost of doing business goes up. Materials go up. Cost of living goes up. The one thing that hasn’t gone up is wages for those at the entry level of the workforce. Sadly, in some businesses, there are those who are far from entry level work who are still at the bottom of the pay scale because it’s one of the few things that an employer has direct control of – how much he pays his people.

    Starbucks is a perfect example of paying people a livable wage and passing that cost on to the customer. You can get a cup of coffee at McDonalds for $2.00. A similar drink at Starbucks is more than double that. Starbucks employees are paid a decent wage and have benefits, including tuition assistance. Starbucks has a cult following of customers who don’t mind paying the extra cost to get a quality product and over-and-above service. Starbucks also outsells McDonalds for coffee.

    The federal minimum wage law was enacted in 1938. Necessity is the mother of invention. There wouldn’t be a need for minimum wage if employers paid a fair wage to start with.

  3. If we put workers and min wage workers under the spotlight, so should the managers and owners of businesses. It sounds like Mike Richey and Pat Kieny are unwilling to make less money and instead want to make patrons and their own business take the hit instead of them. I bet their paychecks/pay is unchanged. They could of taken these wage changes as a positive but instead only thought about themselves and how it's going to affect them. After reading this and hearing they want to lower quality in some aspects of their business at the same time as charge customers for "free" items, make me sick and will ensure that I'll no longer dine here.