A new report from the Common Sense Institute Arizona finds that a proposition that will appear on the Glendale city ballot this fall could have a serious negative effect on that community’s jobs and economy.
The Hotel and Event Center Minimum Wage Act, Proposition 499, would, among other things, require hotels and event centers to pay their employees $20 an hour and closely manage how employees perform certain tasks.
The proposal, which is backed by the Worker Power Political Action Committee, a group affiliated with labor union UniteHere Local 11, the most active labor organization in the hospitality sector, would not only require the new $20 per hour minimum wage, which would be adjusted upward annually depending on the level of increase in the cost of living, but would also limit the amount of square feet a room attendant would be allowed to clean in a work shift before the employer would be required to pay the worker double his or her hourly wage.
The measure also requires employers to adhere to strict new recordkeeping requirements and to allocate all service charges to the employees who provided the services for which the customer was charged.
New requirements for city
The initiative does not only affect the workplace. Proposition 499 also requires the Glendale city government to establish and staff a new labor department. According to CSI Arizona’s estimates, the city may need to add 5-10 full-time equivalent positions, depending on the volume of new work created by these requirements, at a cost of between $995,000 and $1.9 million annually to taxpayers.
A tourism powerhouse
Glendale’s tourism industry is a significant contributor to the Arizona economy. State Farm Stadium has played host to Super Bowls, Fiesta Bowls, the NCAA Men’s Basketball Final Four, and Taylor Swift’s Eras Tour.
According to CSI Arizona’s findings, Glendale hosts about 13% of the state’s entire sports and tourism sector, contributing to 8% of the city’s economy.
Thanks to its high concentration of hotels and special event venues that include not only State Farm Stadium but the Westgate Entertainment District and Desert Diamond Arena, CSI Arizona researchers estimate that Glendale is responsible for 19% of Maricopa County’s events and accommodations industry, impressive for a city that has only 3.4% of the state’s population.
A devastating financial hit
The report finds that the proposition, if passed, would negatively impact the economy of Glendale. The report estimates higher room rates and a potential 1,700 to 32,000 lost jobs in addition to the lost tax revenues that would result from a flagging tourism sector in the city, as travelers and events shift their dollars to more economically attractive nearby cities. CSI Arizona estimates Proposition 499 would reduce Glendale’s economy by between $120 million and $1.9 billion.
“For Arizona to pass a $20 minimum wage for hotel and event center workers in Glendale, it could cost employers up to $10,756 per affected worker through a combination of either direct increased wage costs or efficiency losses as employers mitigate the impacts by reducing staff, cutting hours, or moving business activity,” the report says. “Much of this cost will likely be passed onto consumers in the form of higher prices and increased fees (as has been the case in California). This may further incentivize both customers and operators to seek alternatives outside the city.” Jurisdictions in California have adopted similar measures, including Long Beach, which adopted a $23 per hour minimum wage for hotel workers.
State’s high court won’t review case
Glendale originally rejected the petition signatures submitted by Worker Power, arguing the group’s initiative violated state law that limits ballot questions to a single subject.
Worker Power won challenges at the Superior Court and Court of Appeals levels, forcing the city to process the signatures and place the measure on the November ballot. The city appealed to the state Supreme Court, but the high court on September 16 said it would not take up the case.
Prior to the Supreme Court decision, however, the Arizona Lodging and Tourism Association began an aggressive opposition campaign to the measure.
“We continue to believe the union proposal violates state law,” AzLTA President and CEO Kim Grace Sabow said. AzLTA and the American Hotel and Lodging Association and the Arizona Chamber of Commerce & Industry submitted arguments to the courts supporting Glendale’s position that the initiative should not appear on the ballot. “But we are equally convinced that once Glendale voters learn how devastating Proposition 499 will be to the city’s economy they will strongly reject it. Glendale voters aren’t going to take economic policy lessons from California.”
Photo courtesy Paul Martinez. Creative Commons license. Article updated Sept. 16 to reflect state Supreme Court’s denial of review.