Yuma businesses making cuts due to wage increase

Yuma businesses, nonprofits and even City officials say they are feeling the impact of the wage increase.

Mike Lutes the manager of Lutes Casino says he is losing more money every day because of it, “It’s cost me about 350 bucks a day extra.”

The wage increase went up 23 percent according to Michelle Sims the professor of economics at Arizona Western College. “When we look at the long term locally and in our state we will see the average price level go up,” says Sims.

Price increases, layoffs and less work hours were expected when proposition 206 was passed in November. Lutes says that’s exactly what happened, “I did 50 cents down the board and that’s a pretty big increase. I think a lot of independent restaurants and chain restaurants have raised their prices. I mean everybody went up, grocery stores. Everything is going up.”

Winter is the busiest season for Yuma businesses. However when the winter visitors leave, Lutes says he and others will have to make more changes for summer.
“Right now we are so busy and I need the people to work, but come May, June and July, that’s probably when I’ll have to make more cuts,” says Lutes. If not businesses like Lutes Casino, which has been operating for more than 50 years, face the risk of shutting their doors for good. “I hate passing it to the customers but I have to do something to stay alive,” says Lutes.

Dr. Alex Steenstra, the Chair of the Department of Business and Administration at Northern Arizona University says according to a study don by the Grand Canyon Institute, teenage unemployment will go up and thousands of jobs will be lost.
“The study also indicates 13,000 jobs will be lost as a result,” Dr. Steenstra says.

Restaurants and businesses can somewhat alleviate their losses by increasing their prices. However for city services and nonprofits that’s not an option. Professor Sims says, “smaller organizations, non-profit organizations especially those that have an annual budget process within a certain fiscal year.”

The city of Yuma has announced the closure of Kennedy Memorial Park Pool for the rest of their fiscal year because of budget issues. Dave Nash a spokesperson for the city says administration is looking at the possibility of finding other options for cost savings to keep the pool open, but no plans have been made at this time.

Edwardo Castro with the Saguaro foundation, a local nonprofit that serves thousands in Yuma says they have cut administration and benefits to keep their doors open.

Castro says, “we had to cut staff back and then right now we have zero benefits, we had to cut back on everything.”

While health benefits may have been taken away, Castro says employees will be receiving something else that was in proposition 206. “We have to implement a week of paid time off because that is part of the prop 206.”

Which is one of the reasons why the Yuma County Chamber of Commerce along with other Arizona Chamber of Commerce and nonprofits filed a lawsuit against the state to stop the proposition from going into effect. The executive director for the Yuma County Chamber of Commerce John Courtis says, “We’re going after it saying it’s the paid sick time, there’s the wage itself and there’s also the fact that you can have different minimum wages throughout the state.”

Courtis says Yuma joined the lawsuit because in the proposition, Arizona counties can increase the minimum wage beyond 12 dollars an hour. “I joined that lawsuit because there is a clause hidden in prop 206 that says other cities can still have different minimum wages. Flagstaff has 15 tucson can go to 15 or 16 if they want, yet we passed a bill last year in the legislature that said cities can’t have different laws in the state but buried in 206 it says that they can,” said Courtis.

The lawsuit went all the way to the Arizona Supreme Court where it was denied, but Courtis says there’s another bill already in the works.

“There’s a bill in the house right now to arrest any of those increases,” says Courtis. “So we just live with the ten bucks and the paid sick time.”

While things may be looking somewhat grim for businesses now, Dr. Steenstra says there is hope for the future. A study done on poverty levels for 20 states that increased their minimum wage says the state’s economy should balance out.

“The result actually shows that after sometime there is no real change in poverty levels the economy adjusts,” Steenstra says. “Price increases get passed on to consumers and so what we see is that things balance out in the end.”