A proposal on the Glendale ballot this fall could have serious negative effects on the area’s jobs and economy, according to a new report from the Common Sense Institute Arizona.
The Hotel and Event Center Minimum Wage Act (Prop. 499) would require hotels and event centers to pay employees $20 an hour and strictly control how employees perform certain job tasks.
The proposal, supported by the Workers Power Political Action Committee, an umbrella group of the hospitality industry’s most active labor union, UniteHere Local 11, would not only mandate a new minimum wage of $20 per hour that would be adjusted upward annually based on the level of cost-of-living increases, but would also limit the amount of square footage that housekeepers can clean during a shift, beyond which employers would be required to pay employees double their hourly wage.
The measure also requires employers to comply with strict new record-keeping requirements and allocate all service fees to employees who provided services billed to customers.
New requirements for cities
This initiative won’t just affect the workplace: Proposition 499 requires Glendale’s city government to create and staff a new Labor Department. CSI Arizona estimates that the city will need to add five to 10 full-time equivalent employees, depending on the amount of new jobs these requirements create, costing taxpayers between $995,000 and $1.9 million per year.
Tourism powerhouse
Glendale’s tourism industry is a major contributor to Arizona’s economy, and State Farm Stadium has hosted the Super Bowl, Fiesta Bowl, NCAA Men’s Basketball Final Four, and Taylor Swift’s Erasu Tour.
Glendale accounts for about 13 percent of the state’s sports and tourism sector and contributes 8 percent of the city’s economy, according to CSI Arizona findings.
CSI Arizona researchers estimate that thanks to its concentration of hotels and special event venues, including State Farm Stadium as well as the Westgate Entertainment District and Desert Diamond Arena, Glendale accounts for 19 percent of Maricopa County’s events and lodging industry — an impressive figure for a city that accounts for just 3.4 percent of the state’s population.
A devastating economic blow
If the proposition passes, the report said it would have a negative impact on Glendale’s economy. The report estimated that a decline in Glendale’s tourism sector would result in lost tax revenue as visitors and events shift money to more economically attractive neighboring cities, higher room rates and the potential loss of 1,700 to 32,000 jobs. CSI Arizona estimates that Proposition 499 could reduce Glendale’s economy by $120 million to $1.9 billion.
“If Arizona were to raise the minimum wage to $20 for hotel and event center employees in Glendale, employers could incur costs of up to $10,756 per affected employee, either through increased direct wage costs or reduced efficiency. Employers would mitigate the impact by laying off staff, reducing work hours, or relocating business activities. Much of this cost would likely be passed on to consumers in the form of higher prices and fees (as in California). This could further incentivize both customers and operators to seek alternatives outside the city,” the report states. California jurisdictions have adopted similar measures, with Long Beach raising the minimum wage for hotel employees to $23 per hour.
The state’s high court will not hear the case.
Glendale initially rejected petition signatures submitted by Worker Power, arguing the group’s proposal violated state law limiting ballot questions to a single topic.
Worker Power won in Superior Court and the Court of Appeals, 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 announced on September 16 that it would not hear the case.
But ahead of the Supreme Court’s decision, the Arizona Lodging and Tourism Association began an active campaign against the bill.
“We continue to believe the union proposal violates state law,” said Kim Grace Sabow, president and CEO of the Arizona Hotel Association. The Arizona Hotel Association, the American Hotel & Lodging Association and the Arizona Chamber of Commerce have filed arguments in court supporting Glendale’s position that the proposition should not be on the ballot. “However, we are confident that if Glendale voters knew how devastating Proposition 499 would be to the city’s economy, they would strongly reject it. Glendale voters are not going to learn economic policy lessons from California.”
Photo by Paul Martinez. Creative Commons license. Article updated Sept. 16 to reflect state Supreme Court refusal to review.
