Minimum Wages and Price Increases To Customers: A Real World Example Today in Arizona

Our company operates a number of public campgrounds and parks, including about 35 in Arizona.  This is a letter I sent early this morning to the agencies we work with in Arizona

It appears that the ballot initiative for a higher Arizona minimum wage is going to pass, raising minimum wages as early as January, 2017 from $8.05 to $10.00. This is an increase of 24%, and comes on very short notice.

Currently, about half of our total costs are tied to wage rates (both payroll taxes and workers compensation insurance premiums are directly tied to wages and go up automatically by the same amount wages go up). Because of this, a 24% increase in wage rates will result in our costs going up on average by 12%.

It had been my intention to keep fees to customers flat in 2017, but that is now impossible in Arizona. This 12% expense increase is about twice the amount of profit we make -- there is no way we can absorb it without a fee increase. I apologize for the late notice, but I have never, ever had a minimum wage increase imposed on such short notice.

We will have to look at our financials for each permit, but my guess is that on average, we are talking about camping fee increases of $2 and day use fee increases of $1. This range of fee increases will actually not cover our full cost increase, but we will try to make up the rest with some reductions in employee hours.

  • steamboatlion

    "we will try to make up the rest with some reductions in employee hours."

    "But. but, but," a chorus of 'Progressives' scream, "increasing the minimum wage doesn't reduce employment!"

  • Joshua

    goddamn californian immigrants

  • Matthew Slyfield

    But, but ,but those same progressives who think increasing minimum wages has no impact on employment thought Trump had zero chance of beating Hillary in the presidential election. How'd that work out for them?

  • JTW

    it doesn't, it just moves the employment off the employment figures reported to the government. IOW people on paper will work 24 hours but will in fact work 32 or 40, the other day or two being paid "under the table" and no taxes paid on it, no social security premiums, no nothing.
    Of course it's illegal, but that's what happens.

  • Agammamon

    On the plus side, if its implemented this quickly, there will be a clear showing of how raising the MW causes unemployment - since there won't be time for businesses to adjust their staffing to take the new law into account *before* it goes into effect. This won't allow MW proponents to use that pre-adjustment as an excuse 'oh look, there was no significant drop in employment *after* the law went into effect' - 'yeah, because businesses had already laid off their low-performing position by that point'.

  • jon49

    When I saw the election results for the AZ initiatives was that AZ if full of authoritarians. Minimum wage increase and vote down on legalizing MJ.

  • Agammamon

    Nah, we're just full of old white people (how do you think Arpaio was able to stay in office so long?) and extremely conservative Mexican-Americans.

  • Peabody

    I don't believe this. Paul Krugman told me it wasn't true.

  • frankania

    Back in the 70's, I ran my TV shop in Mississippi with 5 employees. When I finally got sick of all the paperwork and deductions, etc. I fired them all. THEN, I hired them back as "private contractors" (sort of like when you hire a plumber or auto-mechanic to do things for you). I then paid them in cash, the exact full amount they'd earned each week, and left it up to them to pay their taxes and fill out paperwork.

    Nowadays, I am not sure of the legal crap you might have to go through to do this, but think about it!

  • joe

    Krugman cites the Card krueger Study as proof in every column he writes about the minimum wage - even though he knows the card kruger study was based on flawed data. In excusably, every economist that studies the effects of minimum wage knows that study has seriously flawed data..