Living wages: Flagstaff, AZ
- Requiring higher pay than the federal rate: Living wage laws require all employers within a jurisdiction to pay wages at a rate higher than the federal minimum wage ($7.25 for untipped workers; $2.13 for tipped workers). Increasingly, living wage laws are designed to phase out a subminimum wage for tipped workers altogether, often over a period of 3-5 years.
- Making market-specific adjustments: Local living wage laws take into account market-related costs (such as food, childcare, housing transportation, and more) to determine basic living costs and self-sufficiency. Many newer living wage laws also build in annual increases to account for changes in the cost of living and inflation.
- Multiple pathways to implementation: Some localities advance living wage laws through ballot measures; others may pass legislation through a city or county council. Legislation may also include related benefits, such as supplemental pay when an employer does not provide health insurance, unpaid and paid days off, and various job protections.
- Enforcing the law: Living wage laws and other worker protection laws can be enforced by a range of jurisdictional agencies. These can include a department of worker protection, an office of labor standards, the mayor’s office of equity, and more. Dedicated staff, often attorneys, are responsible for raising awareness about the law, reviewing and investigating complaints, and facilitating settlements between workers and employers.
A large body of evidence demonstrates that living wage laws can increase earnings and reduce poverty in some circumstances. However, more evidence is needed to confirm such effects.
Synthesized research of living wage laws conducted by County Health Rankings & Roadmaps shows that living wage laws can increase earnings and alleviate poverty. Effects are most pronounced for individuals close to the poverty line.
Synthesized research on minimum wage showed mixed results, with modest positive impacts on health outcomes and income for some residents. However, the results were inconsistent in demonstrating a reduction in poverty rates.
Results and accomplishments
The minimum wage in Flagstaff is now $15.50/hour, up from $8.05 in 2016. The law includes a cost-of-living adjustment that goes into effect annually starting in 2023, when the minimum wage will be set at $16.80.
Minimum wage workers in Flagstaff have seen their wages rise by 93% since the law went into effect in 2017.
By 2026, the gap between the tipped minimum wage and the standard minimum wage, improving the earning potential of hospitality workers, who make up 15% of Flagstaff’s workforce.
54% of Flagstaff voters supported increasing the minimum wage in 2016, and 56 percent voted to reject an attempt to reverse the minimum wage increase in 2018.
- Raising the minimum wage for all workers: By raising the minimum wage for tipped and nontipped workers, Flagstaff secured greater financial security for workers in its largest private sector industry, hospitality. Doing so has significantly raised wages for thousands of workers and will likely increase economic mobility for a large swath of the population.
- Winning the fight for public opinion, twice: After Proposition 414, the minimum wage ballot initiative, passed with 54 percent of the vote in November 2016, the Flagstaff Chamber of Commerce, with financial support from the advocacy group American Encore -- sought to reverse the law with a countermeasure on the ballot in November 2018. After another intense campaign, Flagstaff voters showed even stronger support for increasing their local minimum wage, with 56 percent voting to reject the countermeasure, Proposition 418.
- Serving as a model for other jurisdictions: Several jurisdictions have looked to Flagstaff as a model for a grassroots ballot initiative to raise the minimum wage for all workers. Some members of the Flagstaff campaign are now working to pass a similar measure in Tucson. They are seeking to build on the Flagstaff model and incorporate stronger and better-funded enforcement mechanisms, such as a larger labor standards office.
In 2015, nearly a quarter of residents of Coconino County, which includes Flagstaff, lived in poverty. The prevailing minimum wage was too low to ensure workers could meet their basic needs, especially for hospitality workers earning the lower tipped minimum wage. Additionally, community-based organizations reported that minimum wage workers were being paid below the legal minimum and subjected to other labor violations.
In 2016, Flagstaff residents approved Proposition 414. Under the new ordinance, the minimum wage rose from $8.05 to $15.50 an hour between 2016 and 2022, with annual cost-of-living adjustments required thereafter. The tipped minimum wage will gradually be phased out between 2022 and 2026, when all workers will have the same wage floor. Additionally, the ordinance empowered the Flagstaff Office of Labor Standards to investigate violations of labor law and levy fines against offending employers.
Keys to the ordinance’s success included passing the law as a ballot measure instead of through City Council, which allowed for greater wage increases and stronger worker protections; effective organizing to build constituencies to support the referendum (and to vote against a 2018 ballot measure that sought to repeal the ordinance); increasing the minimum wage gradually, which lessened community members’ concerns about the impact on local businesses; and leveraging support from national unions and labor groups to enact and defend the ordinance.
The greatest challenges to the ordinance are the limited resources the City commits to minimum wage enforcement, a campaign to overturn the ordinance by referendum in 2018, and efforts by the Arizona state legislature to preempt Flagstaff’s minimum wage law.
What was the challenge?
- Intergenerational poverty in Flagstaff: In 2015, nearly a quarter of Coconino County residents (which includes Flagstaff), and 28% of all children in Flagstaff itself, lived in poverty, two points higher than the statewide average. Arizona had the fifth highest child poverty rate in the country.
- A large, underpaid hospitality sector: Hospitality workers -- those employed at hotels, restaurants, and bars -- represented 15 percent of Flagstaff’s workforce. It was the city’s largest private-sector employment sector. With a large share of these workers earning the subminimum wage for tipped workers, many lived in or near poverty.
- Reports of worker mistreatment: Grassroots organizers and community-based organizations increasingly reported that minimum wage workers, especially undocumented residents of Flagstaff, were being paid wages below the legal minimum wage. Additionally, workers described a range of other labor violations (which, for various reasons, such as safety and security, they did not feel comfortable reporting to municipal authorities). These included not receiving overtime pay and having to buy their own cleaning supplies.
- Public sector employers paying minimum wage: The public sector was the largest employer in the city, with Northern Arizona University being one of the largest single employers. The school had a high number of minimum wage jobs on or near campus. Students with limited incomes sought ways to improve their earning potential while enrolled in the university.
What was the solution?
- Raising the minimum wage - gradually: Flagstaff passed a graduated minimum wage increase by referendum in November 2016. Using a “$15 in 5” structure, the law raises the minimum wage from $8.05/hour to $11 in 2018, $12 in 2019, $13 in 2020, and $15 in 2021. After City Councilmember Eva Putzova successfully added an amendment to the law through Flagstaff City Council in 2017, the wage is set for an additional increase to $15.50/hour in 2022. The law also includes a provision tying the minimum wage to inflation, resulting in an adjusted minimum wage of $16.80 for 2023.
- Phasing out the tipped minimum wage: With tipped workers (anyone receiving more than $30/month in tips) disproportionately impacted by low wages in Flagstaff, Proposition 414 also included a provision to phase out the different minimum wage rates for tipped and non-tipped workers. It is set to $3/hour less than the standard minimum wage (matching the state gap) until 2022. At that point, the tipped minimum wage will be phased out by 50 cents each year until 2026 at which point the tipped minimum wage will be equal to the standard minimum wage.
- Employee protections through the Flagstaff Office of Labor Standards: The Flagstaff Office of Labor Standards leads enforcement and investigations into potential violations, including retaliation against employees who file complaints, which was explicitly banned by the ordinance. The office is funded in part through fines levied against employers violating labor laws.
- Letting residents decide: Eva Putzova, a Flagstaff City Councilmember, had previously considered legislation to raise the minimum wage. She did not propose the legislation after her City Council colleagues said they would refuse to bring it up for debate. Instead, in partnership with members of Flagstaff's grassroots organizing community led by Joe Bader (a local labor union consultant), she initiated a voter referendum for a minimum wage increase for the November 2016 General Election. The referendum, Proposition 414, passed with 54 percent of the vote.
What factors drove success?
- Grassroots organizing: Although Eva Putzova was an elected official, she also had extensive experience as a community activist and organizer. Along with Joe Bader, a veteran labor union consultant for worker groups in the area, the campaign activated various groups, especially students and hospitality workers. As a result, the campaign garnered widespread word-of-mouth support across Flagstaff’s diverse communities.
- Using gradual wage increases: The coalition working to advance the minimum wage realized that some community members, especially small business owners, had significant apprehensions about a substantial, immediate increase in the minimum wage. To address that concern, the campaign focused on “$15 in 5” messaging, highlighting the gradual implementation of the living wage. This provided businesses with an extended period to adapt.
- Using the ballot initiative: In 2014, Putzova campaigned for her City Council seat with a platform prioritizing a living wage. After she was elected, Putzova quickly determined that the Flagstaff City Council in 2015 would not take action on the issue. In response, Putzova and her team sought an alternative approach. Recognizing that there was strong public support for a minimum wage increase, Putzova took advantage of Arizona’s welcoming environment for ballot initiatives, ultimately passing a stronger rule than would have been possible through City Council.
- Leveraging national support: Flagstaff’s minimum wage campaign received significant financial support from the United Food and Commercial Workers (UFCW) and Restaurant Opportunities Center United. (ROC United). ROC United also provided policy research and data support. The National Employment Labor Project (NELP) provided the campaign with crucial legal counsel and campaign funding to defend the law against the countermeasure.
- Maintaining organizing infrastructure: Upon Proposition 414's adoption, opponents quickly initiated a countermeasure, Proposition 418, which would have overturned the minimum wage increase. Because Putzova’s team maintained its campaign infrastructure and remained in regular communication with NELP and other national partners, it was able to defend Proposition 414 and ultimately defeat the challenge.
What were the major obstacles?
- Limited enforcement capacity: With limited local government capacity, Flagstaff dedicates just one full-time employee to enforcing its local minimum wage ordinance. As a result, minimum wage enforcement in Flagstaff is complaint-driven; many experts say that proactive enforcement is more likely to ensure fair wages are being paid.
- An effort to reverse the referendum: Shortly after Proposition 414 went into effect, a group led by business owners attempted to overturn the minimum wage increase with a referendum of their own, Proposition 418. This required the Flagstaff Living Wage Coalition to launch another campaign to keep the wage reforms in place.
- State preemption attempts: Arizona state legislators have sought to pass two preemption bills and filed two different lawsuits in an effort to nullify local minimum wage ordinances that required a higher rate than the state’s. However, as a result of the 2006 Arizona Minimum Wage Law, which NELP helped to write and defend, state courts and Arizona’s Attorney General have invalidated such attempts for the time being.
The state enacts the Voter Protection Act, a constitutional amendment. The law prohibits state legislators from overturning locally passed ballot initiatives.
After a campaign led by workers, community-based organizations, and activists, and with support from NELP, Santa Fe’s City Council passes the Living Wage Ordinance, which raises the minimum wage for all businesses with 25 or more employees to $8.50 -- $3 more than the state’s minimum wage. The ordinance is the first in the country to apply to all workers, including tipped workers. Other southwestern communities, including Flagstaff, begin to consider their own minimum wage campaigns.
With 65 percent of voters supporting the measure, Proposition 202, also known as the Arizona Minimum Wage Initiative, becomes state law. The law includes a gradual minimum wage increase, which would reach $12/hour in 2020. Crucially, the measure, which was defended in court by NELP, also includes a provision explicitly banning state preemption of local minimum wage laws that set rates higher than the state’s.
With three open seats on Flagstaff’s City Council, Eva Putzova uses a strong network of activists and grassroots organizers to finish second with nearly 7,500 votes. A vocal advocate of workers’ rights throughout her campaign, Putzova calls for Flagstaff to increase the minimum wage for all workers.
The coalition, led by Putzova and represented in court pro bono by two local attorneys, challenges a 2013 state wage preemption law passed by Arizona legislators. Attorney General Mark Brnovich settles the case in favor of the coalition, paving the way for local minimum wage laws.
With the legal path cleared, Putzova and Flagstaff union consultant Joe Bader lead a grassroots coalition to develop ballot initiative language and vet the provision with their allies. This came after the City Council dismissed efforts to debate the minimum wage.
After gathering 3,5000 signatures to qualify for the ballot and a robust messaging campaign led by a coalition including Putzova, workers, students, and advocacy groups, Flagstaff voters pass Proposition 414, which becomes the Minimum Wage Act. The measure passes with 54 percent of the vote and raises the minimum wage between $1-$2/hour until 2021, when it reaches $15/hour.
After being caught off-guard by the success of Proposition 414 in 2016, the Flagstaff Chamber of Commerce organizes a group of small business owners into a coalition called Elevate Flagstaff. They seek to pass a ballot initiative of their own, Proposition 418, which would tie Flagstaff’s minimum wage to the state’s rate.
After a counter-campaign led by Flagstaff Needs a Raise, which includes Putzova and her supporters, 56 percent of Flagstaff voters reject Proposition 418, leaving the minimum wage increase in place. The coalition writes on its website, “More than 20,000 workers in Flagstaff have benefitted from Flagstaff’s local minimum wage law. More pay means less stress for families, better health, and less domestic violence among other positive social outcomes.”
With the 2016 campaign built on the “$15 in 5” messaging of a gradual minimum wage increase over five years, Flagstaff’s minimum wage reaches that target, despite several legal challenges and the attempt to reverse it via ballot initiative. Flagstaff raises its minimum wage to $15.50/hour the next year, and is on track to phase out the tipped minimum wage by 2026.
To account for a significant increase in inflation and the cost of living, the minimum wage is set to $16.80 for 2023. This is the result of a provision in the ordinance that built in cost-of-living adjustments annually starting in 2023.
How did leaders confront the problem?
- Addressing intergenerational poverty: In Flagstaff in 2015, nearly one in four residents earned an income below the federal poverty line, and 28% of children lived in poverty. Many of these residents worked in low-paying jobs in the hospitality sector or in the public sector. With costs of living rising, local leaders begin to consider increasing wages for low-income workers.
- Changing the status quo from the inside: Eva Putzova launches her Flagstaff City Council campaign in 2013, focusing her platform on increasing the minimum wage. Putzova, a political newcomer, uses her strong background in grassroots organizing to win more than 7,500 votes and a seat on Flagstaff’s City Council.
- Mobilizing a coalition: After identifying a ballot initiative as the most likely vehicle to achieve a sustainable minimum wage increase, Putzova and community organizer Joe Bader begin building a coalition of local and national supporters. Within Flagstaff, this includes hospitality workers and graduate students. At the national level, the campaign receives advisory support and funding from NELP, financial and policy research support from ROC United, and and financial support from the United Food and Commercial Workers (UFCW) Union.
- Bringing the issue before voters: After the Flagstaff City Council refuses to debate a wage increase, Putzova and a coalition of workers and advocacy groups collect more than 3,500 signatures to put the question of a living wage -- $15/hour -- on the ballot in November 2016.
How was the strategy designed?
- A graduated increase: To make immediate compliance more likely and to reduce opposition, the measure was designed to provide employers with a five-year phase-in to adjust to the higher wages, while workers could still realize short-term gains. The law raises the minimum wage from $8.05/hour to $11 in 2018, $12 in 2019, $13 in 2020, and $15 in 2021. The minimum wage is set at $15.50 in 2022 as a result of an amendment Putzova successfully proposed in 2017. In 2023, the minimum wage will rise to $16.80 due to the cost-of-living adjustment.
- Equality across sectors: The Flagstaff coalition, which included many tipped workers, recognized the consequences of significant wage disparities between tipped and non-tipped workers. As a result, a key element of the measure's design was to use a 10-year graduated phase-in to eliminate the gap. By 2026, all workers, regardless of industry, will earn the same minimum wage.
- Reshaping the worker-employer relationship: To increase employer compliance and worker access to information, NELP designed the Flagstaff minimum wage law to require employers to proactively affirm workers’ rights and wages. This includes providing employees with written notice of their rights, hanging a poster with the law’s details in public, and banning employer retaliation in the wake of a complaint. Employers are also required to maintain payroll records for four years.
- Empowering workers: The Flagstaff Office of Labor Standards is tasked with enforcing the law, including investigating any complaints and pursuing legal action if necessary. If the Office of Labor Standards validates a complaint, the law permits workers to sue for up to three times the wages they are owed, plus interest.
- Leveraging existing laws: Primarily drafted by NELP attorneys, the Flagstaff minimum wage law primarily repurposes the legal language used in Arizona’s existing minimum wage law (roughly 80 percent of the language is the same). The NELP attorneys also used Seattle’s minimum wage ordinance as a model to strengthen worker protections and develop the graduated implementation approach.
How was the approach funded?
- Grassroots fundraising: With a campaign infrastructure mostly in place from Putzova’s City Council race, the Flagstaff Needs a Raise coalition raised roughly $7,000 in small-donor gifts. The funds were used for essential campaign needs, such as advertising and office supplies.
- External support from workers’ groups: The coalition raised $20,000 from the United Food and Commercial Workers (UFCW) Union and $5,000 from Restaurant Opportunities Centers United. These funds were used to pay for Facebook ads, mailers, and an external campaign consultant.
- Pro bono legal support: NELP provided significant legal support pro bono, including drafting much of the proposed law. Crucially, NELP also filed a legal challenge to the summary language used for Proposition 418, which initially did not offer a clear explanation of the fact that it would reverse the minimum wage rule.
- Fighting Proposition 418: The coalition ran a second campaign in 2018 to defeat Proposition 418, the ballot initiative seeking to reverse the minimum wage increase. To fund advertising and staff costs, NELP awarded the campaign a $50,000 grant.
- Maintaining the Office of Labor Standards: The Flagstaff Office of Labor Standards continues to enforce the minimum wage and associated fair labor laws as it did before the wage increase, thus requiring no new investment from the city. However, with more stringent labor standards in place, Flagstaff’s law calls for fines on employers to fund more robust enforcement efforts.
How was the plan implemented?
- Working with employers to implement wage increase: Once the measure is approved by 54 percent of Flagstaff voters, the Office of Labor Standards begins to engage with businesses and inform them of the new requirements. This includes providing each business with a poster on workers’ rights that management must hang in public. They are issued a new poster each year as the minimum wage increases.
- Phasing in the wage increases: The law was written to phase in the increased minimum wage with annual raises. Once the law passed, the minimum wage in Flagstaff was raised from $8.05/hour to $11, and then $12 in 2019, $13 in 2020, $15 in 2021. In 2022, the minimum wage reached $15.50 (the result of a 2017 amendment proposed by Putzova).
- Eliminating the distinction between worker categories: Using a 10-year graduated phase-in, Flagstaff’s law fully eliminates the distinction between tipped workers and others by 2026, closing the $3-gap incrementally each year until then. The Office of Labor Standards is responsible for conducting outreach to the business community to communicate and enforce the change.
How was the approach measured and refined?
- Public opinion data informs strategy: Given the barriers to passing minimum wage legislation through the City Council and Arizona state law offering strong protections for ballot initiatives, Putzova and other supporters analyzed local and national opinion data indicating that the majority of Flagstaff residents would likely vote to support a minimum wage increase. This data led the coalition to commit their volunteer hours and limited financial resources to pursuing a ballot initiative.
- Defending the minimum wage: Because Arizona's constitution provides favorable conditions for the creation of ballot initiatives, a network of business owners and executives organized by the Flagstaff Chamber of Commerce and funded by national organizations opposed to raising the minimum wage launched a countermeasure to Proposition 414 in November 2018. A strong public relations campaign from the coalition and a legal challenge from NELP helped defeat the countermeasure, with 56% of Flagstaff residents rejecting the reversal.
- Maintaining payroll records for four years: The ordinance requires employers to retain payroll records for four years to support Office of Labor Standards investigation efforts. Such data is crucial to the office’s ability to enforce the gradual phase-in of the higher minimum wages.
- Improving complaint data: Today, the Flagstaff Office of Labor Standards has limited administrative capacity, resulting in a dearth of complaint and other fair labor practice data from workers. Members of the Flagstaff coalition have identified this as a priority area for the future.
Results for America would like to thank the following individuals for their help in the completion of this case study: Eva Putzova, Joe Bader, and Frankie Beesley of Flagstaff Needs a Raise; and Paul Sonn, Yannet Lathrop, and Tsedeye Gebreselassie of NELP.