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2016 in Review: Minimum wage hikes shock some Flagstaff employers

2016 in Review: Minimum wage hikes shock some Flagstaff employers


The Flagstaff business community saw continued growth in 2016, both in new and expanded economic activity. Harkins closed its old cineplex and opened a new one while a half-dozen projects had groundbreakings.

But it also received some shocks when both the state (Prop. 206) and city (Prop. 414) minimum wage hike ballot initiatives passed -- and Granny’s Closet closed.

Many voters and businesses owners expected at least one minimum wage ballot question to pass but were not prepared for both to pass. Business owners are now facing at least two wage increases in the new year, one from $8.05 per hour to $10 an hour in January and one in July to $12 an hour.

Flagstaff Needs a Raise, the group that proposed the local minimum wage increase to $15 by 2021, is focused implementing the new wage increase. The new law  includes increased wages for tipped workers, such as wait staff at restaurants, to $15 an hour by 2026. And it requires that the city’s minimum wage always be at least $2 above the state minimum wage and that it be increased based on the cost of living each January.

The Prop. 206 initiative increases the state minimum wage to $12 an hour by 2020. Future state minimum wage increases would be tied to the Consumer Price Index. It also includes an increase to $9 an hour for tipped workers. Employers are also required to offer mandatory sick leave.

Several small business owners have said they won’t be able to absorb increasing wages to $12 an hour within six months and will have to lay off staff, cut hours, increase prices or all of the above.

Elevate Flagstaff, a group of business owners and residents, is working on a plan to gather 4,000 signatures by the end of January to put an initiative gutting Prop. 414 on the May ballot.

At the state level, the Arizona Chamber of Commerce and several other business groups have filed a lawsuit to overturn the state minimum wage change.

Northern Arizona Healthcare startled the community when it announced in May that it was closing outpatient programs at The Heart & Vascular Center of Northern Arizona and partnering with Mountain Heart for outpatient cardiac care and rehab services.

Officials from NAH and Mountain Heart said the partnership would free up space at the hospital to expand inpatient cardiac care services and provide better and less expensive outpatient and rehab care.

In a shock to their fans, Granny’s Closet, a local restaurant landmark, closed suddenly in November, and Il Rosso, a favorite pizza parlor, was forced to move in April. The property Il Rosso was renting at Aspen Avenue and Beaver Street was sold to a developer and a new hotel is being built in the location.

The business sector also had several bright spots during the year.

Golden Eagle Distributors was purchased by Hensley Beverage Company and stayed open. All but one staff member was rehired.

In-N-Out Burger announced in July it was coming to Flagstaff. Construction on the new restaurant has not started but it’s supposed to move in next to Pizza Hut on Milton Road.

Harkins opened its new 16-screen movie theater complex near the Flagstaff Mall in November and Nestle Purina has a plan to reduce the smell from its plant in the new year.

The reporter can be reached at or (928)556-2253.


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Education/Business Reporter

Suzanne writes about education and business. She covers the local school district, charter schools and Northern Arizona University. She also writes the Sunday business features.

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