First, the minimum wage in Arizona jumped nearly 25 percent on Jan. 1 to $10 an hour.
Then, on July 1 in Flagstaff, it rose another 50 cents to $10.50.
Meanwhile, state economists charged with tracking job growth and decline made a surprising finding: the leisure and hospitality industry, where a sizable portion of minimum wage workers are employed, added 17,600 jobs over the past year.
And supporting that growth, according to a separate report, is the booming tourism sector, where overall spending hit a record last year even though the price of gasoline kept falling.
Looking just at the numbers, this is good news for Coconino County, where more than 9,000 jobs are in low-wage food service alone. The jobless rate is lower than any other Arizona county north of Maricopa except Yavapai. And Coconino ranked third among all 15 counties in tourism spending at $1.3 billion, which generated $67.3 million in local taxes.
It’s also fairly evident that despite the doomsayers, the higher minimum wage has not destabilized lower-wage sectors of the economy. Yes, there are fewer local jobs in retail stores than a year ago, but that is part of a nationwide shift to shopping online that is also generating jobs in e-commerce, warehousing and technical support.
LEVERAGING ITS AMENITIES
Flagstaff, with its so-called “amenity-based” economy that leverages the slower pace of a smaller city with a major university and easy access to the great outdoors into consistent Top 10 ratings in all manner of lifestyle magazines, would seem ideally situated to take advantage of the travel boom. And social media has already spread the word around the globe about not only the wonders of the Grand Canyon (70,000 Chinese alone visited last year) but also the Colorado Plateau backcountry, to the benefit of rafting guides, tour operators and outdoor gear suppliers.
The worry, as we have expressed before, comes from an over-reliance on jobs in just two sectors: leisure/hospitality and government. The first depends on households having discretionary income to spend on travel and entertainment, and the jobs themselves are neither high-paying nor upwardly mobile. Come the next economic recession, and the contraction in global travel alone will be painful for counties like Coconino, with its high quotient of national parks and other international tourist destinations. The higher-end, value-added jobs in educational tours and adventure tourism may be the first to go, and with them the spending that rippled through the community.
Government jobs start with public education, and in Arizona, the investment has been pathetic at the K-12 level. The result is not just children deprived of high-quality teaching and schools, but a widening social and economic gap that is exacerbated by self-selective charters and private schools that retain the right to discriminate even though they receive public funds. Throw in housing prices that are unreachable for many in the Flagstaff workforce, and the amenity-based economy, even with a $15 minimum wage by 2021, will remain a daily grind for all but high-level professionals, wealthy semi-retirees and owners of second homes.
TOURISM NOT ENOUGH
That is not to say those last groups do not contribute to the diversity and vitality that makes Flagstaff so livable. And a contraction or at least a timeout in certain kinds of tourism might not be a bad thing – winter snowplay is one example. As for NAU enrollment and employment growth, there appear to be diminishing returns as traffic volume outpaces road capacity.
But taken alone, growth in hospitality jobs (even at $15 an hour) and tourism spending clearly are not the answers. And manufacturing, given the relative isolation of Flagstaff and its limited water supply, will not be a major factor. We saw this when even SCA Tissue, despite getting lower-cost water from treated effluent and lower-cost pulp from the Norton recycling plant next door, pulled the plug on its paper mill. We should be grateful for Nestle-Purina, Joy Cone and several other basic production plants in town with their high-paying jobs. But large-scale manufacturing is not where Flagstaff’s economic future lies. Biomedicine, information technology, and applied engineering coming out of NAU, among others, will be smaller in size but deserve local government support.
The bottom line, however, is that the hospitality, recreation and travel industries will continue to be big players in the economy. As such, the key numbers that should matter to Flagstaff are connected to how to negotiate the costs that an amenity economy imposes on mobility, health, safety and access to what is popularly known as “the American Dream.” The growing gap that economists and sociologists have noted in the U.S. between the top 20 percent and bottom 80 percent applies in spades to Flagstaff – one study found it to be the least affordable of 191 U.S. cities for median-income families. That means doubling down on the local commitment to first-rate public schools, basic health care for the 25 percent of children who live in poverty, and housing – both ownership and rentals – that the local workforce can afford.
OPPORTUNITY FOR ALL
If Flagstaff is going to continue to throw in its lot with the amenity-based economy, all of its citizens should have the opportunity to enjoy its benefits. Otherwise, the politics of resentment, as we’ve seen on the national level, has a real chance of taking root in Flagstaff. That’s not a constructive path, and we’ll look to local leaders to recognize that before it is too late.