Leisure, hospitality sector leads jobs growth, despite minimum wage increase

PHOENIX – Remember those claims during the Proposition 206 debate that increasing the minimum wage would lead to less hiring and people being laid off from low-wage jobs?

The latest unemployment statistics suggest that hasn’t happened.

In fact, the data from the state Office of Economic Opportunity shows that the number of people working in bars and restaurants last month not only increased but did so at a rate six times higher than the economy as a whole. Employers who run food service and drinking establishments added 7,800 new workers compared with February, a 3.3 percent boost.

By contrast, month-over-month employment in the private sector for the entire state grew just 0.5 percent.

Overall, there are now 242,800 people in that sector of the economy, 8 percent more than there were a year ago. That compares with a 2.5 percent increase in all private sector employment in the past year.

This does not just appear to be a one-year bump in employment.

Doug Walls, the research administrator for the agency, said the entire leisure and hospitality sector, which also includes hotel workers and those who work in the entertainment industry, said employment growth in this sector for the first three months between 2010 and 2016 averaged about 9,500. But for the first three months of this year, the number of jobs is up 14,200.

The new figures come despite the fact that the state’s minimum wage, which had been $8.05 an hour last year, is now $10. Both figures can be $3 less for those who earn tips provided the employer can show their workers actually got that much.

It was the Arizona Chamber of Commerce and Industry that led the opposition to Proposition 206 with claims there would be fewer entry-level and low-wage jobs as employers culled payrolls to cover the higher expenses. But organization spokesman Garrick Taylor said the strong employment growth numbers do not necessarily mean those fears were unwarranted.

“I think it points to the fact that this governor and legislature have done all they can to put pro-growth policies in place that will blunt the negative impact of a mandated wage increase foisted on employers who rely on entry-level labor,’’ he said.

But Taylor could not explain why those policies his organization likes did not result in the same strong growth across the state’s economy that showed up in food and drinking places.

“We would like to be proven wrong,’’ he said. Anyway, Taylor noted, what happened on January 1 is not the last word, with Proposition 206 pushing the minimum wage to $12 by 2020.

“We are in the early stages of this dramatic mandated wage increase,’’ he said.

“Let’s hope these numbers remain strong,’’ Taylor continued. “But we have our concerns.’’