UPDATED:April 5, 2017

Arizona Supreme Court Upholds Minimum Wage

On March 14, the Arizona Supreme Court rejected the challenge that several business aligned groups had brought against the new minimum wage increase. In our political discourse, words like “unconstitutional” are thrown around too much for the actual number of times that descriptor would be accurate. We here at Arizona Public Square want to dive into how a decision like this would be challenged as unconstitutional, and break down the arguments for and against the constitutionality of this proposition.

In 2016, voters approved Prop. 206 with 58 percent of the vote. This put Arizona on a path to reach a $12 an hour minimum wage by 2020. Right after the election, several business groups, including the Arizona Chamber of Commerce and the Tucson Hispanic Chamber of Commerce, filed against the proposition claiming that the law would violate the Arizona Constitution.

A note on process should be made here as to why this challenge ended up in State court instead of Federal court. The different business interests did not challenge the proposition on the grounds that it violated the U.S. Constitution. For the most part, minimum wage laws are thought to be consistent with the U.S. Constitution – ever since West Coast Hotel Co. Vs. Parrish, for those curious. However, the Arizona Constitution has several statutes regarding the passage of propositions, a feature not allowed in every state. Those who brought the suit argued that proposition 206 violated these statutes, which landed this case in State court.

It is interesting to see the distinction here between a political reason for a lawsuit and the legal reason for a lawsuit. All of the organizations that were part of the lawsuit against the proposition were groups that opposed the minimum wage proposition during the election. They all argued that a higher minimum wage would hurt private business and decrease employment rates. Right or wrong, neither of these arguments are present in their briefs to the Arizona Supreme Court. Instead, their arguments revolve around an argument that the new law might have violated a provision of how propositions are written. This case is a good example of common discrepancies between political and legal arguments against laws.

The challenge to the new minimum wage laws revolved around a provision in the Arizona Constitution called the revenue-source rule. This provision says that any proposition that would affect how the State spends its money or requires funding must pinpoint a source for this funding. In other words, a proposition that affects state funding must also stipulate from where the money is coming. Although this law would primarily affect private businesses, the groups suing argue that this proposition would also affect state spending. They argued that the increased amount that Arizona would have to pay to contractors, who themselves benefit from a minimum wage increase, would cost the State money. Arizona Central interviewed the head lawyer of those bringing the suit, who said, “The state already has seen a substantial increase, he said, spending $55 million more for services that contractors provide through the state’s Medicaid system. The agency that runs the system is seeking an additional $21 million for the next budget year to cover higher costs for contractors who have to comply with the new minimum-wage law.”

However, it seems that this argument has been unpersuasive to the courts. From usnews.com, “A Maricopa County Superior Court Judge came down on the side of Proposition 206 backers in December. Judge Daniel Kiley ruled that because it exempts the state itself from having to pay the higher wages and there’s no mandate that it pay its contractors more for work they do, there’s no requiring for a funding source.” The defenders of the law say; “If the argument that even indirect costs make a ballot measure unconstitutional prevails, [Lawyer for the proposition] Bales wondered how any future citizen initiative would be legal. After all, he said, most measures probably would trigger some cost, no matter how small.” As Attorney General Mark Brnovich – a state attorney who argued in defense of the proposition, said, “If you accept the logic of the plaintiffs, you would never have a state initiative again.”. “Anyone could always come up with some type of hypothetical where there would be an indirect or incidental cost to the state.” The proposition doesn’t stipulate that the state must cover the cost of increased wages for the contractors .

The defenders of the minimum wage propositions might have a point here. Any proposition that passes would at a minimum have certain administrative costs that while not prohibitive would have to be paid. If the proposition forced the state to cover the incidental cost of printing, for instance, this would trigger this revenue-source provision. The defenders of this bill would argue that this would be absurd. It is these arguments that seemed to persuade the Arizona Supreme Court.

These arguments had more sway with the Court, and the minimum wage law is here to stay. However, this case can be used to illustrate the difference between a political argument and a legal argument against a law. Especially how legal arguments can be used to achieve political objectives. In this case, that strategy didn’t work, much to the pleasure of the hundreds of thousands of workers who just got a raise.