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A survey of Valley businesses shows support among businesses for increased taxes to fund K-12 education to better prepare and train incoming workers for jobs.
The survey, conducted by the Greater Phoenix Chamber of Commerce, also showed that three-fourths of businesses saw no impact so far from the Tax Cuts and Jobs Act passed by Congress in 2017 and that Arizona’s increased minimum wage and mandatory sick leave caused by the adoption of the Fair Wages & Healthy Families Act in 2016 has affected big businesses negatively with little impact on small businesses.
Many employers feel their employees are abusing their sick leave, using it as vacation time.
The Greater Phoenix Chamber’s electronic survey was sent out to its members and the members of eight other Valley chambers of commerce, including Peoria, yielding 330 responses. It was the first time the Greater Phoenix Chamber had conducted such a survey, but it now intends to send one out each quarter.
The next survey, for the second quarter of the fiscal year, will focus on businesses’ workforce needs. In the third or fourth quarter, the Chamber will do a follow-up to the questions asked in its first survey to see if responses change from the first quarter.
Education funding
Among 219 businesses that responded to the question, 63 percent supported some form of increased taxes to fund K-12 education.
Greg Tilque, senior economic development manager for the Greater Phoenix Chamber, said these results weren’t surprising.
“That’s pretty consistent with what we’re hearing out there,” he said. “I think kind of across the board there is a struggle to find qualified people.”
A property tax or sales tax, which received 20-25 percent support each, were the preferred method over income tax, which received 10 percent support.
Majority support for education taxes was consistent across large, small and mid-sized businesses. Big businesses showed more overwhelming support than smaller businesses, but fewer of them responded. Nearly three-fourths of businesses with more than 100 employees supported education taxes, but only 22 of 54 big businesses that responded to the survey provided an answer to the question. Businesses with 11 to 100 employees had 43 of 77 businesses respond and businesses with 10 or fewer employees had a 100 percent response rate. Both small and mid-sized businesses supported education taxes at a rate of just over 60 percent.
Voters, in large part, agree. Eighteen of 22 ballot measures asking for taxpayer money for local school districts in Arizona passed. Voters didn’t get a chance to vote on the largest proposed education funding ballot initiative. The Arizona Supreme Court disallowed an Invest in Ed ballot initiative, which would have taxed the state’s top earners to fund education, from appearing on the ballot. The Court said the initiative’s petition signers were not fully informed of what the new law would do.
Education funding was also in the news earlier this year when teachers across the state staged a five-day walkout to demand higher teacher pay and increased education spending. This led Governor Doug Ducey to commit to a plan to increase teacher pay 20 percent by 2020, beginning with a $300 million increase in education funding in the 2019 fiscal year.
Change to the incoming workforce isn’t only happening in the Capitol building. The Greater Phoenix Chamber has organized four workforce collaboratives to study the needs for industry-specific training in the Valley and to take steps to help the workforce meet those needs.
“Those collaboratives are trying to close that skills gap and find ways to make sure that there’s some employees out there that are qualified,” Mr. Tilque said.
The four workforce collaboratives are in the areas of construction, cyber security, financial services and health care.
The Chamber’s next survey, which is already out and has a response deadline of Thursday, Dec. 20, will focus solely on workforce needs.
“We want to find out, if there’s a skills gap, what that is, and if people are trying to hire employees — if they’re not qualified, what’s the reason they’re not qualified?” Mr. Tilque said. “And just overall trying to see where we’re missing. Do we need more training in certain areas, that kind of thing?”
According to survey results, workforce was one of the top three challenges faced by large, small and mid-sized businesses. In total 30.5 percent listed it as a challenge. The larger the company, the more likely the business was to list workforce as a challenge.
Tax cuts
Most businesses reported no impact felt by the GOP tax cuts passed in 2017.
Small businesses reported the highest rate of positive impact, 26.8 percent, with 16.9 percent of mid-sized businesses reporting a positive impact. Large businesses reported the same rate of positive and negative impact — 6.8 percent each.
Large businesses also reported the highest rate of no impact — 86.4 percent.
In addition to the electronic survey, the Greater Phoenix Chamber also conducted an in-person survey at 173 businesses. This survey found many companies saying they didn’t anticipate much of an impact from the tax cuts, but many more said they would have to wait until they filed their 2018 taxes to provide a complete answer.
While passed in 2017, 2018 is the first year the Tax Cuts and Jobs Act will apply to, and 2018 taxes will not be filed until early 2019.
Minimum wage
An Arizona law on minimum wage had more impact on Arizona businesses. The raise of the minimum wage under the Fair Wages & Healthy Families Act, which was approved by voters in 2016, rose the state minimum wage from $8.05 per hour in 2016 to $10 in 2017, increasing each year until it reaches $12 in 2020.
Minimum wage is currently $10.50 per hour and will increase to $11 on Jan. 1.
Naturally, this change caused a bigger hit for Arizona businesses based on how many employees they have. Nearly three-fourths of small businesses, with 10 or fewer employees, saw no impact from the minimum wage increase. More than half of mid-sized businesses, 11-100 employees, also reported no impact. It was larger businesses that felt the new law the most, with 53 percent reporting a negative impact from the law.
Very few businesses reported a positive impact from the minimum wage increase.
Sick leave
The minimum wage increase wasn’t the only change brought by the Fair Wages & Healthy Families Act. It also put in place requirements for paid sick leave an employer must provide an employee, which vary based on the employee’s status and the company’s size.
The Greater Phoenix Chamber’s electronic survey showed that this part of the law also impacted large businesses negatively while having little impact on small businesses.
The Chamber’s in-person survey also showed that many employers feel their employees are abusing this new sick leave, using it as vacation time.
“In the employer’s mind, some people are taking advantage of that law, and they’re saving up all their sick leave and all of a sudden, where they never took sick around the holidays, now they’re all of a sudden sick. And it’s affected some of the businesses’ operations,” Mr. Tilque said. “Especially where you have distribution facilities, stuff like that, where all of a sudden during the holidays, where they need people, they’re not there.”
Mr. Tilque said one business of 250 people saw a third of its employees take off multiple days around a holiday.
Results from the electronic survey showed the same percentage of large businesses — 53 percent — were negatively impacted by the mandatory sick leave as by the minimum wage hike. Mid-sized businesses were negatively impacted at a rate of 43 percent and, again, nearly three-quarters of small businesses were unaffected.
The in-person survey, however, indicated a larger negative impact from mandatory sick leave, according to the Chamber, but the Chamber did not provide numbers for the in-person survey results.