Arizona’s Minimum Wage to Rise by 35 Cents, Hitting $14.70

Beginning in January, Arizona’s minimum wage will see an increase of 35 cents, bringing it to $14.70 per hour. This change affects workers at the lower end of the pay scale and brings up the question of how this extra money can be spent.

The increase stems from voter-approved initiatives that set a state minimum wage separate from the federal rate of $7.25, which has remained unchanged since 1991. These initiatives mandate annual adjustments based on the Consumer Price Index, making this wage hike a direct response to inflation.

According to the Bureau of Labor Statistics, inflation over the past year was recorded at 2.5%. This translates to a necessary increase of approximately 35.9 cents when applied to the current wage of $14.35; however, rounding to the nearest nickel results in the new figure of $14.70. An official announcement regarding the wage adjustment is expected later this month.

In Tucson, residents benefit from a separate initiative that will raise the minimum wage to $15 by 2025, with subsequent inflation adjustments ensuring wages remain higher than the state’s baseline. Meanwhile, Flagstaff’s minimum wage currently stands at $17.40 per hour, projected to rise to at least $17.85 due to its local wage ordinance, which mandates a minimum wage that is at least $2 above the state rate.

The actual number of workers currently earning below the new minimum wage remains unclear. As inflation continues and the labor market tightens, many employers are raising salaries to attract applicants. Recent data reveals starting wages in various industries, including fast food and ticket sales, hover around $13.86 to $14.10 per hour.

Governor Katie Hobbs, commenting on the wage issue, acknowledged the struggles faced by many families with rising costs. Although she refrained from stating a specific wage she deemed appropriate, she recognized that survival on $14.70 an hour is challenging for most families.

The Arizona Restaurant Association is pushing a measure that could alter what it pays tipped employees. Current law allows restaurants to claim a $3-an-hour credit, but a proposed Proposition 138 would raise that credit to 25% of the minimum wage, effectively shifting some financial responsibility from employers to patrons.

Critics argue the proposal could further entrench employees’ reliance on tips, while proponents claim it would benefit tipped workers by keeping more employees on staff.

The 35-cent increase in the minimum wage reflects a lower inflation rate compared to last year when it rose by 50 cents due to a 3.7% inflation rate. However, there are mixed signals in the inflation data; while housing and vehicle insurance costs rose significantly, food prices saw only a minimal increase, with some categories even reflecting price drops.

As Arizonans prepare for the upcoming changes, the implications of the wage increase on local economies and job markets continue to unfold.