Arizona's minimum wage will increase in 2023. Here's what to know
Russ WilesLow-wage earners in Arizona have struggled more than most people from the nation's inflationary surge this year, but they also will get a modest boost from it starting in January.
That's when the state's minimum wage, already one of the highest in the nation, will rise again, with the increase tied to inflation.
How much will minimum wage change in Arizona?
By law, Arizona's minimum wage now is pegged to inflation. The current minimum is $12.80 an hour. That will rise to $13.85 an hour, an increase of $1.05, starting Jan. 1.
Why is Arizona's minimum wage changing in 2023?
Annual increases are mandated by Proposition 206, which statewide voters approved in 2016. That ballot measure bumped up the minimum wage in four steps, from $8.05 an hour in late 2016 to $12 an hour by Jan. 1, 2020.
Since then, increases have been tied to inflation, specifically the Consumer Price Index for urban workers, as tracked by the federal Bureau of Labor Statistics.
Arizona's minimum-wage inflation calculation runs for the 12 months from September through August each year, with adjustments taking effect the following January. The Industrial Commission of Arizona announced the increase.
Will all states or the federal government boost minimum wages?
No. Most states have lower minimum wages, and most don't adjust or index their numbers to inflation. States with higher minimums include California ($15 an hour), Washington ($14.49) and Massachusetts ($14.25), along with the District of Columbia ($16.10), according to a list compiled by the Labor Law Center. Some of these also will see increases in 2023.
At the other end of the scale, 20 states follow the federal minimum of $7.25 an hour, including Pennsylvania, Texas, North Carolina, Wisconsin, Utah and Idaho. The federal minimum hasn't changed since 2009.
Isn't inflation running higher in Arizona?
Yes, but Arizona's minimum wage is tied to national inflation. The BLS doesn't track inflation at the state level.
However, the agency does disclose inflation for metro Phoenix and nearly two dozen other big cities, and Phoenix-area inflation has run hotter than anywhere else in the country, with a reading of 12.1% for the 12 months through October, compared with 7.7% nationally. For the 12 months ending in August, which is what the Arizona minimum-wage increase is pegged to, Phoenix-area inflation was even higher — 13%.
Is inflation driving up Social Security?
Yes, but the government uses a slightly different Consumer Price Index gauge to determine annual cost-of-living or COLA increases for Social Security, and it's based on the 12 months through September, not August. Owing to inflation, Social Security recipients will see their benefits increase 8.7% starting in January.
Will Arizona's minimum wage increase cause problems for businesses?
Yes, but it's also true that many employers are paying more than the minimum to attract and retain workers at a time of low unemployment and widespread job openings. The jobless rate in metro Phoenix has hovered around 3.5% for months, despite Federal Reserve efforts to slow the economy through interest-rate hikes.
As for employees, about 34% of Arizonans earlier this year were earning $15 an hour or less, according to a recent report by Oxfam America. Workers in this group include tipped employees, farmworkers, domestic caregivers and students.
Will the new minimum wage apply everywhere in Arizona?
Generally, but some cities have their own minimums, including Tucson ($13 an hour) and Flagstaff ($15.50, rising to $16.80 in January).
Also, there are various exceptions such as people employed by a parent or a sibling, those who work as a babysitter in an employer’s home on a casual basis and people employed by the state of Arizona or federal governments. Another exemption applies to individuals working at small businesses that generate less than $500,000 in annual revenue.
In addition, employers may pay tipped employees — those who customarily and regularly receive tips or gratuities — up to $3 an hour less than the minimum wage, provided the employer keeps records showing that workers received at least the minimum for all hours worked.
Reach the reporter at russ.wiles@arizonarepublic.com.
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