Arizona minimum wage increases Jan. 1 from $11 to $12 per hour

PHOENIX — What would you do with an extra $2,080 a year?

Well, maybe closer to $1,600 after taxes?

That’s the happy question facing hundreds of thousands of Arizonans who are in line for a wage bump Wednesday, Jan 1. That’s when the last phase in a 2016 voter-approved increase in the minimum wage kicks in.

It will take the bottom from $11 an hour to $12, adding an extra $2,080 a year for those working a full-time job.

Exactly how many Arizonans are affected is unclear.

The most recent wage data from the Arizona Commerce Authority is for 2018. But it does show the workers who, on average, were getting not much more than $11 at the time.

Among the largest group likely to see bigger paychecks are workers in the personal care and service occupations.

The state figured there were more than 112,000 people at that time with a median wage of $11.61 an hour. That means half were making above that and half were making less.

Another nearly 48,000 personal care aides are in that wage category.

And there are other categories where the median wage last year was below $12 an hour, including more than 92,000 in retail sales, close to 49,000 waiters and waitresses, 12,500 counter attendants and 17,500 fast-food cooks.

The wage figures do include tips. That’s crucial as the 2016 law allows employers to pay tipped workers up to $3 an hour less than the minimum — but only as long as what they ultimately get, with those tips, hits what the law mandates.

And it won’t be those now making less than $12 who will be affected. Any move that makes $12 the new minimum rung on the salary ladder is likely to force employers to increase the wages of more experienced workers who are getting just $12 or slightly more.

“We’re very excited that we’re about the reach the culmination of Prop. 206,” said Tomas Robles of Living United for Change in Arizona, the group that put the issue on the ballot that scrapped the minimum of $8.05 an hour in 2016.

He said the higher wages helped get Arizonans closer to a “living wage,” especially with rapidly rising rents. And Robles said all that was accomplished without wrecking the economy as had been predicted by initiative foes, mostly in the business community.

“The industries that folks said would die off because of this minimum wage have not only been fine but actually have increased in income, employment, demand,” he said.

That is borne out by statistics from the Arizona Commerce Authority.

Since 2017, the average number of people employed by all private companies has increased by 5.7%. And employment in bars and restaurants, which include fast-food establishments, has pretty much kept pace at 5.6%.

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Garrick Taylor, spokesman for the Arizona Chamber of Commerce and Industry, which opposed the 2016 measure — and then unsuccessfully sued to have it voided — does not dispute that the predictions of wholesale reductions in employment levels in certain industries have not materialized. But he said there’s a reason for that.

“It is important to remember that we are in a strong economy, particularly in metropolitan areas, both nationally and in Arizona,” he told Capitol Media Services. “We have yet to see the effects of this policy in a struggling economy or to truly understand the impact in rural areas.”

And Taylor said he still believes that it is the people who are seeking jobs who will “bear the brunt of a policy that makes hiring more expensive.”

But Taylor has more immediate concerns.

One is an initiative drive being financed by the Service Employees International Union which, if approved in November, would mandate that everyone working at a hospital get an immediate 5% pay hike. Then there would be successive 5% pay increases for the following three years.

That would apply at all levels, including medical staff, nurses, social workers, orderlies and even custodians.

And with that $12 minimum beginning Jan. 1, that would put the base salary for hospital workers after the fourth year at $14.59.

Taylor said his organization will try to convince voters to reject the proposal.

Separately, Taylor objects to the fact the 2016 law allows local communities to create their own minimum wages.

Flagstaff voters did that in a move that will put the floor in that city at $13 an hour this year, increasing automatically to $15.50 by 2022.

Robles, for his part, said the benefits of Prop. 206 extend beyond pure pay. He pointed out that it requires employers to provide at least three paid leave days each year.

“We get phone calls all the time of people utilizing their paid sick days and being able to utilize those days for emergencies or other situations,” he said.

A study performed in 2019 by the Grand Canyon Institute concluded that since the wage law took effect in 2017 there has been a 19% increase in food service hourly pay. The report did conclude, however, there was “some evidence” that the average hours worked by those in that sector of the economy “may have declined by about one hour per week.”

Robles said even with new minimum set at $12 an hour it still does not provide a “living wage,” particularly for people in metro areas where housing prices and rents are increasing sharply.

For the Phoenix area, the website Rent Jungle puts average monthly rent at $1,215. That is 18% higher than it was at the end of 2016.

At the moment, however, Robles said there are no plans for a future initiative. But even if that does not occur, a provision in the law requires an adjustment to the minimum annually based on a cost-of-living index. So if inflation goes up by 2.5% in 2020, the 2021 minimum would go to $12.30.